The Japanese experience shows that ifdone right- preventive investments pay. The Japanesegovernment invested about 7 to 8 percent of the total budgetfor disaster risk management (DRM) in the 1960s, a move thatmost probably decreased disaster deaths. Cost-effectivenessanalysis (CEA) and cost-benefit analysis (CBA) of DRMprojects have been widely implemented both at national andlocal levels in Japan. Different procedures for suchanalysis have been followed according to the type ofproject, the funds, and the governing entity responsible.The Japanese experience shows that CBA is applicable to DRMrelated projects and is a useful tool in choosing amongdifferent options and understanding the effectiveness of aproject. This report gives introduction; findings; lessons;and recommendations for developing countries.