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As U.S. maritime security adapts to the terrorist threat, we argue that quantitative analysis should be used to evaluate security initiatives and present a case study of one proposed measure: 100 percent scanning of containers entering the United States. By assessing the minimum attack likelihood required to justify increased inspection costs, we conclude that 100 percent scanning is cost-effective only if the attack damages or likelihood of an attack are quite high. Even so, additional land and labor transaction costs could render adoption infeasible unless scanning technologies improve significantly.

Reprinted with permission from The Economic Impacts of Terrorist Attacks, edited by Harry W. Richardson, Peter Gordon, James E. Moore II, pp. 218-241. Copyright © 2005 Edward Elgar Publishing.

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