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The economics of climate change adaptation, and uncertainty

What measures could we take in view of the likely effects of climate change? How would they play out in economic terms? And how do we decide on investments, given that we do not know how pronounced the change will be? An EU-funded project has produced tools and guidance to support policy- and decision-makers.

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The ECONADAPT project was launched in October 2013 to produce more information on the cost, benefits and economics of adaptation to climate change risks across Europe. It refined the methodologies used to assess the economic impact of measures, compiled two comprehensive online resources – a library and a toolbox – and issued policy briefs with recommendations.

‘The toolbox enables decision-makers to incorporate adaption into their decisions more easily than with existing methods, and with less fuss,’ says project coordinator Alistair Hunt of the University of Bath, United Kingdom. ‘It is designed to facilitate the mainstreaming of adaptation measures into current practices,’ he adds.

The library is an electronic resource providing case studies from around the world in a variety of sectors. ‘It offers demonstration of good practice and can serve as a first port of call for people having to make these types of decisions,’ Hunt explains.

To test their methodological advances in practice, the partners also conducted case studies of their own. One of these focused on tea plantations in Rwanda, by way of an example.

‘Tea is a major export crop for the country,’ Hunt points out. ‘The climate risk is that as temperatures increase, the viability of current plantations falls, so it may be necessary to move the plantations higher up. We looked at a range of possibilities to see what the best altitudes could be, and we worked with the major plantation owners to optimise the portfolio of sites.’

A policy-led approach

The need to integrate decisions into the wider policy framework is one of EU-funded ECONADAPT’s main messages: climate adaptation measures should be shaped in view of the broader objectives pursued across a territory, rather than taken in isolation or potentially tacked on once other investments have already been agreed.

‘It’s a more holistic and integrated approach,’ Hunt explains. ‘It recognises current policy objectives in terms of general economic development, rather than seeing climate adaption as a separate practice.’

Taking climate risks into account systematically and early on in decision-making processes pursuing other objectives can help to adjust investments that might have been made anyway. Repairing pipes to avoid leakage in water supply systems, for example, produces benefits regardless of the future climate, while placing communities in a better position to deal with potential droughts.

‘We devoted a lot of attention to the issue of how to treat climate risk uncertainty,’ says Hunt. So far, the approach to climate change adaptation has been based on a ‘predict-then-optimise’ approach’.

‘We took the basis of that, but introduced a little bit more flexibility,’ he explains. To do so, the project integrated tools developed in other contexts, such as financial risk management, which can be used to design portfolios of adaptation measures to be developed in parallel.

‘Different measures can kick in depending on the level of risk being met,’ Hunt adds. ‘This means that, as we learn about the extent of climate risks, we can adjust and change our response.’

Engaging support

‘We also paid more attention than had previously been given to adaptation measures that rely on behavioural change rather than on engineering solutions – with the intention of pointing out that some of these behavioural changes are likely to be more affordable,’ Hunt observes.

To explore the scope for such non-technical forms of adaptation, the project asked citizens directly. ‘One thing that we did was to look at drought scenarios in areas with low rainfall, and more specifically at alternatives to building reservoirs,’ Hunt explains.

Reducing water use was one such alternative presented in the project’s surveys. Their outcomes indicate that respondents are willing to consider changing their habits if they are provided with enough information.

The project ended in September 2016, having packaged its insights and a wealth of supporting information for easy accessibility online and initiated dialogue with a wide variety of decision- and policymakers.

This interaction continues, says Hunt, who adds that the partners are notably interacting with the European Commission, the European Investment Bank and the European Bank for Reconstruction and Development, as well as with several national governments and a number of decision-makers in the private sector.

A follow-on project named COACCH was set up in December 2017, which involves case studies led by end-users from research, business, investment and policymaking communities, continuing the work begun in ECONADAPT.

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Project details

Project acronym
ECONADAPT
Project number
603906
Project coordinator: United Kingdom
Project participants:
Austria
Belgium
Czechia
Denmark
Germany
Greece
Italy
Netherlands
Spain
United Kingdom
Total cost
€ 3 700 787
EU Contribution
€ 2 928 617
Project duration
-

See also

More information about project ECONADAPT

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