The Economics of Adaptation
As adaptation moves from theory to practice, there is an increased need for more detailed economic analysis, including estimates of costs and benefits. This need is recognised at the EU level, for example in the EU Strategy on Adaptation, as well by Member States. However, the economics of adaptation remains in its infancy, in relation to both the methodological challenges and examples of practical application.
Against this background, the objectives of the ECONADAPT project are to advance the knowledge and evidence base on the economics of adaptation, and to convert the findings into practical material to help support adaptation planning and decision makers. To help achieve these objectives, the project is co-developing the research with policy makers, to ensure it is grounded in practice. This will also encourage final dissemination in a user-orientated form that is targeted towards end users.
The overall project approach is split into two major research themes:
1. To make methodological advances to improve the economic assessment of adaptation.
2. To apply these advances to major adaptation decisions, i.e. in policy areas where improved economic methods and tools are needed.
The first theme advances research on:
- Improved methods and empirical data. This will develop better methods for analysing data on the costs and benefits of adaptation and in doing so will broaden the application to non-technical options and non-market sectors. It will also explore treatment of risk and ambiguity, learning and option values, changing preferences, and adaptation-mitigation linkages in economic assessment. The research will undertake primary valuation studies to survey preferences for alternative types of adaptation in three countries.
- Scaling, transfer, aggregation. This will assess and produce guidance on how to transfer adaptation cost and benefit values from one study to another, taking account of time and location, and the issues in aggregation from local to macro-economic scales.
- Analysis of uncertainty. This will address the problem of how to quantify uncertainty - extending existing methods and tools - and developing new ones.
The second theme applies these advances to key policy domains using case studies, focusing on five major areas where adaptation economics will be important over the next decade:
- Management of the early major risks of climate change in Europe. This focuses on extreme events, as these have high economic costs in the short-term.
- Including adaptation into economic project appraisal, especially for large capital investment with long life-times and high exposure to climate change (and uncertainty).
- Including adaptation in policy appraisal (impact assessment), especially where there are large flows associated with mainstreaming adaptation into major EU funding areas.
- Identifying the macro-economic effects of adaptation within the EU and MS, including the effects on public finance, growth and competitiveness.
- Developing methods of economic analysis to support EU/MS international development assistance for adaptation in developing countries.
The project will undertake these case studies with stakeholders from relevant DGs, Member States, regional or local policy makers. The methods and case studies will therefore be co-developed with user groups engaged in using economic data for adaptation decision making. A number of workshops are anticipated in the study to help build these links, including a major series of case study-focused meetings early in the project to identify user-needs.
The results and findings from the project will be brought together in a toolbox which provides guidance from the methodological tasks and examples from the case studies to help inform the application of the economic assessment of adaptation. A two-tier approach is proposed, with detailed guidance and empirical data for economists, as well as ‘light-touch' methods and information for other users.
The ECONADAPT project is designed to have a high impact through improved adaptation economic support. The impact is directed in three important and inter-linked areas.
- Through the new academic research that the project will undertake. The impact will be achieved through academic publications and dissemination to the user community.
- Through the methods and guidance developed and tested in the study, and the focus on practical case studies. This impact will be achieved by working with policy stakeholders.
- Through developing a wider community of practice in the economics of adaptation. The impact of this will be maximised by producing detailed information in an accessible form for wider dissemination.
|University of Bath||GB|
|Basque Centre for Climate Change||ES|
|International Institute for Applied Systems Analysis||AT|
|IVM Institute for Environmental Studies||NL|
|Potsdam Institute for Climate Impacts Research||DE|
|Euro-Mediterranean Center on Climate Change||IT|
|Agricultural University of Athens||GR|
|Danish Meteorological Institute||DK|
|University of East Anglia||UK|
|Paul Watkiss Associates||UK|
|Charles University Environment Center||CZ|
|Joint Research Centre of the EC (IPTS)||BE|