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Assessing adaptation options

4.2 What are costs and benefits of adaptation?

In order to assess feasible adaptation options the analysis of costs and benefits is crucial. This section provides information and guidance for the costing of adaptation options.

In this section you can also query the CLIMATE-ADAPT database for available information on the economics of adaptation originating from various sources as research projects and studies, information portals etc.

Information on the costs and benefits of adaptation is potentially relevant at a number of different aggregation levels, addressing different objectives:

  • The European level, where information on the costs and benefits of adaptation can raise awareness of the issue and the scale of adaptation. It can also provide input to the discussion on the likely resources, sources of finance and funds needed. Examples are available from the ClimateCost project and ClimWatAdap.
  • The national level, where the information on costs and benefits is relevant for national adaptation financing needs and for allocations of adaptation to allow efficient, effective and equitable response strategies, including national planning and prioritisation. Work is progressing in many Member States, such as in the UK with the Economics of Climate Resilience and in Germany in the Kompass.
  • The regional or local level, where information on the costs and benefits of adaptation can facilitate the design and prioritisation of adaptation policies, programmes and projects, and provide an input into decision making, support and appraisal.

Estimates of costs and benefits are emerging, but vary substantially with the objectives of the study, and the aggregation level and sector. Methodological papers on the assessment of costs and benefits in a framework of uncertainty have resulted from recent work and links are provided below to further information.   

Cost-benefit tools and methodologies

When calculating adaptation costs, the following steps are recommended:

  1. Defining cost assessment boundaries and baselines;
  2. Identifying climate change risks and vulnerabilities;
  3. Identifying adaptation measures applicable to the identified risks;
  4. Selecting the applicable valuation approach.This step is required to determine upfront investment costs, operating costs and lifetime implementation costs of the measure. This will help to determine the annualised cost per measure. Future costs can be extrapolated on the basis of locally verified estimates; a trajectory for the growth in cost can be based largely on inflation rates. Once a trajectory has been established for a business as usual scenario, the potential loss averted for each measure can be calculated based on different scenarios;
  5. Identifying and collecting data needed for evaluation;
  6. Estimating costs and benefits of adaptation actions;
  7. Prioritising adaption measures and selecting the appropriate level of governance for implementation.

Explore the Cost Benefit Database

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Guidance and tools

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Further reading

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