Review of available methods for cost-effectiveness assessment

Description

This report provides a critical review and synthesis of the available methods and metrics for adaptation cost-effectiveness assessment (CEA). The review outlines the challenges in applying CEA to adaptation, contrasting this with mitigation. It highlights the risk and sector specific nature of adaptation, the lack of common adaptation metrics across sectors, the greater focus on non-technical options (including building capacity) and the need to consider uncertainty, as key methodological issues, along with baselines, attribution, time-scales, and ancillary effects. Possible ways to address these issues are outlined for the Mediation case studies and the common platform. The review also outlines some of the more detailed issues with advanced CEA assessments, drawing lessons from the existing mitigation literature on expert versus modelled cost curves, top-down versus bottom-up assessments, adjustments for ancillary effects, discount rates, policy and transaction costs, sensitivity analysis, and learning and innovation. Finally, the review surveys the literature on applications of adaptation CEA, and summarises possible cost-effectiveness metrics and/or objectives for each sector, providing suggestions for CEA metrics for different case studies.

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