The use of new economic decision support tools for adaptation assessment: a review of methods and applications, towards guidance on applicability

Paul Watkiss, Alistair Hunt, William Blyth, Jillian Dyszynski

Research output: Contribution to journalArticlepeer-review

59 Citations (Scopus)

Abstract

There is a growing focus on the economics of adaptation as policy moves from theory to practice. However, the techniques commonly used in economic appraisal have limitations in coping with climate change uncertainty. While decision making under uncertainty has gained prominence, economic appraisal of adaptation still uses approaches such as deterministic cost-benefit analysis. Against this background, this paper provides a critical review and assessment of existing economic decision support tools (cost-benefit analysis and cost-effectiveness analysis) an uncertainty framework (iterative risk management) and alternative tools that more fully incorporate uncertainty (real options analysis, robust decision making and portfolio analysis). The paper summarises each method, provides examples, and assesses their strengths and weaknesses for adaptation. The tools are then compared to identify key differences, and to identify when these approaches might be appropriate for specific applications in adaptation decision making.
Original languageEnglish
Pages (from-to)401-416
Number of pages16
JournalClimatic Change
Volume132
Issue number3
Early online date7 Oct 2014
DOIs
Publication statusPublished - 1 Oct 2015

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