Economic Evaluation of Adaptation Pathways for an Urban Drainage System Experiencing Deep Uncertainty

Abstract

As Decision Making under Deep Uncertainty methodologies are becoming more widely utilised, there has been a growth in the use and generation of Adaptation Pathways. These are meant to convey to policy makers how short-term adaptations can act as elements of longer-term adaptation strategies. However, sets of Adaptation Pathways do not convey the individual pathway’s relative costs and benefits. To address this problem in relation to urban pluvial flooding, an economic analysis of a set of Adaptation Pathways was conducted. Initially, a methodology to conduct an economic assessment for deterministic climate change scenarios is developed. This methodology is then modified, using methods that underpin real options to assess how a pathway performs across a bundle of possible futures. This delivered information on how the performance of adaptations can vary across different climate change scenarios. By comparing the deterministic analysis to the new method, it was found that the order in which options are implemented greatly affects the financial performance of an Adaptation Pathway, even if the final combination of options is identical. The presented methodology has the potential to greatly improve decision making by informing policy makers on the potential performance of adaptation strategies being considered.