Estimating willingness-to-pay for adaptations to climate change in water resources projects: demonstration for Lesotho irrigation investment

Abstract

A broad set of tools, frameworks, and guidance documents are available for water resources project planning, design, evaluation, and implementation in an ever-evolving world. The principles underlying most of these resources aim to advance the practice of water systems engineering under uncertainty, preserve and enhance project benefits, and achieve investment goals. Approaches to financial and economic evaluation under climate uncertainty in civil infrastructure investments, in particular, are currently being reviewed by academics and practitioners in the field to assess their ability to deliver resilience, sustainability, and equity. In climate-sensitive projects, adaptation measures that help mitigate the adverse effects of climate change and preserve project benefits are required, and stakeholder willingness-to-pay (WTP) for these must be assessed. Typically, stakeholders and decision-makers utilize the outcomes of economic assessment methods such as cost–benefit analysis (CBA) to justify large capital investments. Synthesizing previous advancements in water resources planning and evaluation, this study illustrates how a CBA framework can be augmented by applying a Climate-informed Robustness Index (CRI). The analytics underpinning the CRI, as well as the summary metric itself, help characterize project climate vulnerability, while conducting CBA with and without potential adaptation measures can be used to estimate WTP of investors for adaptation to the identified climate vulnerabilities. The case study of a planned irrigated agriculture project in Lesotho highlights critical climate conditions for which adaptation measures such as integrated catchment management (ICM) plans can be introduced to safeguard project robustness.