Adaptation Investments Research Articles

Seawalls and Stilts: A Quantitative Macro Study of Climate Adaptation

Abstract Can we reduce the damage from climate change by investing in seawalls, stilts, or other forms of adaptation? Focusing on the case of severe storms in the US, I develop a macro heterogeneous-agent model to quantify the interactions between adaptation, federal disaster policy, and climate change. The model departs from the standard climate damage function and incorporates the damage from storms as the realization of idiosyncratic shocks. Using the calibrated model, I infer that adaptation capital comprises approximately 1$\%$ of the US capital stock. I find that while the moral hazard effects from disaster aid reduce adaptation in the US economy, federal subsidies for investment in adaptation more than correct for the moral hazard. I introduce climate change into the model as a permanent increase in either or both the severity or probability of storms. Adaptation reduces the damage from this climate change by approximately one-third. Finally, I show that modelling the idiosyncratic risk component of climate damage has quantitatively important implications for adaptation and for the welfare cost of climate change.

Uptake of Climate Smart Agriculture in Peri-Urban Areas of South Africa's Economic Hub Requires Up-Scaling

Climate variability and change impact significantly on food security and the livelihoods of smallholder farmers making it necessary for the farmers to prioritize investment in adaptation and mitigation approaches, such as climate smart agriculture, to enhance resilience. Climate smart agriculture approaches have been adopted in many countries around the world to address the adverse impacts of climate change on agricultural production. There is limited information about climate smart agriculture adoption by peri-urban farmers in developing countries. The present study aimed to assess the extent to which agricultural activities by smallholder crop farmers in the City of Tshwane Metropolitan Municipality in Gauteng province of South Africa are climate smart, and to establish the sustainable measures to be put in place to enhance the adoption of climate smart agriculture. The study made use of a mixed method design combining qualitative and quantitative approaches. A combination of simple random and non-probability sampling techniques was employed to select the study locations and identify respondents. A sample of thirty-six farmers were selected for the study. The main findings revealed overwhelming awareness of climate change and the impacts thereof on crop productivity and yields. However, the respondents' level of awareness of climate smart agriculture technologies was generally low. Despite the lack of knowledge of climate smart agriculture practices, the farmers were, to an extent, utilizing adaptation mechanisms acquired from indigenous systems or scientific knowledge. Examples of these practices include mulching, cover cropping, crop rotation and use of crop varieties. The study concludes that much more can be done to scale up the uptake of climate smart agriculture in the Gauteng province. The study recommends formal and informal strategies including one-on-one extension programs to raise the awareness of climate smart agriculture technologies appropriate to the unique conditions of the farmers.

Climate finance and peace—tackling the climate and humanitarian crisis

Climate finance and peace—tackling the climate and humanitarian crisis

Decision Making in Real Estate: Portfolio Approach

Abstract An investment policy is suggested about assets on real estate markets. Such analysis recommends investments in non-financial assets and optimization of the results from such decisions. The formalization of the investment policy is based on the portfolio theory for asset allocation. Two main criteria are applied for the decision making: return and risk. The decision support is based on Mean-Variance portfolio model. A dynamical and adaptive investment policy is derived for active portfolio management. Sliding procedure in time with definition and solution of a set of portfolio problems is applied. The decision defines the relative value of the investment to which real estates are to be allocated. The regional real estate markets of six Bulgarian towns, which identify the regions with potential for investments, are compared. The added value of the paper results in development of algorithm for a quantitative analysis of real estate markets, based on portfolio theory.

Growing hope: Island agriculture and refusing catastrophe in climate change adaptation in Fiji

In both media and policy, climate change is broadly framed as the promise of catastrophe for small island states such as Fiji. This framing is often used to attract adaptation investment in islands, the targets and directives of which are frequently market-based and oriented toward economic-growth development models. In Fiji, this takes the form of land tenure policy and efforts to attract investment to support agricultural modernization. Such a pattern is the source of scholarly and activist critique that climate change adaptation is nothing more than a repackaging of neoliberal development. This paper seeks to situate such critique alongside parallel attention to climate change adaptation practices emerging from alternative, hopeful frames and aimed at less national development driven efforts. In doing so, it centers adaptation as a space of unsettled struggle and asks, in what ways do climate change adaptation practices in Fiji align and conflict with dominant framing of island vulnerability and climate catastrophe, and how might they suggest alternative adaptive interventions that renegotiate these frames? Specifically, this paper focuses on efforts to promote ‘traditional’ agriculture throughout Fiji as an endogenous and hopeful form of adaptation, and one consistently opposed to efforts at agricultural modernization as an adaptation strategy.

Application of Multi-Criteria Analysis selecting the most effective Climate change adaptation measures and investments in the Italian context

In the context of climate change, one of the EU’s major political efforts focus on water management. Public investment is carried out considering several drivers, from economic development to demographics, climate, and pollutants. Meanwhile, the need for evaluation methods is also increasing, so their development has grown in recent years. Among these, Multi-Criteria Analysis methodologies (MCA) have taken on great importance. This work aims to demonstrate the usefulness of MCA in addressing crucial environmental issues, such as the use of water resources for agricultural and food production. The document presents an application of MCA for the ranking and selection of projects to be financed under the Italian National Plan on Water Resources. The Plan is part of the national initiatives planned for the adaptation of the agricultural sector to climate change. The selection criteria have been identified following a participatory approach, and to respond to both the challenge of climate change and the limited availability of funds. MCA is used to select the best projects to be financed with the available amount. The Italian experience confirms the effectiveness of MCA and highlights how the involvement of both decision makers and stakeholders is necessary for a successful application of MCA to environmental issues.

Risk management and market structures in seaport–dry port systems

As seaborne and inland transport hubs, seaports and dry ports are vulnerable to diversified risks, such as climate-change-related disasters and congestion in daily operations, owing to their special geographical locations and socioeconomic functions in seaborne supply chains. If appropriate investments are made before the risks occur, the probability and potential damage of such risks can be mitigated. We propose a two-stage game to simultaneously study the preventive and adaptive investments of seaport and dry port authorities on diversified risks in scenarios of vertical cooperation and horizontal competition. In addition, in the latter case, the asymmetry between seaports and dry ports, regarding their vulnerability to risks, is taken into account. Findings show that it is not always advisable to pursue close cooperation, as players in a horizontal relationship must consider not only their own vulnerabilities but also those of others when making investment decisions. Finally, we find that port authorities need to pay more attention to the free-riding problem in the process of preventive investments than in adaptive investments.

Seaport adaptation to climate change disasters: Subsidy policy vs. adaptation sharing under minimum requirement

Many seaports around the world face serious threat of natural disasters related to climate change. They have been investing in adaptation measures to mitigate potential disaster damages. This paper proposes an economic model to examine the inter-port competition in adaptation investments when ports face asymmetric disaster losses. Specifically, we model the trading mechanism of the adaptation resources among different ports, and benchmark the outcomes with the widely used adaptation subsidy policies. Our analytical results suggest that with adaptation trading under the minimum requirement policy, the port facing the low disaster loss sells adaptation resources to the port facing the high disaster loss, allowing the latter to cover all its disaster loss. Subsidy policy is pro-competitive and intensifies inter-port competition in adaptation investment and output. In comparison, adaptation trading facilitates inter-port coordination, possibly leading to port collusion. When the magnitudes of disaster damages are low, adaptation trading brings higher social welfare than the subsidy policy despite possible port collusion, leading to a Pareto improvement. When the magnitudes of disaster damages are high, the subsidy policy is preferred in terms of social welfare and port adaptation. Our model results reveal the strengths of alternative adaptation policies, and call for evaluation beyond competition effects when examining port coordination in adaptation.

Climate Bridge Fund: Tackling Climate Migration in Bangladesh by Bridging Stakeholder Gaps

Climate change is already happening. In the Fifth Assessment Report (AR5), the Intergovernmental Panel on Climate Change (IPCC) indicates that about 72 million people will be displaced with 0.5-metre sea level rise if there is no investment in adaptation. In the case of a 2.0-metre rise, that number of people will be pushed to 187 million. IPCC also provides evidence on increased displacement and migration due to floods and droughts in many countries including Bangladesh. It has been reported “22% of households affected by tidal-surge floods and 16% of households that were affected by riverbank erosion moved to urban areas in Bangladesh”

THE SPILLOVER, RISK AND LEVERAGE EFFECTS OF SMART BETA MANAGEMENT EXCHANGE-TRADED FUND (ETF)

This research uses two different GARCH models to measure spillover, risk, and leverage effects of active, passive, and smart beta management Exchange-traded Funds (ETFs). The increase in popularity of ETFs and new categories within them, specifically the growth of smart beta management, means asset managers and investors have new metrics to account for when determining portfolio exposure following the Adaptive Investment Approach (AIA). The results show significant relationships among all groups regarding the spillover. A trend of positive multi-lateral spillover of returns among the three management types including passive, active and small beta is observed with smart beta showing the highest percentage of a bi-lateral positive effect. The strongest spillover of volatility effects is among the actively managed ETFs. The testing of risk results is insignificant, but the leverage effect results are consistent with the past studies showing the significant negative bi-lateral effect.

Climate change, riverine flood risk and adaptation for the conterminous United States

Riverine floods are among the most costly natural disasters in the United States, and floods are generally projected to increase in frequency and magnitude with climate change. Faced with these increasing risks, improved information is needed to direct limited resources toward the most cost-effective adaptation actions available. Here we leverage a newly available flood risk dataset for residential properties in the conterminous United States to calculate expected annual damages to residential structures from inland/riverine flooding at a property-level; the cost of property-level adaptations to protect against future flood risk; and the benefits of those adaptation investments assuming both static and changing climate conditions. Our modeling projects that in the absence of adaptation, nationwide damages from riverine flooding will increase by 20%–30% under high levels of warming. Floodproofing, elevation and property acquisition can each be cost-effective adaptations in certain situations, depending on the desired return on investment (i.e. benefit cost ratio), the discount rate, and the assumed rate of climate change. Incorporation of climate change into the benefit-cost calculation increases the number of properties meeting any specified benefit-cost threshold, as today’s investments protect against an increasing frequency of future floods. However, because future expected damages are discounted relative to present-day, the adaptation decisions made based on a static climate assumption are very similar to the decisions made when climate change is considered. If the goal is to optimize adaptation decision making, a focus on quantifying present-day flood risk is therefore at least as important as understanding how those risks might change under a warming climate.

Experience in a Climate Simulator: Influence of Probability Function and Feedback on Decisions Against Climate Change

Research indicates that people continue to exhibit “wait-and-see” preferences toward climate change, despite constant attempts to raise awareness about its cataclysmic effects. Experiencing climatic catastrophes via simulation tools has been found to affect the perception of people regarding climate change and promote pro-environmental behaviors. However, not much is known about how experiential feedback and the probability of climate change in a simulation influence the decisions of people. We developed a web-based tool called Interactive Climate Change Simulator (ICCS) to study the impact of different probabilities of climate change and the availability of feedback on the monetary actions (adaptation or mitigation) taken by individuals. A total of 160 participants from India voluntarily played ICCS across four between-subject conditions (N = 40 in each condition). The conditions differed based on the probability of climate change (low or high) and availability of feedback (absent or present). Participants made mitigation and adaptation decisions in ICCS over multiple years and faced monetary consequences of their decisions. There was a significant increase in mitigation actions against climate change when the feedback was present compared to when it was absent. The mitigation and adaptation investments against climate change were not significantly affected by the probability of climate change. The interaction between probability of climate consequences and availability of feedback was significant: In the presence of feedback, the high probability of climate change resulted in higher mitigation and adaptation investments against climate change. Overall, the experience gained in the ICCS tool helped alleviate peoples' “wait-and-see” preferences and increased the monetary investments to counter climate change. Simulation tools like ICCS have the potential to increase people's understanding of climatic disasters and can act as a useful aid for educationalists and policymakers.

Subsidy or minimum requirement? Regulation of port adaptation investment under disaster ambiguity

This paper models two commonly adopted regulatory polices (the minimum requirement regulation vs. subsidy) on port adaptation investment to mitigate the damage caused by climate change-related disasters. The ambiguity of the disaster occurrence probability and the decision makers’ attitudes towards risk are explicitly modelled. It is found, under the minimum requirement regulation, ports balance the option of increasing their adaptation vs. reducing their economic activities. In comparison, subsidies promote adaptation without introducing any incentive for ports to reduce outputs, but they can be less efficient than minimum requirement regulations in addressing market failures, such as that caused by a spill-over externality. The ambiguity of disasters changes the optimal designs of minimum requirement regulation and subsidy policy but does not change their relative ranking qualitatively. Decision makers’ risk attitudes also play important roles. Higher degrees of pessimism (more risk aversion) lead to lower port outputs but can also increase the level of port adaptation to achieve full insurance against disaster loss. Higher degrees of pessimism also make the government more conservative to intervene in the ports’ adaptation and thus less likely to impose the two regulatory policies. Our analysis also explains why it is justified for the government to withhold intervention under ambiguity, and also shows that the ambiguity does not necessarily bring worse expected social welfare.

How unprecedented was the February 2021 Texas cold snap?

Winter storm Uri brought severe cold to the southern United States in February 2021, causing a cascading failure of interdependent systems in Texas where infrastructure was not adequately prepared for such cold. In particular, the failure of interconnected energy systems restricted electricity supply just as demand for heating spiked, leaving millions of Texans without heat or electricity, many for several days. This motivates the question: did historical storms suggest that such temperatures were known to occur, and if so with what frequency? We compute a temperature-based proxy for heating demand and use this metric to answer the question ‘what would the aggregate demand for heating have been had historic cold snaps occurred with today’s population?’. We find that local temperatures and the inferred demand for heating per capita across the region served by the Texas Interconnection were more severe during a storm in December 1989 than during February 2021, and that cold snaps in 1951 and 1983 were nearly as severe. Given anticipated population growth, future storms may lead to even greater infrastructure failures if adaptive investments are not made. Further, electricity system managers should prepare for trends in electrification of heating to drive peak annual loads on the Texas Interconnection during severe winter storms.

Human Adaptation to Coastal Hazards in Greater Bridgetown, Barbados

As urban risks associated with a changing climate continue to intensify, it is increasingly important to broaden our understanding of climate vulnerabilities in coastal cities and human adaptation to climate-related hazards. Coastal cities in small island developing states in the Caribbean stand to be among the most climate-impacted. This paper explores vulnerability to coastal hazards (sea-level rise, storm surges and flooding) in Barbados’ capital city and its urban corridor—Greater Bridgetown. Specifically, it is a qualitative survey of climate change vulnerabilities and human adaptation in the study domain that is underpinned by three research questions: 1) In what ways is Greater Bridgetown vulnerable to coastal hazards? 2) What are the human dimensions of this vulnerability? and 3) What are the associated human adaptations? We apply a four-component adaptive urban governance framework to explore the role of the city’s historical development, urban morphology, national-level institutions and relevant government and other stakeholder initiatives in shaping, reducing and/or increasing vulnerability to coastal hazards. The paper relates primarily to the governance dimension of the risk reduction framework articulated by the Intergovernmental Panel on Climate Change. In totality, a case is presented that highlights Greater Bridgetown’s capacity for coastal/urban resilience, but which cannot be maximized without institutional prioritization of vulnerability, increased stakeholder “buy-in” and participation, along with significant investment in adaptation and the protection of valuable coastal infrastructure. The findings are of relevance to human adaptation within coastal cities of small island developing states.

Bracing for the Typhoon: Climate change and sovereign risk in Southeast Asia

AbstractThis article investigates and empirically tests the link between climate change and sovereign risk in Southeast Asia. Southeast Asian countries are among those most heavily affected by climate change. The number and intensity of extreme weather events in the region have been increasing markedly, causing severe social and economic damage. Southeast Asian economies are also exposed to gradual effects of global warming as well as transition risks stemming from policies aimed at mitigating climate change. To empirically examine the effect of climate change on the sovereign risk of Southeast Asian countries, we employ indices for vulnerability and resilience to climate change and estimate country‐specific OLS models for six countries and a fixed effects panel using monthly data for the period 2002–2018. Both the country‐specific and the panel results show that greater climate vulnerability appears to have a sizable positive effect on sovereign bond yields, while greater resilience to climate change has an offsetting effect, albeit to a lesser extent. A higher cost of debt holds back much‐needed investment in public infrastructure and climate adaptation, increases the risk of debt sustainability problems, and diminishes the development prospects of Southeast Asian countries.

Cultural Adaptation of Group Parenting Programs: Review of the Literature and Recommendations for Best Practices.

Group parenting programs based on cognitive-behavioral and social learning principles are effective in improving child behavior problems and positive parenting. However, most programs target non-Hispanic, White, English-speaking families and are largely inaccessible to a growing Hispanic and non-White population in the United States. We sought to examine the extent to which researchers have culturally adapted group parenting programs by conducting a systematic review of the literature. We identified 41 articles on 23 distinct culturally adapted programs. Most cultural adaptations focused on language translation and staffing, with less focus on modification of concepts and methods, and on optimizing the fit between the target cultural group and the program goals. Only one of the adapted programs engaged a framework to systematically record and publish the adaptation process. Fewer than half of the culturally adapted programs were rigorously evaluated. Additional investment in cultural adaptation and subsequent evaluation of parenting programs is critical to meet the needs of all US families.

A focus on market imperfections can help governments to mobilize private investments in adaptation

ABSTRACT Climate change requires significant adaptation of economies, and the largest part of most economies is composed of private sector actors. In this Viewpoint, we argue that it should not be the role of the public sector to cover the full costs of adaptation - which would also typically exceed government's fiscal space. Rather, we suggest that the public sector should set the right conditions to catalyse private investments in adaptation. While the suggestion is not new, we argue that the current focus on generic ‘barriers’ hindering more private investments in adaptation is not expedient. These barriers are descriptive rather than explanatory, sometimes mix cause and effect, and tend to focus on eliminating obstacles, rather than adapting efficiently. Alternatively, we suggest to focus on addressing three market imperfections that give rise to those barriers. In doing so, the overall welfare of society, including the vulnerability of the most marginalized, should be centre-stage. The development of markets should aim to contribute to such welfare - it is not an end in itself. In that sense, our call for a focus on market imperfections is a call for a larger role of public actors, both in developed and developing countries.

An Adaptation-Mitigation Game: Does Adaptation Promote Participation in International Environmental Agreements?

This paper studies how the investment in adaptation can influence the participation in an international environmental agreement (IEA) when countries decide in adaptation before they choose their levels of emissions. Two types of agreements are studied, a complete agreement for which countries coordinate their decisions on adaptation and emissions, and an adaptation agreement for which there is only coordination when countries decide their levels of adaptation. In both cases, we assume that the degree of effectiveness of adaptation is bounded from above, in order words, adaptation can alleviate the environmental problem, but it cannot solve it by itself leading the vulnerability of the country to almost zero. Our results show that the grand coalition could be stable for both types of agreement, but for extremely high degrees of effectiveness of adaptation. If this condition is not satisfied, the model predicts low levels of membership. The standard result of three countries for the complete agreement. For the adaptation agreement participation can be higher than three, but not higher than six countries. In any case, we can conclude that under reasonable values for the degree of effectiveness of adaptation, in our model adaptation does not promote participation in an IEA.

Climate finance potential to unlock private sector investment in adaptation

The increasing variety of climate, water and biodiversity funds and financing facilities, has the potential to increase complementarity. In practice, this increasing fragmentation is becoming a systemic barrier for local access to finance. The development of novel governance structures for collective investments at watershed level and innovative procurement strategies is required to deal with the remaining systemic barriers for private sector participation. A public-private programmatic approach that enables the combination of multiple thematic finance streams is required along with non-traditional global-local partnerships that bring the required expertise to effectively de-risk and significantly reduce transaction costs for investments at the watershed scale.