Climate Change Risks and Adaptation
Linking Policy and Economics
Climate change is giving rise to diverse risks, ranging from changing incidences of tropical diseases to increased risks of drought, varying widely in their potential severity, frequency and predictability. Governments must integrate the management of these climate risks into policy making if they are to successfully adapt to a changing climate. Economic analysis has a vital role to play in supporting these efforts, by identifying costs and benefits and supporting decision-making for an uncertain future. However, this analysis needs to be adapted to the institutions, policies and climate risks in a given country. Building on the experience of OECD countries, this report sets out how the latest economic evidence and tools can enable better policy making for adaptation.
Tools to mainstream adaptation into decision-making processes
This chapter examines the tools that can be used to mainstream, or integrate, adaptation into existing decision making and appraisal processes. Informed by countries’ experiences to date, it explores how adaptation can be included within traditional decision-making tools such as cost-benefit analysis, multi-criteria analysis and cost-effectiveness analysis. It analyses the applicability of new approaches, such as real options analysis, that are designed to support decision making under uncertainty. It discusses the importance of aligning the tools used with the institutional context that they will operate in.
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