The economic evaluation of adaptive pathways for flood risk reductions strategies

Abstract

Climate change and its impacts have necessitated a shift from relying solely on mitigation measures to implementing effective adaptation strategies. The financial requirements for adaptation, particularly in developing countries, have increased substantially. The annual projected needs for adaptation have nearly quadrupled over the past decade and are anticipated to reach significant amounts by 2030 and 2050. Sea level rise is considered a critical threat, and allocating financial resources efficiently becomes challenging due to the uncertain nature of SLR. Adaptive pathway planning, which allows for flexible decision-making over time, offers a promising approach to develop flood risk reduction strategies that can adapt to changing circumstances. However, evaluating the effectiveness of adaptive pathways requires accounting for uncertainty, using multiple evaluation metrics, and considering the value of time. To address these requirements, a new framework for evaluating flood risk strategies was established, incorporating Monte Carlo analysis to incorporate uncertainty and several evaluation metrics including NPV, BCR, EAC, POL, and CV. The framework emphasized the importance of decision moments, where new measures are required, and the balance between flexibility and costs. A conceptual case study involving seven strategies was conducted to test the framework, and sensitivity tests were performed to assess its robustness. The results demonstrated the framework's effectiveness in capturing uncertainty and the value of time, providing a solid foundation for further research. However, certain aspects of adaptive pathway planning, such as preventing future lock-ins, were not quantified in this analysis. Future research should focus on refining and validating the framework through real-world and more complex case studies, evaluating the performance of adaptive pathways, and incorporating various stochastic variables. Additionally, a comprehensive assessment of the entire flood system, encompassing both pluvial and fluvial flood risks, is crucial. Once refined, the framework has the potential to serve as a valuable evaluation tool, enabling the comparison of static and robust strategies against more flexible adaptive strategies, and facilitating decision-making in flood risk management.