10. Economics and finance of adaptation
Convenors: Anthony Bigio, Stéphane Hallegatte, Swenja Surminski, Paul Watkiss
For policy makers and politicians, some of the most challenging questions are on the economics of adaptation, i.e.: what are the cost and benefits of adaptation, how does these costs and benefits affect when and how to adapt, and what are effective and legitimate strategies to finance adaptation measures? If adaptation options do not have benefits in the short term, or if there are conditions of high uncertainty (when one cannot be sure how much economic loss or loss of lives are likely), it may be difficult to justify adaptation interventions, especially when weigh investments against other urgent and visible problems that also require resources. Many such decisions are taken by private actors, both businesses and individuals, and the role of the state in providing an enabling framework to overcome existing barriers is important.
The financing arrangements for adaptation are also an emerging matter, especially in continents that have undergone recent economic crises, where there is high competition for funds. Creative solutions, in which alliances are forged to invest now to avoid problems in the far future, could be an answer for deltas to continue as key areas of residential homes and economic activity. Questions related to a fair distribution of costs and benefits could play a role such as what is politically acceptable and which principles define this?’
This theme covers the following issues: Which methods can be used to develop and appraise adaptation under conditions of uncertainty? How can these methods be applied practically in the context of complex and cross-sectoral policy backgrounds, and in the context of autonomous, private and public planned adaptation? How do we define the most cost effective or cost-beneficial measures to gain the most socially desired benefits? Which innovative financing models for adaptation exist or can be applied and what are possible partners for financing alliances?