ALM UNDP

Summary:

##### Description

The objective of this project is to develop a decision making framework and detailed methodology for cost benefit valuation of adaptation measures to support increased and innovative means of prioritizing and financing adaptation to climate change hazard risks.

##### Background

Supporting developing countries in the development of nationally-led adaptation strategies is a critical GEF objective. The components of the proposed study will directly advance this objective by providing fact-based resources and decision support tools to help countries articulate priorities and attract and deploy capital more efficiently and at greater scale. The project will be organized along three components:

(1) Development of fact base (e.g. analytic assessment of costs, benefits and economics of adaptation measures) will provide countries with benchmarks and examples to better understand their own adaptation investment requirements, as well as practical insights into lessons learned from developing adaptation projects and programs
(2) Clear description of financing models (e.g. types of investment and roles of public and private sources of capital) will help countries target and potentially catalyze capital flows
(3) Decision support tools will identify the key dimensions of trade-offs decision-makers will need to make between different adaptation measures to help them allocate limited resources strategically, i.e. in a manner consistent with their overall objectives

The micro-economic fact base developed during the course of this project will also constitute a significant contribution to other efforts aimed at determining the global cost of adaptation. We will ensure that the output is aligned with those key efforts (e.g. World Bank work on economics of adaptation.)

##### Problem

Global climate change is producing significant changes in the physical environment that could threaten human lives and livelihoods and increase the vulnerability of critical ecosystems. The IPCC’s Third Assessment Report identifies a broad range of observed changes in physical, biological and socioeconomic systems associated with climate change and suggests significant potential for further ‘dangerous anthropogenic interference’ with these systems. For example, the IPCC identifies a range of studies that have documented climate change in agricultural systems that have given rise to changes in yields, phenology and management practices. Analysts have also observed greater climate variability and likelihood of catastrophic weather events; one estimate suggests that the cost of weather-related disasters has increased from an annual average of $8.9 billion (1977-1986) to $45.1 billion (1997-2006). These are just a small sample of the IPCC findings, which imply potentially significant economic losses and substantially greater human and ecosystem vulnerability as a consequence of anthropogenic climate change. While some key vulnerabilities can be addressed effectively – and cost effectively – by encouraging behavioral change, some areas may eventually require substantial investment to manage anticipated and unanticipated climate impacts (e.g. potential relocation of communities in regions of increasing floods).

##### Solution

This study will complement existing efforts by focusing on developing the fact base and decision tools needed by public and private decision maker in order to develop an adaptation strategy. It is not an attempt to re-create or duplicate the analytic work carried out by the IPCC report, the Stern report, or the ongoing work of the World Bank, although it will draw from them and from the existing evidence base from adaptation projects to draw practical implications to support decisions.
In order to make the results sufficiently specific to be practical, the project will select a set of case studies, chosen to be representative of a wide range of impacts and economic development. The analysis done through these case studies are meant to be replicable in other regions and provide a framework for improved adaptation assessments. For each case study the project will select a subset of impacts. It will then adopt a risk and vulnerability management approach for each impact, developing the processes a national decision maker would have to follow in order to select and fund an adaptation strategy suitable to manage the uncertain risks and vulnerabilities represented by that impact.