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Author: Graeme Guthrie Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Enormous public investment will occur as communities adapt to climate change. Much of this investment will be irreversible and the future benefits are currently uncertain. The real options embedded in adaptation projects are therefore potentially important and their existence needs to be incorporated into investment decision-making. Standard real options analysis is inadequate for this purpose because the future arrival of information about climate change is unlikely to conform to the stochastic processes typically used in real options analysis. This paper presents a new framework that reflects current uncertainty about climate change and how that uncertainty might change over time. Optimal investment depends on current beliefs regarding the severity of future climate change, how quickly these beliefs are likely to change in the future, and current economic conditions. Most of the net benefits of optimal investment can be captured if investment timing is decided using a simple alternative decision-making rule.
Author: Graeme Guthrie Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Enormous public investment will occur as communities adapt to climate change. Much of this investment will be irreversible and the future benefits are currently uncertain. The real options embedded in adaptation projects are therefore potentially important and their existence needs to be incorporated into investment decision-making. Standard real options analysis is inadequate for this purpose because the future arrival of information about climate change is unlikely to conform to the stochastic processes typically used in real options analysis. This paper presents a new framework that reflects current uncertainty about climate change and how that uncertainty might change over time. Optimal investment depends on current beliefs regarding the severity of future climate change, how quickly these beliefs are likely to change in the future, and current economic conditions. Most of the net benefits of optimal investment can be captured if investment timing is decided using a simple alternative decision-making rule.
Author: Tiago Capela Lourenço Publisher: Springer Science & Business Media ISBN: 3319048767 Category : Science Languages : en Pages : 200
Book Description
Climate change highlights the challenges for long-term policy making in the face of persistent and irreducible levels of uncertainties. It calls for the development of flexible approaches, innovative governance and other elements that contribute to effective and adaptive decision-making. Exploring these new approaches is also a challenge for those involved in climate research and development of adaptation policy. The book provides a dozen real-life examples of adaptation decision making in the form of case studies: · Water supply management in Portugal, England and Wales and Hungary · Flooding, including flood risk in Ireland, coastal flooding and erosion in Southwest France, and flood management in Australia’s Hutt River region · Transport and utilities, including the Austrian Federal railway system, public transit in Dresden, and Québec hydro-electric power · Report examining communication of large numbers of climate scenarios in Dutch climate adaptation workshops.
Author: Richard De Neufville Publisher: MIT Press ISBN: 0262297337 Category : Science Languages : en Pages : 310
Book Description
A guide to using the power of design flexibility to improve the performance of complex technological projects, for designers, managers, users, and analysts. Project teams can improve results by recognizing that the future is inevitably uncertain and that by creating flexible designs they can adapt to eventualities. This approach enables them to take advantage of new opportunities and avoid harmful losses. Designers of complex, long-lasting projects—such as communication networks, power plants, or hospitals—must learn to abandon fixed specifications and narrow forecasts. They need to avoid the “flaw of averages,” the conceptual pitfall that traps so many designs in underperformance. Failure to allow for changing circumstances risks leaving significant value untapped. This book is a guide for creating and implementing value-enhancing flexibility in design. It will be an essential resource for all participants in the development and operation of technological systems: designers, managers, financial analysts, investors, regulators, and academics. The book provides a high-level overview of why flexibility in design is needed to deliver significantly increased value. It describes in detail methods to identify, select, and implement useful flexibility. The book is unique in that it explicitly recognizes that future outcomes are uncertain. It thus presents forecasting, analysis, and evaluation tools especially suited to this reality. Appendixes provide expanded explanations of concepts and analytic tools.
Author: Anil Markandya Publisher: Routledge ISBN: 1136212116 Category : Business & Economics Languages : en Pages : 565
Book Description
Climate change is one of the greatest challenges facing human kind owing to the great uncertainty regarding future impacts, which affect all regions and many ecosystems. Many publications deal with economic issues relating to mitigation policies, but the economics of adaptation to climate change has received comparatively little attention. However, this area is is critical and a central pillar of any adaptation strategy or plan and is the economic dimension, which therefore merits the increase in attention it is receiving. This book deals with the difficulties that face the economics of adaptation. Critical issues include: uncertainty; baselines; reversibility, flexibility and adaptive management; distributional impacts; discount rates and time horizons; mixing monetary and non-monetary evaluations and limits to the use of cost-benefit analysis; economy-wide impacts and cross-sectoral linkages. All of these are addressed in the book from the perspective of economics of adaptation. Other dimensions of adaptation are also included, such as the role of low- and middle-income countries, technology and the impacts of extreme events. This timely book will prove essential reading for international researchers and policy makers in the fields of natural resources, environmental economics and climate change.
Author: Graeme Guthrie Publisher: ISBN: Category : Languages : en Pages : 25
Book Description
Investments in climate-change adaptation will have to be made while the extent of climate change is uncertain. However, some important sources of uncertainty will fall over time as more climate data become available. This paper investigates the effect on optimal investment decision-making of learning that reduces uncertainty. It develops a simple real options method to value options that are found in many climate-change adaptation contexts. This method modifies a binomial tree model frequently applied to climate-change adaptation problems, incorporating gradual learning using a Bayesian updating process driven by new observations of extreme events. It is used to investigate the timing, scale or upgradable design of an adaptation project. Recognition that we might have more or different information in the future makes flexibility valuable. The amount of value added by flexibility and the ways in which flexibility should be exploited depend on how fast we learn about climate change. When learning will occur quickly, the value of the option to delay investment is high. When learning will occur slowly, the value of the option to build a small, low-risk project instead of a large high-risk one is high. For intermediate cases, the option to build a small project that can be expanded in the future is high. The approach in this paper can support efficient decision-making on adaptation projects by anticipating that we gradually learn about climate change by the recurrence of extreme events.
Author: Matthew Kahn Publisher: Yale University Press ISBN: 0300258577 Category : Business & Economics Languages : en Pages : 305
Book Description
A revelatory study of how climate change will affect individual economic decisions, and the broad impact of those choicesSelected by Publishers Weekly as one of its Top Ten books in Business and Economics for Spring 2021 It is all but certain that the next century will be hotter than any we’ve experienced before. Even if we get serious about fighting climate change, it’s clear that we will need to adapt to the changes already underway in our environment. This book considers how individual economic choices in response to climate change will transform the larger economy. Using the tools of microeconomics, Matthew E. Kahn explores how decisions about where we live, how our food is grown, and where new business ventures choose to locate are impacted by climate change. Kahn suggests new ways that big data can be deployed to ease energy or water shortages to aid agricultural operations and proposes informed policy changes related to public infrastructure, disaster relief, and real estate to nudge land use, transportation options, and business development in the right direction.
Author: Patrick A. Ray Publisher: World Bank Publications ISBN: 1464804788 Category : Business & Economics Languages : en Pages : 149
Book Description
Confronting Climate Uncertainty in Water Resources Planning and Project Design describes an approach to facing two fundamental and unavoidable issues brought about by climate change uncertainty in water resources planning and project design. The first is a risk assessment problem. The second relates to risk management. This book provides background on the risks relevant in water systems planning, the different approaches to scenario definition in water system planning, and an introduction to the decision-scaling methodology upon which the decision tree is based. The decision tree is described as a scientifically defensible, repeatable, direct and clear method for demonstrating the robustness of a project to climate change. While applicable to all water resources projects, it allocates effort to projects in a way that is consistent with their potential sensitivity to climate risk. The process was designed to be hierarchical, with different stages or phases of analysis triggered based on the findings of the previous phase. An application example is provided followed by a descriptions of some of the tools available for decision making under uncertainty and methods available for climate risk management. The tool was designed for the World Bank but can be applicable in other scenarios where similar challenges arise.
Author: Anthony Bonen Publisher: International Monetary Fund ISBN: 1475539711 Category : Business & Economics Languages : en Pages : 46
Book Description
We propose a macroeconomic model to assess optimal public policy decisions in the the face of competing funding demands for climate change action versus traditional welfare-enhancing capital investment. How to properly delineate the costs and benefits of traditional versus adaption-focused development remains an open question. The paper places particular emphasis on the changing level of risk and vulnerabilities faced by developing countries as they allocate investment toward growth strategies, adapting to climate change and emissions mitigation.
Author: Kara N. DiFrancesco, Patrick Ray Publisher: World Bank Publications ISBN: Category : Languages : en Pages : 62
Book Description
Climate change adds uncertainty to already complex global water challenges. Because climate change affects poorer countries and vulnerable populations the most, the World Bank strives to mainstream climate change considerations into its operations to inform investment and water resources management decisions. Although no standard method has been adopted yet by the Bank, common practice used downscaled projected precipitation and temperature from Global Climate Models (GCMs), as input to hydrologic models. While this has been useful in some applications, they often give too wide a dispersion of readings to provide useful guidance for site-specific water resources management and infrastructure planning and design. Rather than design for an uncertain situation selected a priori, the so-called “bottom-up” approaches explore the sensitivity of a chosen project to the effects of uncertainties caused by climate change. This book summarizes alternatives explored by a group of organizations (such as the U.S. Corps of Engineers, Conservation International, the University of Massachusetts and the Bank) all belonging to the Alliance for Global Water Adaptation (AGWA), to provide practitioners with the tools to adapt to the realities of climate change by following a decision-making process that incorporates bottom-up thinking.
Author: Graeme Guthrie
Author: Graeme Guthrie
Author: Tiago Capela Lourenço
Author: Richard De Neufville
Author: Anil Markandya
Author: Graeme Guthrie
Author: David García-León
Author: Matthew Kahn
Author: Patrick A. Ray
Author: Anthony Bonen
Author: Kara N. DiFrancesco, Patrick Ray