Economics of climate change adaptation at the local scale under conditions of uncertainty and resource constraints: the case of Durban, South Africa

Abstract

This paper describes the design and application of a benefit-cost model to the city of Durban's (South Africa) climate change adaptation options. The approach addresses the inability to compile an accurate damage-cost function for economic prioritizations at the local level. It proposes that uncertainty over climate impacts and the efficacy of adaptation responses, in conjunction with the lack of economic data, high levels of economic informality and inequality make it difficult to link adaptation efforts to positive GDP impact in Durban. Instead, the research based its calculations of "benefits" on the number of people impacted and the extent of the welfare benefits imparted by the respective adaptation efforts. It also took into account the uncertainty over future events, capacity constraints, priorities of decision makers and the risk of maladaptation. The results were reported as benefit-cost ratios for 16 clusters of interventions (many of which were primarily the responsibility of one municipal department or agency) in each of four future scenarios (defined by minor or major climate change and weak or strong socio-institutional capacity). The paper presents and discusses the benefit-cost ratios and total benefits for each of the intervention clusters in each of the future scenarios. It emphasizes how these are influenced by choices of time frames. It also highlights how the most efficient interventions across all futures and time frames tend to be socio-institutional − for instance the creation of a cross-sectoral disaster management forum, sea level rise preparedness and early warning system, and creating climate change adaptation capacity within the water services unit. Ecosystem-based adaptation measures had moderate benefit-cost ratios, probably because in Durban the land that needs to be purchased for this is relatively expensive. Infrastructure-based clusters generally had the lowest benefit-cost ratios.

Early VfM AdaptationToolkit: Delivering value-for-money adaptation with iterative frameworks & low-regret options

“…Previous studies, e.g. Cartwright et al (2013) have found such plans have very high BC ratios and are among the highest priority parts of DRM-adaptation options.…”

“…However, some studies (e.g. Cartwright et al, 2013) highlight that in the context of adaptation, traditional cost-benefit analysis does not capture inequality and the most vulnerable, as it focuses on more valuable assets and groups. Furthermore, conventional CBA focuses on projects for which costs and benefits are more easily defined, such as infrastructure projects, location-specific actions and the introduction of technologies, rather than the social, ecological and institutional interventions.…”

A historical, scaled approach to climate change adaptation: the case of Vietnam

“…Overall, critical reflection on scale in adaptation remains limited. Existing literature tends to focus on adaptation at a particular scale (Cartwright et al 2013;Jeffers 2011) rather than across scales (Adger et al 2005). Attention to the latter is growing, particularly regarding cross-scalar governance of adaptation (see e.g.…”

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“…There are some assessments of forums/institutional strengthening and awareness-raising in the context of disaster risk management and emergency/contingency and response plans. An IDRC-funded study by Cartwright et al (2013) compared these types of institutional options against hard options in Durban in the context of adaptation. The analysis used an adjusted form of CBA, whereby benefits were calculated in relation to the number of people impacted and the extent of the welfare benefits imparted by the respective adaptation efforts, because of concerns about the use of standard cost-benefit analysis and its weighting on monetary metrics, as well as high levels of economic informality and inequality.…”

“…Furthermore, their omission is likely to actually exacerbate the distributional consequences of adaptation responses. Standard cost-benefit analyses does not capture inequality and impacts on the most vulnerable explicitly, and implicitly it often gives greater focus to more valuable assets and groups (Cartwright et al, 2013). Similarly, in aggregate economic estimates of impacts, there is an underestimation of the impact of climate change on subsistence or near subsistence activities (as these are not part of the formal economy), thus the impacts of climate change on livelihoods may be severe without having much impact on GDP.…”