The added value of real options analysis for climate change adaptation

Wreford, Anita; Dittrich, Ruth; Pol, Thomas van der

doi:10.1002/wcc.642

Cited by 16 publications

(9 citation statements)

References 48 publications

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“…The standard lists a range of decision‐making approaches that permit one to address the uncertainties in climate predictions in undertaking adaptation planning (ISO, 2019a): adaptation pathways (Quinn et al, 2018); decision mapping (Bouchart et al, 2002); dynamic adaptive policy pathways (Haasnoot et al, 2013); robust decision‐making (Kunreuther et al, 2013 and references therein); and adaptive policy making (IISD, 2007). Other potentially useful decision‐making approaches are also listed: cost–benefit analysis and cost‐effectiveness analysis (Kunreuther et al, 2014); multi‐criteria analysis (Jones et al, 2014); real options analysis (Buurman & Babovic, 2016; Wreford et al, 2020); expert judgment (Oppenheimer et al, 2016; Thompson et al, 2016); systems approaches (Keller, 2015); and planning scenarios (Galy, 2019). Though not explicitly mentioned in ISO 14090, the use of storylines (Shepherd et al, 2018) is a further option, having some commonality with scenarios.…”

Section: Risk Assessmentmentioning

confidence: 99%

Implications of climate change for railway infrastructure

Palin

Stipanović

Gavin

et al. 2021

WIREs Climate Change

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Weather phenomena can result in severe impacts on railway infrastructure. In future, projected changes to the frequency and/or intensity of extreme weather events could change weather–infrastructure risk profiles. Infrastructure owners and operators need to manage current weather impacts and put in place adequate plans to anticipate and adapt to changes in future weather risks, or mitigate the impacts arising from those risks. The assessment of the risk posed to railway infrastructure from current and future weather is dependent on a good understanding of the constituent components of risk: hazard, vulnerability, and exposure. A good understanding of the baseline and projected future risk is needed in order to understand the potential benefits of various climate change adaptation actions. Traditional risk assessment methods need some modification in order to be applied to climate change timescales, for which decisions need to be made under deep uncertainty. This review paper highlights some key challenges for assessing the risk, including: managing uncertainties; understanding weather‐impact relationships and how they could change with climate change; assessing the costs of current and future weather impacts and the potential cost versus benefit of adaptation; and understanding practices and tools for adapting railway infrastructure. The literature reveals examples of progress and good practice in all these areas, providing scope for effective knowledge‐sharing—across the railway infrastructure and other sectors—in support of infrastructure resilience and adaptation. This article is categorized under: Assessing Impacts of Climate Change > Evaluating Future Impacts of Climate Change

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Section: Risk Assessmentmentioning

confidence: 99%

Implications of climate change for railway infrastructure

Palin

Stipanović

Gavin

et al. 2021

WIREs Climate Change

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“…Although this approach is already widely applied, future work should also build on decision‐making under deep uncertainty and promote flexible adaptation such as learning scenarios, real options analysis, and decision tree analysis (Marchau et al, 2019). This means that despite the large uncertainties, adaptation plans that minimize under‐ or overadapting (Hinkel et al, 2019; Wreford et al, 2020) such as building too high or too low, over‐ or underrelocating or over‐ or underreliance on nature‐based adaptation can be formulated. Given that the uncertainties of SLR are universal, these approaches will probably be widely applicable around the world's coasts, especially in coastal cities with high values and growing flood risk (Hallegatte et al, 2013; Nicholls et al, 2015).…”

Section: Discussionmentioning

confidence: 99%

“…No action is a valid decision, but this should arise from analysis rather than ignorance and inertia. The no action option is available in all types of adaptation decision framing, although its treatment will be different in methodologies that explicitly consider the value of delaying decisions such as real option approaches (Woodward et al, 2014; Wreford et al, 2020).…”

Section: Revision/updating Process Of Sea‐level Scenarios For Risk An...mentioning

confidence: 99%

Integrating new sea‐level scenarios into coastal risk and adaptation assessments: An ongoing process

Nicholls

Hanson

Lowe

et al. 2021

WIREs Climate Change

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The release of new and updated sea‐level rise (SLR) information, such as from the Intergovernmental Panel on Climate Change (IPCC) Assessment Reports, needs to be better anticipated in coastal risk and adaptation assessments. This requires risk and adaptation assessments to be regularly reviewed and updated as needed, reflecting the new information but retaining useful information from earlier assessments. In this paper, updated guidance on the types of SLR information available is presented, including for sea‐level extremes. An intercomparison of the evolution of the headline projected ranges across all the IPCC reports show an increase from the fourth and fifth assessments to the most recent “Special Report on the Ocean and Cryosphere in a Changing Climate” assessment. IPCC reports have begun to highlight the importance of potential high‐end sea‐level response, mainly reflecting uncertainties in the Greenland/Antarctic ice sheet components, and how this might be considered in scenarios. The methods that are developed here are practical and consider coastal risk assessment, adaptation planning, and long‐term decision‐making to be an ongoing process and ensure that despite the large uncertainties, pragmatic adaptation decisions can be made. It is concluded that new sea‐level information should not be seen as an automatic reason for abandoning existing assessments, but as an opportunity to review (i) the assessment's robustness in the light of new science and (ii) the utility of proactive adaptation and planning strategies, especially over the more uncertain longer term. This article is categorized under: Assessing Impacts of Climate Change > Scenario Development and Application

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“…While a number of excellent working papers and book chapters have been published analyzing strategies for adaptation and mitigation, the publications for review in this manuscript were limited to peer‐reviewed journal publications and conference papers. Reviews of existing literature (e.g., Dittrich et al., 2017; Hill, 2012; Jones et al., 2020; Sala & Bocchi, 2014; Wreford et al., 2020), and publications deemed irrelevant to flood management (e.g., A. F. Bennett & Hughes, 2009; Subbiah, 2003; Tschakert et al., 2016) were also excluded.…”

Section: Methodsmentioning

confidence: 99%

A Review of Decision Making Under Deep Uncertainty Applications Using Green Infrastructure for Flood Management

Webber

Samaras

2022

Earth's Future

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Decision making under deep uncertainty (DMDU) approaches are well‐suited for making decisions about infrastructure to manage flooding exacerbated by climate change. One important system for climate resilience and flood management is green infrastructure, which refers to a network of natural and semi‐engineered areas that provides ecosystem functions. Green infrastructure is often characterized as a low‐regret strategy with multiple co‐benefits under uncertainty. These attributes enable green infrastructure to be an important adaptation strategy under DMDU frameworks for flood management. However, DMDU analyses that include green infrastructure are still relatively limited, perhaps due to computational or modeling complexity and other barriers. This paper identifies and reviews publications in the flood management literature that use DMDU frameworks and refer to green infrastructure adaptation strategies, in order to identify trends and inform future research. The reviewed publications are categorized according to a variety of performance metrics, climate change scenarios, DMDU metrics, and hydrologic modeling techniques, and represent several adaptation strategies applied to case studies on five continents using a range of data sources and assumptions. This paper highlights a number of solutions that can be employed to facilitate additional research at the intersection of these fields. Primary among these is the transparent documentation and use of open source models, methods, and data. Future research should also focus on communication among different stakeholders, particularly in ensuring definitions, assumptions, and data requirements are clear. These partnerships can facilitate effective application of robust strategies such as green infrastructure for urban adaptation to the effects of climate change.

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The added value of real options analysis for climate change adaptation

Cited by 16 publications

References 48 publications

Implications of climate change for railway infrastructure

Implications of climate change for railway infrastructure

Integrating new sea‐level scenarios into coastal risk and adaptation assessments: An ongoing process

A Review of Decision Making Under Deep Uncertainty Applications Using Green Infrastructure for Flood Management

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