Uncertainty in the Economic Appraisal of Adaptation

Abstract Economic appraisal is often used by governments and public sector organisations in the development of policies, plans and programmes. It uses well-established techniques to assess the case for action and can also be used to assess alternative options to support prioritisation. However, there are challenges in applying conventional economic appraisal to adaptation, not least due to uncertainty. This chapter discusses these issues, and in response, it sets out a framework for prioritisation of adaptation using economic principles. This framework can be used to identify types of adaptation problems and the appropriate economic decision-support approach. This includes the use of traditional economic appraisal for no- and low-regret options, as well as more complicated decision-making under uncertainty when there are lock-in risks or the need for adaptive management or pathways. Finally, the chapter identifies suggestions for further work in this area, with the need to build and share portfolios of case studies identified as a key priority.