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Look beyond "cost-benefit" analysis in adaptation

Manila - Police evacuate an elderly couple from a flooded section of suburban Pasig city east of Manila on 28 September 2009
Jason Gutierrez/IRIN

You can put a price tag on the cost of building a dyke to protect people from sea-level rise brought on by climate change, but not on how they will benefit from it, say the co-authors of a new paper calling on countries not to restrict themselves to cost-benefit analysis.

Co-authors Rachel Berger, a climate change policy advisor to Practical Action, an international development charity, and Muyeye Chambwera, a researcher at the UK-based International Institute for Environment Development, said they were prompted to write their paper because countries were in danger of focusing exclusively on the cost-benefit analysis approach.

Quantitative cost-benefit analysis is "information-intensive", making it expensive to use in small-scale projects, so planners at community level usually do not use it. Besides, "Some development NGOs take the view that the local people should usually decide themselves what they want to invest in, using their own criteria," said Berger and Chambwera.

"Most climate change adaptation cost reports produced recently have used the cost-benefit analysis tool," Chambwera noted. What set their alarm bells ringing was the agenda of a recent workshop organized by the Nairobi Work Programme (NWP) on how to use cost-benefit methods for adaptation planning at country and community levels.

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The NWP was set up in 2005 under the UN Framework Convention on Climate Change to help developing countries understand and assess the impact of climate change and help them adapt.

Berger and Chambwera's paper had raised "crucial issues to get us beyond mindless 'plug-and-chug' approaches to using cost-benefit analysis to try to make crucial decisions about whether to take certain actions to adapt to climate change," said J. Timmons Roberts, Director of the Center for Environmental Studies at Brown University, in the US.

"The problem is that in our society the language with the most weight is that of money, so there will always be pressure to reduce the complexity of decision-making to tallying up the costs and benefits in some oversimplified currency metric."

Roberts, who has produced key research on the role of foreign aid in addressing climate justice issues, commented: "The key to me is that for each adaptation action, or non-action, different people reap the benefits from those who bear the costs. For this reason, cost-benefit analysis is indeed nearly useless at the local or even national level."

Chambwera and Berger said they were not discounting cost-benefit analysis, which has its benefits an international scale, and cited the Stern Review on the Economics of Climate Change, produced by economist Nicholas Stern for the British government.

''What set their alarm bells ringing was the agenda of a recent workshop organized by the Nairobi Work Programme (NWP) on how to use cost-benefit methods for adaptation planning at country and community levels''

The "Stern Review's finding that the cost of inaction on climate change is 20 times higher than the cost of action has stimulated international policies, leading to local action around the world," they pointed out. But when countries drew up adaptation programmes they would have to be "informed by other factors, such as risk assessment, and not just by costs and benefits".

The researchers urged the NWP to develop a "toolkit" of various approaches to help countries draw up adaptation programmes, to ensure that the most vulnerable communities were not left out of the loop.

For instance, some economic analyses found that climate change would only affect one percent of Namibia's and Tanzania's gross domestic product, while equity and distributional analyses "revealed that the burden would lie heavily on smallholding farmers and the urban poor".

Roberts noted that "In the US ... [some] climate legislation requires actions be prioritized on whether they are 'cost-effective'. This sounds good, but there are some actions that must be taken to protect the most vulnerable groups, regardless of their payoff in the short term. The question is always, 'Cost-effective for whom?'"

Roberts said the researchers' comment - 'Assuming that adaptation will be sustainable on the basis of a cost-benefit rule alone could be risky' - was crucial.

"The political will to keep spending on an adaptation action through tough economic times is never certain, and this could put some communities at grave risk if they head down a road based on a cost-benefit analysis, done without careful analysis of risks; and of course, many risks are simply unknowable".

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