Twenty-eighth Report Adapting Institutions to Climate Change Cm ...

Chapter 4
4.42
the future they are expected to occur. The Treasury has in recent years given detailed guidance
on discounting over the long term, especially beyond 50 years, but nevertheless still argues for a
positive discount rate into the indefinite future. This renders very long-term benefits apparently
trivial as seen from today’s perspective. For example, under Treasury advice that discount rates
should decline from 3.5% per year to around 1% per year over long future periods, an event
expected to occur 300 years from now has a perceived value today that amounts to only 0.1% of
the value that would apply if it were expected tomorrow. There are, of course, important ethical
issues of intergenerational equity involved in decisions with implications that extend into the far
future, and no-one imagines that the discount rate can alone bear the weight of major intergenerational
decisions.
The considerations outlined in these last four paragraphs mean that great care needs to be exercised
in applying cost–benefit analysis in adaptation policy making, and that other methods, including
multi-criteria methods and those involving public and stakeholder engagement, are needed as
replacements or supplements.
ADDRESSING THE CHALLENGES
4.43 The previous section has explored the four challenges facing institutions adapting to climate
change: uncertainty, complexity, path dependency, and equity and efficiency. As noted, these
challenges are not unique to adaptation; rather, it is their specific manifestations and pervasive
nature that make adaptation such a difficult issue. What are organisations to do about these
challenges and what actions might they take? A great deal of evidence indicated that organisations
‘need to build their adaptive capacity’, 21 but what does this involve? We believe that there are three
essential and integrated components in building adaptive capacity. These are:
4.44
4.45
4.46
framing – recognising and understanding the problem and challenges of adaptation
(4.50-4.70);
implementation – taking actions both to adapt to climate change and to build the capacity
to adapt (4.71-4.99); and
learning – gathering information and learning about adaptation (4.100-4.118).
When framing, implementing and learning, institutions will inevitably and repeatedly face the
four challenges outlined in the first half of this chapter. Framing, implementing and learning
are explored in more detail below. For each stage, we have identified key elements but have not
attempted to be comprehensive.
Framing adaptation in particular lies at the heart of an effective decision-making process. We
deliberately focus on framing issues as a support to learning and implementation because, as in
all aspects of good risk management, it is essential to include as wide a range of views and values
as possible before coming to a decision.
There are some parallels between successful approaches to climate change adaptation and
established approaches to business management, although the context in which these approaches
take shape is very different in these two settings. Effective businesses recognise that concepts such
as Customer Service Orientation22 and Total Quality Management, 23 together with innovation and
flexibility, must underpin sustained success in delivering products or services. We saw evidence
that these approaches have been successfully used in a water utility. 24 Key relevant principles
include leadership from top management, continual improvement (learning) and employee
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