Adapting to Climate Change: Assessing the World Bank Group ...

CHAPTER 4ANTICIPATORY ADAPTATION4.1 Climate variability—as manifested in storms, floods, and droughts—is a familiarcomponent of risk for investors in many sectors. Climate change is something new. Thissection is a report from the front lines as the Bank Group and others grapple with theimplications for risk management and planning. It starts by asking the normativequestions:When is it important to factor climate change into decision making? When is itnecessary to cast decisions (perhaps literally) in concrete—as in the case of thePadma Bridge—based on anticipated changes over coming decades? When is itsufficient to adapt-as-you-go, as in the case of the Cartagena causeway? When isclimate change simply not an important factor?Where anticipatory adaptation is necessary, what is the basis for decisionmaking? What are the uses and limits of global and regional climate models?4.2 As noted elsewhere (and elaborated here) the answer to the first question is thatanticipatory adaptation is most important for investments or decisions that areinflexible or irreversible, and have long lifetimes or lead times. The section looks athydropower as an exemplar of long-lived, climate-sensitive infrastructure investments.Hydropower is particularly germane because of its well-developed methods for dealingwith climate variability, and because it was singled out for screening in the SFDCC.(Annex E briefly discusses roads.) The section concludes with large-scale, long-rangeplanning issues related to land use and agricultural technologies.Normative Theory of Incorporating Climate Risk into Project Planning4.3 Climate change has two distinctive features that complicate decision making.First, it plays out over decades, with the worst impacts furthest in the future. Second,while the broad outlines of climate change are clear, there is much uncertainty aboutparticular impacts at particular locations. This brings to the fore three dimensions ofdecision making: incorporating flexibility, discounting future costs and benefits, andprojecting future conditions.FLEXIBILITY4.4 Projects are more affected by climate change (relative to climate variability) if theyare long-lived and expensive to adjust or retrofit. Table 4.1 motivates the choice of thethree sectors chosen for discussion in this chapter. Short-lived projects will not seemuch change in their fundamental economics due to climate change and may need tofocus much more strongly on climate variability. Road surfaces, for instance, aretypically rebuilt every 15 or 20 years and can be adjusted to meet current climatic andtraffic conditions. The causeway in the Port of Cartagena can easily be raised when sea62