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

APPENDIX FANALYTIC WORK ON CLIMATE ADAPTATIONF2. Methodological Weaknesses in Estimates of the Returns to HydrometinvestmentStudies that estimate the economic returns to hydromet investments often contain anumber of methodological weaknesses:They ignore benefits from reductions in deaths or injuries. It would bepossible to assess these benefits using existing willingness-to-pay formortality reductions in health service, traffic safety, etc.They usually consider only benefits from reduced damages, withoutconsidering benefits from reduced business disruption, or benefits fromopportunities that may become available given reliable weather forecasts.Studies often do not consider the full costs involved. They attribute the fullbenefits of reduced disaster damage to the warning system (which sometimesseems to consist of just the computer system, model, and a handful of staff)without considering any of the complementary investments (such as cycloneshelters, communication systems, etc.) that may be required in order for thosebenefits to be realized.Some studies do not discount benefits when calculating benefit-cost ratios:they compare an upfront investment cost to the nominal stream of benefitsthat come in a stream over time.There is dramatic variation in the time horizon; studies might assume thatannual benefits will occur for as little as 5 years or as much as 19. This makescross-study comparison difficult.Some estimates include benefits that could not reasonably be attributed to thewarning system, like the reduction in damage to houses from windblowntrees from better maintenance of trees (unless the trees are maintained onlyonce the warning is received).Many key parameters are based on guesses or assumptions. They sometimesrely on arbitrary estimates of the disaster risk and return period, whenexamination of the historic record could give a more accurate estimate. Theproportion of potentially preventable losses that will be achieved by a givenhydromet investment is often arbitrary.All studies are ex ante. Some form of ex post validation would increase theconfidence that prospective benefits are attainable.120