Paving the Way for Climate-Resilient Infrastructure - UN CC:Learn

Chapter 4: A ‘No-Regrets’ Risk-Based Approach to Climate Proofing Public Infrastructure12Weisbach and Sunstein (2008) claimthat resource allocation decisionsshould be used using the marketdiscount rate (adjusted for uncertainty)and refer to Weitzman (2007), whoclaims that the discount rate alsomust be adjusted for uncertaintyand possible catastrophic risk fromclimate change. This means theyare advocating discounting at themarket rate (properly adjusted foruncertainty and catastrophic risks).Thus Weisbach and Sunstein (2007),Weitzman (2007), and Nordhaus(2007) provide economic argumentsthat strongly support a no-regretsapproach, in which they propose thatthe discount rate should be used toidentify forward-looking high-return toefficiently and equitably manage thepotential direct and indirect impactsof climate change, with a focus onthe poorest and most vulnerablehouseholds and communities.Probabilistic risk modeling: Risk modeling should be methodically conducted along withscenario testing since it brings together hazard, vulnerability and capacity assessments, whichinvolve different types of data in different units of analysis. Reasonable alternatives should beassessed and prioritized.Climate-proofing assessment: Together with the risk analysis, there should be an assessmentthe economics of different climate-proofing options. There is a need for integrated economic,engineering and environmental analyses to assess the benefits and costs of alternative climateproofingoptions under varying assumptions about hazards, vulnerabilities and capacities.In many cases traditional cost-benefit analyses are replaced by more eclectic analyticalmethods and/or application of cost-effectiveness methods. Choosing an appropriate discountrate is important. The discount rate should be based on the market rate, but also includeallowance for uncertainty and catastrophic loss. In this manner, the discount rate is not zero,but can be sufficiently low to allow for greater intergenerational equity and justifications of longtime horizons. 12Territory-based climate-proofing plans: Combining stakeholders’ objectives of the climateproofingexercise and the results of the probabilistic risk modeling, it is possible to bring theCCA/DRM plans into the planning context at the appropriate level(s). This will include decisionsabout climate-proofing actions, including hardware and software. Also, this would include plansfor financing the infrastructure and institutions, EWS and emergency response, and alternativefinance and insurance mechanisms to lessen losses after a hazard event occurs.Establish EWS: There is a need to generate and disseminate timely and meaningful warninginformation to enable individuals, communities and local governments threatened by a hazardto prepare and act appropriately with sufficient time to reduce the possibility of harm or loss.EWS include four basic components: knowledge of the risks; monitoring, analysis and forecastingof the hazards; communication or dissemination of alerts and warnings; and local capabilities torespond to the warnings received. The expression ‘end-to-end EWS’ emphasizes that warningsystems needed to span all steps, from hazard detection to community response.M&E: This is a critical part of the process and should be linked to the EWS. Based on the analysesfor climate-proofing decisions, there is a constant need to update data and assess how climateproofing is performing in reality. Does climate proofing provide no-regrets benefits or is it anunwelcome cost burden? Are residents in the area less or more exposed to hazards? Are theresufficient risk management instruments available to residents?Reflections and feedback mechanisms: It is important to document and discuss majorsuccesses and key challenges and difficulties involved with making infrastructure climate proof.Stakeholders should consider this information as well as lessons learned.30Paving the Way for Climate-Resilient Infrastructure: Conference Proceedings