How do you avoid ‘investment regret’ when future conditions relating to sea levels, storm surge impacts, population growth and land-use are uncertain?
And when multi-functional nature-based investments provide value beyond avoided property damage, their broader economic, social, and environmental benefits are often intangible and hard to quantify.
This is what our economists Liyana Fad'l, Alexandra Humphrey Cifuentes and Alexus van der Weyden are helping APAC governments and water sector participants answer.
We know that many urban areas across Asia-Pacific are at risk of more frequent and intense flooding or coastal inundation.
We start by building on traditional economic evaluation approaches with tools like Real Options Analysis (ROA). Then we can incorporate broader elements of hydro-economic modelling.
This helps decision-makers analyse the value of response actions in the face of significant uncertainty, including the value of resilience and flexibility.
Decision-makers can identify, in their unique situation, the trade-offs between the various pathways over time:
- Relying on reactive decisions once risks have emerged.
- A set of near-term decisions that can adapt to new information as it emerges.
- A set of medium-term decisions that avoid potentially costly and irreversible decisions that could lead to decision ‘regret’ that “lock in” investments.
As an example, Alexandra Humphrey Cifuentes and the team assisted a Department of Education in an Australian State, quantifying the economic value to society of proactive actions that reduce the risk of flood damage on schools in a large flood-affected region in Australia. This value was broader than the avoided damage costs and included productivity benefits from minimising school and travel disruption.
Each flooding or coastal protection location has its own set of unique economic, social and environmental characteristics. It's why each location requires a unique approach, and modelling drawing on the latest in economic techniques. The analysis is informed by local information from other coastal experts including urban designers, engineers, hydrogeologists and ecologists.
For a more detailed look at the approach, our team will be presenting this topic at the upcoming International Association for Hydro-Environment Engineering and Research (IAHR) World Congress, alongside the Singapore International Water Week (SIWW) Spotlight on Flood Resilient Cities.
Please contact Liyana, Alexandra and Alexus for more information on our work in this sector.
VIEW OUR FLOOD RESILIENCE POSTER
