The critical services provided in our cities and communities are subject to growing uncertainty, many of which are physical risks.
Examples of these uncertainties and risks include:
- acute or chronic climate risks such as droughts, heatwaves, flooding, storms, bushfires, or rising sea levels;
- growing but uncertain demand that can strain our ability to provide critical community services; or
- the threat of invasive species and the need for protection of our food security or natural habitats.
Enhancing community resilience involves strengthening our cities and regional communities to withstand, recover from and adapt to these future challenges. This includes strengthening the systems used to deliver essential services — like transport, energy, water, food and health systems and other social services. It can involve investment in a range of ‘hard’ infrastructure (both manmade and natural green/blue infrastructure) and/or ‘soft infrastructure’, as well as investment in people and processes.
Resilience measures are increasingly important in a changing world. Yet there is no single measure that addresses the range of uncertainties our communities face. All actions involve costs or opportunity costs and can provide different benefits to the community – often in the form of avoided economic, social or environmental costs that would otherwise be borne by the community from these risks.
It is critical that decision-makers have the tools to identify where, when and how we should be investing in enhancing resilience.
Economics can help you prioritise these measures by providing robust frameworks and quantitative analysis to help you successfully ‘make the case’ for investment. For example, economic tools can help answer:
- What is the value of enhanced resilience and adaptation in our communities?
- What actions maximise this value?
- Who benefits from these actions?
- Who should contribute to the funding of these actions?
- What frameworks are best placed to monitor delivery of these actions?
What are the problems we are trying to solve?
Clients come to us because they’re looking for actionable, evidence-based analysis and strategies to protect critical services, make resilient investments, and navigate uncertainty. We support them to make informed decisions, avoid costly mistakes – either by overinvestment or underinvestment - and embed resilience into planning, policy and regulation.
Questions we have helped clients answer include:
- How do we embed consideration of investment in resilience into economic regulatory frameworks that govern expenditure and prices for our essential services?
- Where should we prioritise investment in critical freight routes, urban water treatment systems, energy transportation and flood mitigation infrastructure to bolster resilience against natural disaster events?
- How do we value the benefits from actions to enhance resilience to urban heat in our cities (such as integrated planning of our natural and built environment covering blue, green, and grey infrastructure), and who should fund these actions?
- What is the value of native forests and what would a forestry transition and regional employment plan look like to end native forest logging?
- What are the feasible options for the aviation sector to decarbonise by 2050?
- How many is too many? The balance of feral horses, deer and other invasive populations on the sustainability of national parks and environments.
Our partnerships with other resilience experts
Solving these challenges requires multi-disciplinary skills and experiences.
We work closely with climate scientists, engineers, ecologists, planners and other policy experts to inform our economic analysis, build our economic models, and communicate our recommendations. Together, these perspectives, and their data, provide the evidence base we need as economists to assess trade-offs, value co-benefits, and design cost-effective and equitable resilience strategies.
Economic tools for climate adaptation and resilience
We apply a suite of economic tools to support adaptation and resilience decisions under uncertainty. Including:
- Cost-benefit analysis that incorporates key economic relationships between actions and economic, social and environmental outcomes to assess the cost-benefit trade-offs of different options. This can involve hydro-economic modelling when analysing options to enhance resilience to droughts or floods.
- Real options analysis and quantitative adaptive pathway analysis to value the ability of actions such as staged investments to respond flexibly to evolving conditions and new information. In an environment of uncertainty this can minimise the exposure to large irreversible and potentially costly decisions.
- Valuing natural assets and ecosystem services: Using economic techniques to quantify and monetise the costs and benefits of wetlands, forests, water systems, etc., in protecting against floods, heatwaves, or droughts and capturing the costs of climate risks (e.g. flood damage) that markets don’t price properly.
- Financial economics to guide funding strategies for the resilience and adaptation measures identified. Whether this includes asset pricing, risk and return trade-offs, or identifying carbon pricing strategies.
- Socio-economic linkages for understanding impacts distributed across a community or region (such as drought or invasive species) and actions that can best support stakeholders such as customers, residents, industries/business and the broader economy.
- Regulatory advice to design and incentivise efficient investment in climate adaptation and resilience, including decisions on how the costs of these investments should be funded over time, and by whom.
- Transition planning: Balancing complex priorities under uncertainty. Initiatives need to be considered across an organisation’s activities and geographies over time, and getting the balance right requires data and analysis.
