Economic Analysis Of Climate Proofing Investment Projects

Climate change represents an increasing threat to the continued development of the people, preservation of ecosystems, and economic growth of Asia and the Pacific. Mainstreaming climate risk management in all aspects of development is thus key to an effective transition to climate-resilient development pathways. ADB's climate risk management framework aims to reduce risks resulting from climate change to investment projects in Asia and the Pacific. A key step in this framework is the technical and economic valuation of climate-proofing measures. This report describes the conduct of the cost-benefit analysis of climate proofing investment projects. An important message is that the presence of uncertainty about climate change does not invalidate the conduct of the economic analysis of investment projects, nor does it require a new type of economic analysis. However, the presence of uncertainty does require a different type of decision-making process in which technical and economic expertise combine to present decision makers with the best possible information on the economic efficiency of alternative designs of investment projects.

The provision of water supply and sanitation services is particularly vulnerable to projected changes in climate conditions (temperature and precipitation among others), in the frequency and intensity of extreme weather events, as well as and in the projected rise in sea-level and the intensification of storm surges. The process of climate proofing investment projects aims both at assessing the climate risk to a project's future costs and benefits, and undertaking a technical and economic analysis of options to alleviate or mitigate those risks. Accounting for climate change at the outset of the project cycle implies that decisions about project design, and the adoption and timing of climate-proofing measures be informed with the possible impacts of climate change in the initial phases of the project cycle so that decisions of an irreversible nature will be avoided. This publication presents a step-by-step methodological approach to assist project teams in managing climate change risk in the context of water supply and sanitation investment projects.

This publication aims to present a step-by-step methodological approach to assist project teams to incorporate climate change adaptation measures into transport sector investment projects. While the focus of the publication is on the project level, an improved understanding of climate change impacts should also be used in the design of infrastructure planning and development policies and strategies to ensure appropriate resource allocation. Though the transport sector includes roads, waterways, rails, and airborne transport, this publication focuses solely on road infrastructure.

The transport sector is key to the continued economic development of Asia and the Pacific. By improving connectivity and making the movement of goods and people more affordable, transport contributes to economic growth, efficiency, and competitiveness while providing poor people with access to economic opportunities and services. Various components of the transport infrastructure are exposed and vulnerableto climate change. This is of particular concern to countries in Asia and the Pacific which will experience significant adverse impacts from a changing climate. The Asian Development Bank has put in place a systematic framework guiding the conduct of climate risk and vulnerability assessments of investment projects. Ongoing initiatives will address some of the key challenges encountered when conducting climate risk and vulnerability assessments, including access to readily available climate change information.

This publication provides a step-by-step methodological approach to help project teams assess and incorporate climate change adaptation measures into energy investment projects. While the focus of the guidelines is at the project level, an improved understanding of climate change impacts should also be used to incorporate climate change considerations into energy planning and policy at the country level.

This thoroughly revised third edition offers comprehensive coverage of the economics of climate change and climate policy, and is a suitable guide for advanced undergraduate, postgraduate, and doctoral students. Topics discussed include the costs and benefits of adaptation and mitigation, discounting, uncertainty, equity, policy instruments, the second best, and international agreements.

This unique and erudite second edition can be used at three different levels – advanced undergraduate, post-graduate and doctoral. It comprehensively covers the critical issues on the economics of climate change and climate policy features and clearly identifies the specific sections each level of reader should explore. Topics include the costs and benefits of adaptation and mitigation, discounting, uncertainty, policy instruments, and international agreements. Lectures can be combined with exercises, guided reading, or the building and application of an integrated assessment model. The book is accompanied by a website with background material, data, opinion pieces and videos. Although primarily intended for use in the classroom, anyone with an interest in climate policy can use this text as a reference.

Project economic analysis is a tool used by the Asian Development Bank (ADB) to ensure that ADB operations comply with its Charter. The guidelines in this publication are a revised version of the 1997 edition. The revision responds to the changing development context and ADB operational priorities, and aims to address the recommendations of the ADB Quality-at-Entry Assessments for more methodological work on project economic analysis. The revised guidelines provide general principles for the conduct of project economic analysis, and should be read together with handbooks, technical reports, and other reference materials published by ADB dealing with sector-specific project economic analysis in detail.