Page - 296 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

296 W.J.WouterBotzenet al. Fig.12.5 Performanceofseveraladaptationmeasuresandstrategiesinreducingthefutureimpacts of sea level rise, compared to the situationwithout adaptation (Business-as-usual,BaU).The risk isdisplayed in termsof theexpectedannualdamage (notdiscounted), for thepresentandfor three combinations of scenarios in the years 2050 and 2100: RCP4.5 and SSP2, RCP8.5 and SSP5, RCP8.5High-End (H.E.) andSSP5. SourceModified fromScussolini et al. (2017) 12.3 Cost-BenefitandMulti-criteria Analysis of Risk ManagementOptions—Case Studies from Ho Chi MinhCity and TheNetherlands After conducting an assessment of natural disaster risk and identification of risk managementoptions, theseoptionscanbeappraisedusingmethodslikecost-benefit analysis (CBA).CBAisawidely-usedtool forprioritisingprojects,byassessingthe project’s net benefits to society. In an application to natural disaster risk,CBAcan makeuseof natural disaster risk assessmentmethods that canestimate thebenefits (avoidednaturaldisaster losses)ofriskmanagementoptions.Thebasicquestionthat isaddressedbyCBAis:willsocietyasawholebecomebetteroffbyundertakingthis project rather thannotundertaking it, orbyundertaking insteadanyofanumberof alternativeprojects? (Mishan1988).CBAisoftenused to assess andprioritise risk management options:what are the net benefits to society of this particular option, shouldweimplement itor shouldwechooseanyofanumberofalternativeoptions, including the oneof doingnothing? InCBAall the expected advantages (benefits) anddisadvantages(costs)ofaprojectareexpressedinmoneyterms,sothat theycan becomparedand thenetbenefits (benefitsminuscosts) canbecomputed. ACBAofaproject ideally identifiesall costs andbenefits for all parties that are affectedbytheprojectoverthelifetimeoftheproject.Theexpectedcostsandbenefits are thenvalued inmonetary termsand the costs andbenefits in future timeperiods discountedbyanappropriatediscountrate.Finally, thediscountedcostsandbenefits are aggregated intoone summary statistic: net present value (NPV), benefit-to-cost ratio (BCR)or internal rateof return (IRR).