One of the potential barriers to an organisation thinking about climate change is the uncertain cost of future impacts. Our Costings methodology helps you to calculate the costs of climate impacts and describes how to compare these to the costs of adaptation measures.
The guidance is aimed at decision-makers and should be used in conjunction with a decision-making framework to take account of climate risks and uncertainties.
The methodology can be applied across a wide range of sectors and geographical scales – the Implementation guidelines include a case study on agriculture and irrigation.
- Step 1: Identify and measure (quantify) climate impacts in physical units – direct impacts of climate change and knock-on effects associated with implications of the direct impacts.
- Step 2: Converting these physical impacts into monetary values.
- Step 3: Calculating the resource costs of the proposed adaptation options.
- Step 4: Weighting up the costs and benefits of the adaptation options, then choosing the preferred option(s) taking account of the risks and uncertainties.
In Step 4, cost-benefit analysis (CBA) can be used to determine whether the total benefits of an adaptation option are greater than the costs. CBA can be used along with other decision support tools, such as multi-criteria analysis, in cases where criteria other than economic efficiency are important.
Techniques such as sensitivity analysis, simulation and interval analysis are also suggested to help understand the sensitivity of the costing assessment to input data and models used, and to key assumptions made.
A simplified spreadsheet version of the costing methodology allows you to explore costs associated with the impacts of overheating and flooding, and includes guidance on how to relate those costs to adaptation measures.
Using the spreadsheet, you will be able to estimate the cost of current and possible future extreme weather events at different geographical scales and in different time periods. The sectors considered are:
- Human health
- Built environment
Please note that the results are indicative only, generating costs for a small number of potential impacts based on two historic UK weather events (winter flooding events of 2000 and the hot summer of 2003).