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High level summary: Simplified real options analysis for climate change adaptation

This research is for planners and decision- makers who are making small to medium infrastructure investment decisions now for a future that is highly uncertain. These investments might be made by local or central government, businesses, or infrastructure management.

The research explores how decision-support methods can better accommodate the uncertainty around climate change, while being as economically efficient as possible.

It focuses on Real Options Analysis (ROA), a method that has gained some attention in adaptation investment appraisal, due to its ability to incorporate and value flexibility in investment decisions. ROA is relatively complex however, and this research examines how alternative, more familiar, approaches, could retain flexibility and economic efficiency without the requirements of ROA.

This summary document presents an overview of the project and the main findings, with more details available in the full research report. It begins with a brief overview of ROA, then a guide to alternatives, followed by the findings from this particular project.

RESEARCH PROJECTS THIS RESOURCE IS FROM

Simplifying real options analysis for climate change adaptation