Economics of climate change adaptation in the water sector

This project explores pilot economic research to support climate change adaptation in the water sector of developing countries. It also aims to build the capacity of developing country economists to contribute to action research.


It is widely recognised that climate change will impact upon the water sector of virtually every country in the world. The nature of these impacts are very wide ranging including floods, droughts, saline intrusion and the loss of glaciers. All of these affect the availability of water to households, agriculture and industry. Adaptation to climate change in the water sector is clearly going to be urgently needed in effected countries.

Funding for adaptation has been promised by the international community. There are however multiple ways these resources could be used. Complex decisions will have to be made that ensure both that resources are used efficiently, but also that the benefits of adaptation measures are equitably distributed between different stakeholder groups.

Furthermore, effective adaptation requires action by multiple stakeholder groups and at different scales. Available actions by householders for example are facilitated both by local economic conditions and government policy. Different groups have different priorities and incentives for action. Methods to facilitate effective communication and negotiation between group will be necessary to prevent the non-engagement of key groups preventing the adaptation of vulnerable groups.

It is inevitable that there will need to be a degree of economic assessment and accountability for adaptation funds from national, bi-lateral and multi-lateral sources. To date however the extent of assessment generally demanded by donors has been beyond the capability of most developing countries to fulfil. As such very little adaptation funding has been successfully transferred to developing countries.

iied's approach

iied is working with country based research teams in case study countries to pursue economic analysis using participatory methods. These will representatives of major stakeholder groups together and provide a forum for different interests to be considered and balanced. This approach is being termed Stakeholder based Cost Benefit Analysis.

It is hoped that such an approach will support the creation of relevant data sets and allow analysis that takes into account the distribution of costs and benefits in a variety of climate change affected water systems. This should result in better and more equitable adaptation planning with widespread acceptance by effected communities and other stakeholders.


Project Flyer

Synthesis report

Guidance report

Bangladesh country case study

Bolivia country case study

Malawi country case study

Morocco country case study

Morocco briefing paper

Nepal country case study


Analysing the cost of adapting to climate change - an interview with partners


International Development Research Centre