Economics of climate change adaptation in the water sector

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

2011 - 2012

A desert scene with plants growing in rows.

When this project was conceived, it was widely recognised that climate change would affect the water sector of virtually every country in the world, with a wide range of impacts including floods, droughts, saline intrusion and the loss of glaciers. All of these would affect the availability of water to households, agriculture and industry. Adaptation to climate change in the water sector was clearly going to be urgently needed in some countries.

Funding for adaptation had been promised by the international community, but there were many different ways that these resources could be used. Complex decisions had to be made to ensure both that resources were used efficiently, and also that the benefits of adaptation measures were equitably distributed between different stakeholder groups.

Furthermore, effective adaptation required action by multiple stakeholder groups and at different scales. For example, local economic conditions and government policy would both affect the potential actions that householders might take. Different groups would have different priorities and incentives for action. Methods to facilitate effective communication and negotiation between groups would be necessary to avoid the non-engagement of key groups preventing the adaptation of vulnerable groups.

It was inevitable that there would need to be a degree of economic assessment and accountability for adaptation funds from national, bilateral and multilateral sources. Until this project, however, the extent of assessment generally demanded by donors had been beyond the capability of most developing countries. This meant that very little adaptation funding had been successfully transferred to developing countries.

What IIED did

IIED worked with country-based research teams in case study countries to pursue economic analysis using participatory methods. The research brought representatives of major stakeholder groups together, in order to provide a forum for different interests to be considered and balanced.

The aim of this approach – termed stakeholder-based cost benefit analysis – was to support the creation of relevant data sets and allow analysis that took into account the distribution of costs and benefits in a variety of climate change affected water systems. The goal was better and more equitable adaptation planning with widespread acceptance by affected communities and other stakeholders.