A cost benefit approach to adaptation options and disaster risk management

Asian Development Bank, 17 November 2011, Manila

Ivo Menzinger Managing Director Global Partnerships

picture of extreme event

Tohoku ts unami 2 0 1 1 ; s ource and copyright: SOS Earthquake s

Adaptation is only one element of a compre he ns ive ris k re s ponse s trate gy

Managing total climate risk requires a cost-effective adaptation portfolio

Portfolio of responses

Hazards

Infrastructure and asset- based responses Technological and procedural optimization responses Systemic and behavioral responses Risk transfer and contingent financing

Value

Example Maharashtra, India Adaptation strategies in a climate change context

State of Maharashtra:
Cost/benefit 1 1.0 0.8 0.6 0.4 0.2 0 0.01 200 -0.16 0.02 400 600 0.11 800 0.12 0.12 Irrigation controls Drip irrigation Crop engineering (ir) Integrated Pest Mgmt. (ir) Crop engineering (rf) 0.73 Insurance Risk transfer Residual loss

> 1.00

80% of the expected loss

100% of the expected loss

-2.2 -0.18

1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 Watershed +rwh Averted loss (M $) IPM Rainfed Sprinkler irrigation

Drainage systems (ir) Soil techniques Drainage systems (rf)

Risk transfer measures are effective for low-frequency, high severity events Through providing a price signal to risk, insurance reduces total risk

1 Estimated present value out to 2030 at 2009 dollars

Conclusions

A comprehensive risk response strategy comprises mitigation, adaptation, and transfe r of risk. Adaptation options include be havioural, te chnological, infrastructure , and financial re sponse s. A syste matic cost-be ne fit analysis of available adaption options provide s a sound basis for de cision making.

Thank you

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