Accounting for uncertainty in cost benefit analysis: A generalised framework for natural hazard adaptation in the coastal zone

The social, economic and environmental vulnerability of communities to natural hazards such as coastal inundation, riverine flooding and water security is increasing through the cumulative effect of different climatic and non-climatic factors. Formulating a basis upon which to make adaptation decisions (whether project or policy related) to strengthen community resilience to natural hazards is challenging, with uncertainty present in many data inputs. Sources of uncertainty include site-specific climatic projections, current economic and social cost-benefit valuation methodologies along with varying community preferences. Various adaptation 'frameworks' have been put forward in the published literature. However, practical guidance for decision-makers looking to adapt to the climatic hazards can be unclear, with many different information sets being used, various data sources available, ambiguity on risk ownership and the influence of local political environments. A further challenge faced by stakeholders in following adaptation frameworks is the variability in methodologies and assumption used to define inputs to cost-benefit analysis. This paper discusses established adaptation frameworks and considers how changing natural hazards could be accounted for in cost-benefit analysis using common methodologies. We construct synthetic damage curves for riverine flooding to illustrate how risk-based damage estimates can be determined from natural hazards in future climate scenarios and compared with the benefits of adaptation. The paper finishes by identifying key challenges and future directions towards a generalized adaptation framework to help build resilience and manage the risks against changing natural hazards.