Integrating distributional objectives in the cost:benefit analysis of adaptation options

Context

In adopting measures to adapt to climate change, adaptation options need to be based on robust assessment approaches which allow for the allocation of scarce resources. An important part of this process involves determining the costs and benefits of adaptation options in order to reduce vulnerability, enhance adaptive capacity and build resilience.

Applying alternative discounting rules: The equivalency principle

Context

Discounting is especially relevant in the context of climate change as it requires addressing long term and intertemporal decision-making. From an economic perspective, intertemporal choices have been assessed during the last 80 years using the discounted utility model, formulated by Samuelson (1937). The discounted utility model is based on the assumption that people make decisions by assessing its (positive or negative) consequences in a similar way to how the market evaluates gains and losses.

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