Portfolio Analysis is suggested as a potentially useful decision-support technique in the climate change adaptation context since it is judged that it may be wise to adopt a range of alternative adaptation measures that, between them, can be effective across the range of uncertainty.

This approach has been formalised in portfolio theory which has its origins in financial asset management.

The theory utilises the principle that since individual assets are likely to have different and unpredictable rates of return over time, an investor should ensure that she maximises the expected rate of return and minimises the variance and co-variance of her asset portfolio as a whole rather than aim to manage the assets individually.

The following excel document includes main steps to involve in undertaking in Portfolio Analysis. It combines the estimate the Expected Net Present Value and the variance of the Net Present Value.