Mac Callaway AIACC African Workshop March 13-15, 2002

1. Estimating and Comparing Costs and Benefits of Adaptation Projects in Africa – Project AF47: Technical Progress Mac Callaway AIACC African Workshop March 13-15, 2002

2. Benefit-Cost definitions for Adaptation Assessments • Climate change damages – the net economic loss that occurs if climate changes, relative to the reference case (no climate change, no project). • The benefits of adaptation – the reduction in climate change damages, relative to the reference case if the project is implemented (i.e., the climate change damages avoided by the project). • Adaptation costs – the real cost of the additional resources used to derive the project’s adaptation benefits. • The net benefits of adaptation – adaptation benefits minus adaptation costs. • Imposed costs of climate change – the net economic losses due to climate change that can not be avoided by the project.

3. What we are doing • Developing analytical tools and procedures for estimating adaptation benefits and costs at project level • Implement tools and procedures on selected projects, we are identifying, in • water resources and/or • agriculture • with focus on benefits from “market” activities • Potential candidate projects: • Completed • Planned/proposed • Hypothetical • Development and other “no regrets” projects • “Pure” CC adaptation projects (if there is such a thing)

4. Climate Change - Environment- Behavior Interactions ΔInvestment & Management Climate Δ Δ Net Primary Production Production Δ Goods and Services & Resource Allocation Δ Investment & Management Δ Resource Supply

5. Preliminary Project Concepts: South Africa • Water supply development and cost recovery, probably in a small Western Cape Basin • Alternatives for offsetting the impacts of climate change on urban wastewater treatment in Cape Town • Improvement of on-farm management to adjust to climate variability, probably in the Thukela Basin.

6. Preliminary Project Concepts: The Gambia • Options for controlling the salt water tongue in the lower Gambia River: • Construction of dykes • Upstream flow regulation • Water reallocation • Revision of zoning/design standards • Flood plane zoning • Salinity risk zoning • Updating building codes

7. Problem Areas • Translating adaptation options into projects • Defining project boundaries/participants • Developing an implementation plan • Linking policy measures to incentives to adaptation actions • Paucity of models and data for: • Resource allocation/water demand • Valuation of inputs/outputs • Especially a problem with non-commercial agricultural sector

8. Solutions • Keep searching for information about: • Specific projects that fit our needs • Existing studies/models/data related to: • Water demand and valuation • Water allocation • If that fails • To shift our focus more in the direction of options instead of projects • Focus more on valuing climate change damages, avoided damages and the imposed cost of climate change at a larger scale.

9. The Concept Behind our Approach • In agriculture and water resources infrastructure and “management” are always adapted to, or adjusting to, existing climate variability (using available information). • The greater the variability, the more it costs to adjust both infrastructure and management to the “existing climate”. • But will probably be less costly for areas with high CV to adapt to CC compared to areas with low CV • When CC can’t be detected reliably, people adjust to CC as if it were CV using short-run measures, leading to partial adjustment. Benefits depend on • Existing CV • Overlap between CV and CC • When CC is detected reliably, there are greater opportunities to adjust capital stocks (long-run measures), leading to full adjustment.