Estimating and Comparing Costs and Benefits of Adaptation Projects in Africa – Project AF47

1. Estimating and Comparing Costs and Benefits of Adaptation Projects in Africa – Project AF47 Participating organisations: Energy and Development Research Centre, University of Cape Town, South Africa Department of Water Resources, Banjul, The Gambia UNEP Collaborating Centre on Energy and Environment, Risø Denmark Contact persons: Ogunlade R. Davidson: (EDRC) ogunlade@energetic.uct.ac.za Bubu P. Jallow (DWR): bubujallow@hotmail.com Mac Callaway (UCC) mac.callaway@risoe.dk Molly Hellmuth (UCC) molly.hellmuth@risoe.dk

2. Project Background • Increasing emphasis on adaptation by UNFCCC parties • Lack of project level methods for Phase III adaptation projects • Global and domestic needs of A-1 and non A-1 countries to compare benefits and costs of adaptation projects between • Countries • Sectors • Other investments (climate and non-climate) • Lack of analytical and institutional capacity is most acute in Africa

3. AIACC Project Objectives • Modify framework developed for UNEP by Callaway et al (1999) for assessing adaptation benefits and costs at project level • Develop analytical tools and procedures for estimating adaptation benefits and costs at project level • Implement tools and procedures on selected projects • Develop the capacity of African institutions to develop and implement similar tools

4. Task 1- Definition of Methodological Framework • Objective: Further develop conceptual framework for assessing project-level benefits and costs • Based on previous work for UNEP by Callaway et al. • Issues addressed: • Integrate adjustments to climate variability (cv) to adaptation to climate change (cc) • Adaptation benefits of sustainable development projects and“no regrets” projects • Linkages between autonomous and strategic adaptation • Recent developments to framework will be published by OECD

5. Task 2 – Project Review and Selection • Objective: Select projects to be assessed in later tasks (country – sector – project) • Limited to projects that will avoid ”market” damages of cc • Water resources • Agriculture • Potential projects: • Completed development projects • Proposed development projects • Hypothetical projects linked to national sustainable development objectives • Develop and apply screening criteria to select projects

6. Task 3 – Project Definition and Methodology Development • Define project: • Physical characteristics • How it interacts with receptor system • Investment + O&M costs • Development of methods to: • Simulate effects of cc on environment • Simulate effects of environmental impacts on resource management, allocation and investment • Value avoided damages and costs

7. Task 4 – Scenario Development • Objective: To define cv and cc (or impact) scenarios used in the project assessments • Types of scenarios (where relevant) • Existing climate - To estimate project benefits and costs under the current climate (including current cv) and existing options • Partial Adjustment - To estimate project benefits and costs if the climate changes (including changes in cv), but only currently existing options for adjusting to climate variability are in place • Adaptation/Full Adjustment – To estimate the sectoral benefits and costs if the climate changes (including changes in cv) and specific options to adjust to climate change are introduced

8. Task 5 - Data Collection • Objective: To collect data needed to implement the scenarios, models and methods defined in Tasks 3 and 4 • Data needs: • To characterize project construction, maintenance and operation activities and estimate the costs of these activities for each adaptation project • Climatic and geophysical data to implement the various scenarios determined in Task 4 • Data to estimate the parameters of, calibrate, and/or evaluate driver variables in the impact model(s) used for each project • Data to estimate the parameters of, calibrate, and/or evaluate driver variables in the economic/valuation model(s) used for each project.

9. Task 6 – Estimation of Adaptation Costs and Benefits • Objectives: To estimate the costs and benefits (value of damages avoided) by each adaptation project: • Climate change damages: the net value of the damages that would occur if the climate changes and the project is not built, compared to the existing climate scenario • Adaptation benefits: the value of the climate change damages avoided by the project, if the climate changes and the project is built compared to the partial adjustment scenario • Adaptation costs: the opportunity cost of the real resources used to construct, operate and maintain the project • Net benefits of adaptation: Adaptation benefits – Adaptation costs • Imposed costs of climate change: the net value of the damages if the climate changes and the project is built, compared to the existing climate scenario

10. Task 7 - Reporting • Mid-term report – work through Task 4 • Project completion report • Project guidance document for the World Bank • Input to IPCC experts meetings • Peer reviewed publications

11. Relationship to Other Projects • Other AIACC • Potentially there are mutual benefits from co-operating with other AIACC projects • In project identification and selection • Data and model sharing • Sharing results • World Bank • Proposed cooperation on water resources sector • Investigate completed water projects • Provide guidance about how cc can be integrated into regular project assessments by the World Bank

12. PROGESS POINTS

13. 1.   Task 1 (completed): • a.   Paper presented at OECD/will be published • b.  Second framework paper will be prepared for publication • c.   Research to apply the framework in the Colorado & Missouri River Basins is in progress with New Mexico State University

14. Task 2 (in progress): • a.   First stage screening completed in SA and Gambia • b.  Project areas and concepts identified • c.   Alternative methodologies identified for each area/concept • d.  Information search underway to determine what is feasible with existing data/models

15. Task 3 (early progress): • a.   Project definition: This is an iterative task that begins during project selection. Projects are re-defined and refined on an iterative basis as we find out what information is available. • Methods development: During the project identification phase, we are forced to think about what models/methods we need to accomplishment the assessment of each project, since these needs must be consistent with what is available or can be developed within the project budget.

16. Task 4: We won’t begin to work on scenarios until we have identified the projects we are going to assess and the models we are going to use generate physical impacts.

17. Task 5 (early progress): Related to project identification we are in the process of identifying data needed to assess candidate options, including: a.   Characterization of projects b.  Hydrologic data c.   Data needed to “characterize” water demand by different sectors/uses.

18. Task 6: (no progress) Task 7: Progress report submitted