1. Cost benefit analysis of climate change: coping with risk, uncertainty and policymaker’s preference changes Roel Jongeneel (coord., LEI), Martijn vd Heide (LEI, PBL), Kees van Kooten (Univ.of Victoria, Ca), René Verburg (LEI-WOT) SELS & KB2 4 November 2008

2. Project aims 1) SCBA methodology for climate change 2) How to apply SCBA to an ecosystems approach? 3) Valuation and its evolution: a critical assessment 4) A case study: water storage, biodiversity, bio- energy (climate change: adaptation & mitigation) 5) Risk assessment: explore different approaches (note) 6) Policy preference shifts and SCBA

3. SCBA methodology and climate change

4. Apply CBA to ecosystems approach Established conventional wisdom: don’t mix up direct and indirect effects (avoid biased measurement and flawed analysis) Main exemption: jointness in production (e.g. multifunctionality model of the EC) Ecosystem services: Connectedness / jointness Non linearities (complex interactions, tresholds, …) Uncertainties Ecosystem => functions => goods & services <= valuation

5. Valuation: critical assessment Public and private goods & services Public and private preferences (policy vs. people) The limits of aggregation Historical evolution of valuation techniques and some lessons drawn from this Critical assessment of some valuation studies

6. Case study: water, biodiversity, bio-energy Climate change: temperature & water Adaptation: phased deployment of water (storage/retention, river discharge, sea or IJsselmeer) Mitigation: renewable energy (10% in 2010; bio-energy share >40%) Biodiversity (WTP, AES) Water purification and buffer (drought)

7. Risk What is it: risk (some notion), uncertainty (unforeseen, unknowable a-priori), ‘in between’ (Bayesian probs might be constructable) Decision criteria No info: Pessimism (MaxMin), Optimism (MaxMax), Regret (Min MaxRegret) Info: Expected value, Expected opportunity cost Risk and SCBA (fuzzy CBA, MCA, …)

8. Shifting policy preferences Valuation and (relative) scarcity Interaction of supply, demand and policy Welfare economics: valuation depends on preferences (SWF) Example: bio-energy policy & food crises Examples: role ‘accidents’ in policy formation (risk, endogenous preferences)

9. Outputs Note on methodological issues Paper (scientific article submission) on case study Congress presentations (EAAE 2008 Ghent; paper + OS Climate Change) Toolkit (excel + matlab chain) Note on risk treatment Recommendations wrt to research agenda

10. Thank you / Questions © Wageningen UR