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 Δ Investment & 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 1.Water supply development and cost recovery, probably in a small Western Cape Basin 2.Alternatives for offsetting the impacts of climate change on urban wastewater treatment in Cape Town 3.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.