Introduction

In this chapter we explore the extent to which the measures of value incorporated in cost–benefit analysis (CBA) can be utilised to guide decision-making in adapting to climate change. Our motivation derives from the fact that whilst CBA is now a key element in the project and policy appraisal process in a number of European sectoral contexts (for example air quality in Europe: Holland et al., 2005), the timescales over which climate change adaptation considerations range are beyond those normally considered in such appraisals. As a result, the assumption normally made that unit monetary values utilised in CBA should be based on current preferences and resource scarcity patterns is questionable. Using stated preference techniques Layton and Brown (2000) begin to explore this issue in the context of greenhouse gas mitigation. This chapter pursues this further in the context of adaptation to climate change. Adaptation is understood here to include the spectrum from specific actions, or options, designed to mitigate specific climate risks, to the socio-economic and cultural conditions (i.e. adaptive capacity), that facilitate adaptation to the full range of identified climate change risks. Decisions relating to the adaptation to climate change risks can then be seen to include both sectoral-specific responses and those that shape social and economic development more generally.

The chapter addresses three aspects of CBA related to preference revelation that are applicable to the long time horizons relevant to decisions related to adaptation but which have not been discussed in this context to date.