Communicating economics to influence coastal adaptation decision-making

Making good coastal management decisions requires a clear understanding of the financial, social, and environmental value our coasts provide. In the face of increasing threats from coastal erosion and sea level rise the costs of our choices; to protect, adapt, or retreat, must be weighed up against these values. Economic assessment tools such as cost benefit analysis can quantify these values and costs and are therefore a crucial part of coastal adaptation decision-making.

Aither has undertaken economic analysis of coastal management options and adaptation strategies for clients in Australia and internationally. This experience has clearly demonstrated the value of robust analysis but has also shown that stakeholders must have confidence in the analysis if it is to be incorporated in decision-making. Building confidence requires clear and consistent communication of economic concepts, analysis and findings throughout the assessment process.

Robust economic analysis is needed to support decision-making.

Coastal managers are facing important decisions about how to adapt to the current and future effects of climate change. Often these decisions will have implications for communities over many decades, and many will require significant investments. These decisions are also challenging as they often involve trade-offs. For example, protecting private properties may lead to loss of environmental and recreational benefits. In the face of these challenges, decision-makers need to have clear evidence of the costs, benefits and risks of different options, and have confidence in the evidence provided.

Cost benefit analysis is a useful tool as it allows us to quantify and communicate the costs and benefits of adaptation options and strategies, even at an early stage when data is still limited, and uncertainty is still high. Ensuring that decision-makers have a clear understanding of the purpose of the assessment, the assumptions used, and the risks and limitations, will provide them with greater confidence in the findings. This will ensure that decisions are being made that properly reflect the total costs and benefits to the community.

Cost benefit analysis can be used to inform many different stages of the decision-making process. For example, it can be used to identify and analyse specific investment options, or for a higher-level strategic assessment to identify next steps in a broader adaptation pathway. A detailed assessment of specific investment option, such as a seawall, should provide a robust understanding of the costs, benefits and risks of each option. The assessment will provide a clear investment decision for coastal managers. A higher-level assessment may assess the type and magnitude of benefits from broader options such as protection, or retreat, and identify next steps for further investigation, without identifying a specific investment decision.

Clear communication is necessary to build confidence in economic analysis

Aither has extensive experience in economic analysis of complex natural resource management problems. We are committed to ensuring that our analysis consistently delivers value, in particular ensuring that it is used to make better decisions. From our work we have found that the following principles are helpful in building understanding and support for such analysis from stakeholders and decision-makers. These principles are important for all economic analysis however they are particularly relevant for coastal adaptation as, unlike for transport or other major infrastructure investment, there is often limited experience in cost benefit analysis for decision-making.

• Be clear and agreed on the purpose of the assessment. The purpose of the assessment affects the approach taken and the communication of the findings. An analysis of specific investment decisions will require a different approach to a high-level strategic assessment and will provide different information to decision-makers. The purpose and approach to assessment should therefore be agreed with decision-makers at an early stage, to ensure understanding and engagement with the process.
• Clearly outline all the benefits of the coastline or wider area. When undertaking a cost benefit analysis all of the potential benefits should be identified, including those which are intangible or hard to value. Any quantitative assessment should focus on the most material benefits. However, a failure to identify and call out any non-quantified benefits can reduce confidence in the analysis and lead to results being ignored or invalidated. This is particularly important for coastal adaptation analysis, as many of the benefits such as recreation, amenity, and environmental protection are highly valued by the community but can sometimes be difficult to quantify.
• Identify and include all the costs of action and inaction. It is important to identify all the costs of action and inaction. These may often be overlooked or poorly understood. For example, costs of inaction might include property damage from flooding. However, action to remove, relocate or restrict development of properties implies costs to those people who might otherwise have benefited from living in the location.
• Transparently outline all input assumptions. Quantifying all the costs and benefits of adaptation investments may be challenging due to limited data and the availability of non-market values. Assumptions are often used to support or supplement data limitations. However, assumptions must be clearly documented and validated by local experts to ensure that analysis is understood and supported. An example may be recreational visitation data where local expert input can be an invaluable data source and important means of ensuring stakeholder buy in. Where benefits or costs cannot be quantified, they should still be identified and communicated. Using a ‘blackbox’ approach or opaque, poorly understood methods will not provide confidence in findings.
• Acknowledge risk, uncertainty, and limitations. There will inevitably be risks, uncertainty and limitations to any economic analysis. Acknowledging these risks and limitations provides assurance that they have been considered in any recommendations. Often an assessment will only be a first step in an adaptation planning process. Analysis can be updated and improved over time and this can focus on reducing risks or limitations if these have been clearly identified and communicated.

Embedding these principles within economic analysis ensures that decision-makers are well informed and have a clear understanding and engagement with the findings and analysis. Economic analysis should not be done without input and agreement of the approach from key stakeholders and decision-makers. This includes incorporating local expert knowledge in an assessment but also often taking the time to explain economic concepts. This will ensure that better decisions are made about coastal adaptation providing the greatest overall benefits to communities both now and in the future.

Webinar

We will be sharing our insights into economic analysis for coastal adaptation in more detail in our webinar. The webinar will also include common themes from our multiple adaptation assessments, including the adaptation options shown to be most effective in specific circumstances. The webinar will be led by Aither Associate Director and NSW Coastal Council member, Martijn Gough. We will also be joined by Grant Hinner from Noosa Shire Council who will provide specific insights on the development of Noosa’s recently released draft Coastal Hazards Adaptation Plan.