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Adaptation to an uncertain climate change: cost benefit analysis and robust decision making for dam dimensioning

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  • Hypatia Nassopoulos
  • Patrice Dumas
  • Stéphane Hallegatte

Abstract

Climate models project large changes in rainfall, but disagree on their magnitude and sign. The consequences of this uncertainty on optimal dam dimensioning is assessed for a small mountainous catchment in Greece. Optimal dam design is estimated using a Cost-Benefit Analysis (CBA) based on trends in seasonal temperature and precipitations from 19 IPCC-AR4 climate models driven by the the SRES A2 emission scenario. Optimal reservoir volumes are modified by climate change, leading to up to 34% differences between optimal volumes. Contrary to widely-used target-based approaches, the CBA suggests that reduced rainfall should lead to smaller water reservoirs. The resulting change in the Net Present Value (NPV) of water supply is also substantial, ranging from no change to a large 25% loss, depending on the climate model, even assuming optimal adaptation and perfect foresight. In addition, climate change uncertainty can lead to design errors, with a cost ranging from 0.3 to 2.8% of the NPV, depending on site characteristics. This paper proposes to complement the CBA with a robust decision-making approach that focuses on reducing design-error costs. It also suggests that climate change impacts in the water sector may reveal large, that water reservoirs do not always provide a cost-efficient adaptation strategy, and that alternative adaptation strategies based on water conservation and non-conventional water production need to be considered. Copyright Springer Science+Business Media B.V. 2012

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  • Hypatia Nassopoulos & Patrice Dumas & Stéphane Hallegatte, 2012. "Adaptation to an uncertain climate change: cost benefit analysis and robust decision making for dam dimensioning," Climatic Change, Springer, vol. 114(3), pages 497-508, October.
    • Handle: RePEc:spr:climat:v:114:y:2012:i:3:p:497-508
    DOI: 10.1007/s10584-012-0423-7
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    1. Jeffrey O’Hara & Konstantine Georgakakos, 2008. "Quantifying the Urban Water Supply Impacts of Climate Change," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 22(10), pages 1477-1497, October.
    2. A. Loukas & N. Mylopoulos & L. Vasiliades, 2007. "A Modeling System for the Evaluation of Water Resources Management Strategies in Thessaly, Greece," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 21(10), pages 1673-1702, October.
    3. Stéphane Hallegatte & Philippe Ambrosi & Jean Charles Hourcade, 2007. "Using Climate Analogues for Assessing Climate Change Economic Impacts in Urban Areas," Post-Print hal-00164627, HAL.
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    1. Julia Reis & Julie Shortridge, 2022. "Robust decision outcomes with induced correlations in climatic and economic parameters," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(1), pages 1-23, January.
    2. Hallegatte, Stephane & Shah, Ankur & Lempert, Robert & Brown, Casey & Gill, Stuart, 2012. "Investment decision making under deep uncertainty -- application to climate change," Policy Research Working Paper Series 6193, The World Bank.
    3. Raffaello Cervigni & Rikard Liden & James E. Neumann & Kenneth M. Strzepek, 2015. "Enhancing the Climate Resilience of Africa's Infrastructure," World Bank Publications - Books, The World Bank Group, number 21875, December.
    4. Niu, Yuan & Shah, Farhed A., 2018. "Design and Management of Multi-purpose Dams under Climate Change," 2018 Annual Meeting, August 5-7, Washington, D.C. 274301, Agricultural and Applied Economics Association.
    5. Julie E. Shortridge & Benjamin F. Zaitchik, 2018. "Characterizing climate change risks by linking robust decision frameworks and uncertain probabilistic projections," Climatic Change, Springer, vol. 151(3), pages 525-539, December.
    6. Noémie Neverre & Patrice Dumas, 2016. "Projecting Basin-Scale Distributed Irrigation and Domestic Water Demands and Values: A Generic Method for Large-Scale Modeling," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 1-28, December.
    7. Julia Reis & Julie Shortridge, 2020. "Impact of Uncertainty Parameter Distribution on Robust Decision Making Outcomes for Climate Change Adaptation under Deep Uncertainty," Risk Analysis, John Wiley & Sons, vol. 40(3), pages 494-511, March.
    8. A’kif Al-Fugara & Ali Nouh Mabdeh & Saad Alayyash & Awni Khasawneh, 2023. "Hydrological and Hydrodynamic Modeling for Flash Flood and Embankment Dam Break Scenario: Hazard Mapping of Extreme Storm Events," Sustainability, MDPI, vol. 15(3), pages 1-28, January.

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