Costs and coasts: an empirical assessment of physical and institutional climate adaptation pathways

Adaptation Research Grants Program
Ryan McAllister

Executive summary from final report:

The distribution of coastal inundation risk varies depending on physical factors, such as the risk of storm surge, sea level rise projections, and the topography of the landscape, as well as socioeconomic factors, such as the level to which the area has been developed and the capacity within the community to adapt. Even within a community, the spatial distribution of both inundation risk and the benefits of various adaptations may be very finely structured, affecting some more than others, and raising the question of what combinations of institutions and adaptations will make for the most equitable distribution of risk within the community. Choosing between available adaptation options becomes an issue of balancing both benefit-cost economics and equitable institutions.

In any given coastal community there may be a range of adaptation options that can ameliorate some or all of the effects of future coastal inundation events by “protecting” against inundation (e.g. seawalls), redesigning infrastructure to “accommodate” inundation (e.g. raised floor heights), or “retreating” out of areas likely to be inundated. Often, a suite of adaptations may be necessary to meet all community goals and expectations. Each potential adaptation will have differing costs and side effects, and provide differing levels and qualities of protection. Moreover, those costs and benefits will vary from place to place within the community. Economic tools that can estimate specific costs and potential benefits throughout the community can help inform sensible choices about which adaptations, or suites of adaptations, are likely to yield more benefits than they cost to implement.

Even when adaptation is economically sensible to protect against the long term, uncertain risks of losses due to future inundation events, communities may not have the capacity to invest in adaptations in the short and medium term. This may be due to absolute financial constraints, but may also reflect a lack of community consensus about which adaptations to invest in, because of the expected distribution of risk within the community or differing assessments of the future risk of coastal inundation. Some adaptation options may be more acceptable to the community, because they reflect incremental changes to already familiar risk-management institutions, or because they have few side effects or costs. On the other hand, some potentially very effective adaptations may be less popular if they represent a significant change in prior behaviours and institutions. Moreover, the spatial distribution of inundation risk varies greatly at all scales, from region to region, suburb to suburb, and even property to property. The scale at which adaptation decisions find acceptance, and the scale at which they are made and funded may directly affect the scope of adaptations able to be considered, their equitability and their effectiveness.

This report begins to address these questions by considering both the economic costs and benefits of adaptation, and the institutional factors that may enable or constrain it, across a range of cases studies of Queensland coastal communities. We simulated likely storm surge events under sea level rise scenarios to estimate total costs of inundation across the case studies out to 2100, incorporating both damage to buildings and devaluation of land in the residential sector. We then simulated the implementation of adaptations, comparing the distribution of costs of implementation to the distribution of benefits in terms of avoided damages. At the same time, we interviewed a range of stakeholders within the local council governance structures managing the six case-study areas. The interviews aimed to identify the biggest risks of coastal inundation, the current planning and management tools available, which of these had already been used, and how useful they were expected to be under future sea level rise scenarios. It also sought to discover how enabled or constrained local governments were by government policy at larger scales. Finally, these institutional insights were compared to the state of the art policy and governance frameworks currently in place internationally. 

In each of the six case-study sites, the economic costs of storm surge inundation, including residential infrastructure damage and residential land devaluation, and the potential benefits of adaptation, in terms of avoided damage costs, were estimated for a range of adaptation options under sea level rise scenarios out to 2100. The distribution of these economic costs and benefits throughout the community were calculated, and combined with quantitative estimates of the socioeconomic capacity of each community to fund adaptations. These insights underpinned a typology of coastal settlement types based on the physical determinants of inundation risk, such as storm surge levels and site topography, combined with the distribution of risk throughout the community, and socioeconomic determinants of the capacity for adaptation, such as median household income and number of households.

The most appropriate adaptations for a given location also depend on the institutional factors at play there. The institutional analysis found that current governance structures in the case-study areas exhibited a preference for incremental adaptation: historically tested defensive measures and extension of existing codes or practices to support accommodation of sea level rise and changing inundation regimes. It also found that current governance structures seem to be relying on an implicit ability to ‘outsource’ or ‘scale out’ capability to institutions outside local government’s remit, such as the property market or insurance sector. While this is a recognised rational response from local actors operating in a multi-level governance structure, it does have implications for the types of adaptations being considered within the Australian system.

Contrasting these institutional factors to comparable jurisdictions in other places around the world, we found that the Australian experience depends much less on state-led and centralised intervention in responding to future coastal inundation risks, particularly as they manifest at the local scale. There are also signs that there is an expectation amongst local governments that market signals, responding to current risk and anticipating future risk, will provide much of the impetus for adaptation. Together, these observations suggest that large scale coordinated coastal adaptation programs are possibly underutilised in Australia, but also that the Australian context may be suitable for the development of market-based instruments that would see public as well as private benefits accrue from these processes, and that are suited under current governance arrangements to devolved, local implementation.

View the final report