phase 2



The previous phase, Policies and Plans, describes how governments must formulate long-term plans and policies for urban and rural development that center around a shared, systemic vision for climate resilience that is aligned with national and international priorities. This lifecycle phase identifies ways in which governments and other infrastructure owners and operators should prioritise specific infrastructure projects for development, in the context of these plans. Prioritisation processes must identify those infrastructure projects that most effectively support long-term climate adaptation and address multiple resilience objectives in the face of the deep uncertainty that climate change presents. The project concepts that are selected are then further explored and elaborated on in subsequent phases of the infrastructure lifecycle.

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Lead Practitionerss


Government plays a role in the prioritisation of infrastructure projects by selecting which projects are integrated into long-terms plans, which are allocated funding, and which receive necessary approvals. Prioritisation can be influenced by politicians as well as through formalized and consistent administrative processes. Prioritisation is typically led by the level of government controlling the budget, which could be national, sub-national or municipal.

Investors, whether private financiers or development banks, may be directly or indirectly involved in the prioritisation of infrastructure projects. They can influence which projects are prioritised by government for implementation by funding or financing specific projects that meet their own needs in addition to those of the government. For the projects they finance, they may also play a role in options evaluation and decision-making, bringing in their objectives, including the bankability of the project, into consideration.

Non-governmental infrastructure owners including private utilities must also engage in the prioritisation of projects based on the identification of critical needs or business development objectives and allocating funds or identifying financing to implement these measures.

Key Inputs from Other Phases

Phase 1Policies and Plans

Government structures and coordination mechanisms inform prioritisation processes as they impact who is involved in decision-making and how decisions are made.

Prioritisation is dependent on the accuracy and availability of data, the collection of which must be promoted and led through government policies and programs.

Phase 2Prioritisation

Phase 3Feasibility and Preparation

Learnings from the feasibility phase of various projects will help to inform prioritisation tools and adaptation pathways used in the prioritisation phase.

Phase 4Funding and Financing

Particularly under resource-scarce conditions, the availability of funds and funders as well as the use of financing mechanisms will influence the prioritisation of projects for development.

Phase 5Design

Evaluating the performance of recently completed climate-infrastructure to climate shocks and stresses as well as the benefits they provide can inform the prioritisation of future projects, for example, the use of nature-based solutions.

Design innovations and strategies, such as new approaches to retrofitting existing infrastructure to reduce vulnerability, can influence the projects that are prioritised by increasing awareness of these strategies, lowering costs or enhancing technical feasibility.

Phase 6Procurement

Learnings from previous procurement efforts can help to identify procurement practices that more effectively support resilience-building which will help to inform future prioritisation efforts.

Phase 7Construction

As with design, data collected from the construction of other infrastructure assets and how these practices handle climate shocks and stresses can help to inform prioritisation processes for future projects.

Phase 8Operations and Maintenance

Evaluating the maintenance needs of assets over longer periods of time will allow for the identification of more resilient design and operational approaches, which, as with design and construction, will help to inform the prioritisation of future projects.

Phase 9End of Life

As existing assets reach the end of their lives, effective and coordinated prioritisation strategies will ensure service continuity as one asset is decommissioned and another is introduced.

The Basics and the Shift

In the prioritisation phase of the infrastructure lifecycle, the broad development goals set by government or private infrastructure owners in their long-term planning processes are refined into clearer project approaches, some of which are prioritised for further development in the feasibility and project preparation phase. Some projects will move forward, and others will remain dormant based on a combination of political will, funding availability, and other economic and social considerations. Climate change introduces additional complexity to the prioritisation phase because the additional goals and objectives for climate adaptation and mitigation must also be factored into the prioritisation and decision-making process. Climate change creates additional needs that need to be weighed against basic needs. It also introduces deep uncertainty into decision-making processes. The prioritisation phase of the infrastructure lifecycle is arguably the most critical phase in terms of embedding resilience value into an infrastructure project as the decisions made in this phase have the greatest influence on the overall strategic direction a project takes. The following table explains how climate change has complicated the responsibilities of practitioners in the prioritisation phase and the ways in which they are adapting to allow the development of more climate-resilient infrastructure:


Traditional Responsibilities and Decisions

Effects of Climate Change

New Tools and Approaches

With finite funds, governments and private sector infrastructure owners must make decisions about how best to allocate their budgets. At a national or sub-national level, governments must allocate funds to ministries, agencies and departments, which implies a prioritisation of needs in those sectors. Within ministries, agencies and departments, the allotted budgets must then be allocated to specific activities and projects, prioritising some over others. Private sector infrastructure owners also use the allocation of funds to prioritise some activities and projects over others.

Climate change introduces immediate and long-term risks to infrastructure and greater costs to reduce or eliminate those risks. Without considering climate change and the need for adaptation and mitigation, the funding available in most countries to meet basic societal needs in terms of access to water, energy, sanitation, transport, housing and healthcare is limited and, in many cases, insufficient. With the additional considerations of climate change, governments and other infrastructure owners must determine how best to allocate funds to not only meet basic needs and economic development targets but also to address climate risks. Because the greatest risks of climate change are in the coming decades, it can be tempting to prioritise addressing immediate problems over future risks, especially those that are inherently uncertain in terms of how and when they will manifest.

To address these challenges, governments are becoming smarter about how funds are spent to ensure projects deliver multiple benefits in terms of meeting basic needs, addressing climate goals and limiting long-term risks. They are doing this with the use of the project development and decision-making tools and systems described in this section.

Governments are also becoming more creative in identifying additional funding and financing to support infrastructure projects that meet basic needs and address climate objectives so fewer trade-offs need to be made. This topic is further explored in Phase 4 of the infrastructure lifecycle.

Long-term development plans and sector strategies prepared by governments lay out their main needs and objectives as well as the results they expect over time. However, it is in the prioritisation stage that these plans are translated into more specific actions and approaches and the direction of a project is identified.

Over the past several decades, the shortcomings of some traditional infrastructure delivery approaches have become apparent, including those grey infrastructure solutions that have resulted in long-term environmental damage (e.g. combined sewer overflow systems), long-term social inequities (e.g. highways dividing communities or creating inequitable access to social infrastructure), and greater climate risks (e.g. coastal development that eliminates natural wetlands). When infrastructure strategies are developed to address identified needs or risks, there are now more considerations that need to be made in the evaluation of project options. Green, blue, grey and hybrid infrastructure approaches should be evaluated and the total costs and benefits of these options, including risk reduction, social and environmental considerations based on a review of systemic impacts, must be made. The adaptability of selected approaches and solutions in the face of an uncertain future climate must also be evaluated.

The following can support in the development of appropriate project options:

  • Use of multi-hazard risk assessment
  • Interdependencies analysis and systems thinking approaches
  • Green and blue infrastructure approaches

The following approaches and tools can assist in decision-making including in the prioritisation of project options:

  • Adaptive management strategies
  • Robust decision-making
  • Multi-criteria analysis
  • Triple-bottom line and cost-benefit analysis
  • Lifecycle cost analysis
  • Real Options analysis
  • Monitoring and evaluation of project results and impacts
  • Project review panels
  • Community engagement

Integrated Guidance for Climate-Resilient Infrastructure

Based on the review of over 150 existing publications and tools on climate-resilient infrastructure, the following key actions have been identified to support practitioners in integrating climate resilience into infrastructure development in the Prioritisation phase of the infrastructure lifecycle. These actions are summarized in the table below and grouped by theme. Each action is further elaborated on in this section and references and links to key publication and tools are shared.

View all Themes and Actions

Key resources

The following resources have been chosen as key to understanding the Prioritisation of climate resilient infrastructure assets.


Building Urban Climate Change Resilience: A Toolkit for Local Governments

The ICLEI ACCCRN Process includes a toolkit that enables local governments to assess their climate risks in the context of urbanization, poverty and vulnerability and formulate corresponding resilience strategies. It is applicable to both Phase 1 and 2 of the infrastructure lifecycle

Guidance Hoover Institution

Ready for Tomorrow: Seven Strategies for Climate Resilient Infrastructure

These seven strategies were extracted from the work of leaders from across infrastructure sectors and disciplines. These strategies are fundamental concepts that should drive the design, funding, and building of climate-resilient infrastructure. If broadly applied, they can produce robust and sustainable infrastructure, more cost-effective investments, and reliable services.

Guidance NSW Government

Guidelines for Resilience in Infrastructure Planning: Natural Hazards

While focused on New South Wales, this document provides applicable high-level guidance to all those undertaking infrastructure planning to ensure infrastructure developments deliver appropriate levels of resilience. It includes information on how to embed consideration of resilience into decision making — through the identification, planning, and prioritization of policies and projects.

Guidance United Nations

Assessing the Costs and Benefits of Adaptation Options

This publication provides an introduction to a range of different assessment approaches and methodologies and shares best practices and lessons learned. It builds upon activities and contributions from the Nairobi work programme and its partners

Theme 1: Robust Decision-Making Approach

2.1.1 Institutionalize adaptive management and robust decision-making approaches

The institutionalization of robust decision-making processes within government and corporate systems is essential to allow for consistent, effective action in the long-term to adapt to climate change, avoiding short-term politically based decision-making. The Policies and Plans phase of the infrastructure lifecycle summarizes guidance on embedding climate resilience into government structures, plans and policies. Decision-making processes that promote climate resilience, including adaptive management strategies that recognize the inherent uncertainties involved in making decisions related to climate change, must also be institutionalized.

Adaptive management strategies to decision-making explicitly allow for evolving approaches to the management of climate risks. Adaptive management promotes flexible decision making that can be adjusted in the face of uncertainty as new outcomes from management actions and other events develop[1]. Figure 1 within this report helpfully illustrates the differences between conventional management and adaptive management strategies[2].

Adaptive management has most often been used for decision-making related to natural resources management but has been promoted more recently as an effective strategy for climate resilient infrastructure. The UNDP’s guidance on climate-resilient infrastructure highlights the need to “create adaptive systems for managing evolving risks: systems for making continuous decisions (rather than developing discrete solutions) must be in place at national, subnational and community levels” [3]. The following documents provide guidance on adaptive management approaches:

Learning and IterationLearning and IterationAligned with the concepts of adaptive management is robust decision-making (RDM), an iterative approach used to assess and compare the resilience of several strategies against a suite of future climate scenarios.Future-Oriented PlanningFuture-Oriented PlanningRDM can negate a significant amount of uncertainty by ensuring resilience to a plethora of future climate scenarios through a process of probabilistic risk modelling and stress testing. Relevant stakeholders and decision makers can be engaged to identify vulnerabilities to future shocks and stresses which can then be addressed and managed early in the lifecycle and thus reducing the potential for regret, vulnerability lock-in and premature climate-related obsolescence [9] [10] [11]. Depending on resource availabilities, a number of different assessment approaches can be utilized under RDM to identify and assess future scenarios for prioritisation purposes, including expert judgment, indicators, formulas, and processes-based modelling. Each of these approaches entail differing degrees of complexity, uncertainty and demands on data and resources [12]. Learning and IterationLearning and IterationIn addition, as more data become available, either through increased collection or through a shift towards more open data distribution, the analytical tools used under RDM can be updated. This reference provides more information and case studies on RDM in the context of climate adaptation planning [13].

Use of the prioritisation and decision-support tools described in this lifecycle phase can be embedded into formal decision-making by requiring their use in project preparation or implementation or by adopting them as part of the review process by an advisory panel. Table 5.2 (pg. 62) in a UNDP report shows an example of a matrix used to evaluate several adaptation options based on specified qualitative and quantitative criteria [10]. Tool4.2 within the ICLEI ACCCRN Process provides a step-by-step guidance on one methodology for prioritising climate-resilience interventions based on pre-identified resilience indicators [14].

Case Study

The application of robust decision making and adaptive management strategies as part of an inter-state collaboration on water management strategies to increase resilience in the Colorado River basin.

Robust Decision Making was successfully implemented in the Colorado River Basin to identify and reduce the vulnerabilities linked to the supply and demand of water to 30 million peoplea and over 18000 km2 of farmlandb. A changing climate, including prolonged periods of drought, and the rising demand for water in the basin are threatening the reliability of the water supply. Estimates of future streamflow, based on past data and future models, present uncertainties around future hydraulic conditions, including some scenarios where the water supply in not sufficient to meet demand. Consequently, a study was conducted using RDM to identify water management vulnerabilities around supply reliability, hydropower production, and ecosystem health. These findings then informed a portfolio of least-regret options. A consequent study applied RDM to the design of an adaptive management strategy to guide investments over the coming decadesb.

a OECD, 2018. Climate-resilient Infrastructure, Paris: Organisation for Economic Co-operation and Development.
b Marchau, V., Walker, W., Bloemen, P. & Popper, S., 2019. Decision Making under Deep Uncertainty. 1st ed. New York: Springer.


Theme 2: Holistic Thinking in Options Evaluation

In developing and deciding upon the strategic approach for infrastructure development to meet identified needs and established goals, and in prioritising among various identified projects, it is important that practitioners take a holistic perspective. This theme explores the systemic considerations that must be made when prioritising specific projects over others and deciding upon the strategic direction of a selected project. It should be noted that the approaches described in this section also apply at other stages of the infrastructure lifecycle when decisions are made, including in the project preparation phase (Phase 3) and the design phase (Phase 6).

2.2.1 Develop a set of diverse options for evaluation

The prioritisation process begins with the identification and development of different options or strategies that meet the overall vision and needs that have been identified for a particular place, community or sector. The following considerations are useful when developing options for evaluation:

  • Consider a mix of ‘hard’ (i.e. infrastructure related) and ‘soft’ (i.e. non or minor infrastructure-related such as policy changes or capacity building, also referred to as ‘no build’ options) solutions [14] [4]. Options that focus more on preparedness tend to have lower up-front costs and therefore might be more politically palatable in resource-scarce conditions than more capital-intensive options focused on risk reduction and adaptation which are ultimately more cost effective.
  • Environmental Co-BenefitsEnvironmental Co-BenefitsConsider ‘green’ (i.e. nature-based) and ‘blue’ (i.e. water-based) solutions in addition to traditional ‘grey’ infrastructure, as well as hybrid solutions.
  • Consider opportunities for rehabilitation and/or retrofit of existing infrastructure in addition to new construction.
  • Service Continuity and ReliabilityService Continuity and ReliabilityConsider solutions with different levels of performance in the face of climate risks. When comparing and evaluating solutions, it is essential that these differences are recognized when identifying costs and benefits.
  • Consider solutions that link to or are synergistic with other existing efforts underway[14].

Multi-disciplinary workshops can be useful tools for generating a wide range of options to meet a particular objective [15]. Intervention Mapping, part of the ICCLEI ACCCRN Process [14] (Tool 10), is a useful tool to use at such a workshop for identifying solutions to an identified need.

2.2.2 Take a multi-hazard approach to developing and evaluating options

In developing, evaluating, and selecting infrastructure solutions, primary to enhancing climate resilience is understanding the present and future climate hazards (and other hazards) to which the infrastructure asset or system is, or could be, exposed. Increasingly, observations of historical hazard events as an indicator of future risk are becoming less reliable, given the growing and dynamic threat that climate change poses. In addition, the development of many infrastructure projects can span decades, leading to deep uncertainty associated with the climate hazards to which they will be exposed. Systems ThinkingSystems ThinkingNearly every infrastructure asset is at risk of being impacted by more than one hazard, either directly or indirectly through linkages to wider systems. Despite this, conventional sensitivity analyses often address these shocks, stresses and impacts individually. Breaking these silos down by employing a multi-hazards approach to risk assessment and decision-making can help to prioritise more resilient solutions [6].

Future-Oriented PlanningFuture-Oriented PlanningTaking a multi-hazard approach when evaluating options requires the identification and characterization of hazard scenarios including existing exposure to climate hazards as well as future expected hazards, which could be more extreme, more frequent or novel [4]. Depending upon the context, scope and scale of the infrastructure project, the following types of hazard scenarios may need to be evaluated [16]:

  1. Independent events: hazard events caused by different triggers that can be considered independently, for example, an earthquake and a flood. Even so, there may be situations in which the optimal design for one hazard increases the vulnerability to another independent hazard. A common example of this is the raising of buildings on stilts to reduce flood vulnerability, which in turn, increases seismic vulnerability. It is therefore important to identify balanced solutions that limit risk across anticipated hazards, even if the hazards are evaluated independently.
  2. Coupled events: hazard events caused by the same trigger that must be considered simultaneously in risk assessments, for example, flooding and extreme wind loads.
  3. Influence of one hazard on the disposition of another: where one hazard has the potential to exacerbate the impact of another hazard, now or in the future. For example, a wildfire may lead to increased flood or landslide risk.
  4. Cascading hazards: one hazard causing the next, resulting from interdependencies with other infrastructure and systems. An example of this is an earthquake triggering a landslide which dams a river and leads to a dam break. The evaluation of these scenarios becomes more complex and ambiguous as the scale of an infrastructure project increases. The recommended approach for evaluating these scenarios is to use an ‘event tree’ (p.50)[17].

A risk matrix (p.53)[16], or a likelihood and consequences matrix (p.244) [18], can be a useful tool for identifying the most important risks and scenarios that should be the focus of the evaluation of options when resources are limited.

2.2.3 When evaluating options, consider the entire lifecycle cost as well as the complete system

Cost-benefit analysis (CBA) is a common tool for decision-making related to infrastructure investment, and it can be useful for climate-resilient infrastructure provided it is approached holistically and its limitations are understood. When the analysis is conducted using only upfront capital costs and the benefits are limited to only quantifiable, monetary benefits, it has the potential to impede the prioritisation of climate resilient approaches, given the increased upfront costs associated with integrating resilience-building mechanisms such as redundancies and excess capacity. The difficulties in accounting for costs associated with poor resilience and the economic benefits of resilience considerations are also a factor. Systems ThinkingSystems ThinkingTo move toward the prioritisation of more resilient solutions, a more holistic options evaluation approach must become the business-as-usual approach [6].

Three key considerations can aid in more accurately identifying the true costs and benefits of options at the decision-making stage. If these considerations are acknowledged at the prioritisation and option evaluation stage, the selected option will be more likely to have factored in the benefits of long-term risk avoidance and other downstream benefits in addition to balancing inevitable trade-offs between climate change mitigation and adaptation.

Whole Life Cycle: Future-Oriented PlanningFuture-Oriented PlanningA whole life cycle approach is one in which the costs and benefits and the positive and negative impacts of an infrastructure project are evaluated across the entire lifetime of the asset, including long-term operation and decommissioning of the asset. Applying this approach earlier on in the prioritisation and early-stage planning of infrastructure projects can lead to solutions that more effectively avoid risk or environmental impacts and reduce long-term operational and maintenance costs [6]. For example, non-asset solutions such as mangrove restoration might be identified over physical interventions such as flood barriers [19] [20],[21]. Acclimatise (2011) provides guidance on conducting a whole lifecycle appraisal, including managing additional risks from climate change, aligning with other appraisals, and integrating adaptation and resilience measures into the project lifecycle.

Systems Thinking:Systems ThinkingSystems Thinking Systems thinking, recognizing an infrastructure project as a component within a much wider and complex system or series of systems, is helpful for the identification of triple bottom line impacts as well as in the assessment of whole life cycle impacts discussed above. Systems thinking can help identify cross-sector dependencies and interdependencies that may have costs, risks or impacts associated with them. For this approach to be effective, it must be interdisciplinary to account for discipline-specific biases[4]. It must also look across administrative boundaries, especially when considering the impacts of climate hazards. The following references provide more guidance on systems thinking approaches for prioritisation:

Other considerations and qualifications related to the prioritisation of climate-resilient infrastructure include the following:

  • It is important to carefully select a ‘base case’ to which the other intervention options can be compared. This base case is typically defined as ‘business-as-usual’. The costs of inaction with respect to identified climate change hazards should be identified or quantified as part of this base case [4].
  • CBA does not explicitly account for the value of adaptive management strategies that preserve future options, thereby overvaluing grey infrastructure solutions, even though a flexible approach to resilience may result in greater social and environmental benefits and avoided risks over time [6].
  • Focusing exclusively on Net Present Value (NPV) of a CBA in the prioritisation of projects will favour resilience projects in higher-income areas and populations where the value of avoiding climate-related damage is higher [9].
  • Option evaluation must recognize not only the value of resilience in reducing climate-related losses but also the fact that climate-resilient infrastructure can be an enabler of other development and investment as well as increased land value [25].
  • Section 4.4 of these guidelines provides three key principles for informed decision-making for climate-resilient infrastructure based on cost-benefit analysis when there is a high degree of uncertainty in the climate hazard scenarios [4].
  • Evidence-Based Decision MakingEvidence-Based Decision MakingA holistic approach to options analysis relies significantly on the availability of reliable data as well as the capacity and resources to conduct the assessments. In many instances, one or more of these criteria will not be available to relevant decision makers. For these cases, Theme 3 outlines some approaches that enable decisions to be made under deep uncertainty or where significant resource constraints must be considered.

In most cases, it will not be possible to quantify all identified costs and benefits in a manner that allows for an apples-to-apples quantitative comparison of Net Present Value (NPV) of different options. Evaluation approaches that allow for combined quantitative and qualitative comparisons are more effective in assessing climate-resilient solutions [6].

2.2.4 Make decisions with an eye towards the long-term

Future-Oriented PlanningFuture-Oriented PlanningWhen evaluating options, it is critical to consider which ones are most robust and adaptable to future uncertainties. Stress-testing available options against plausible futures, including ones that assume low-likelihood, but high-consequence events, allow decision makers to prioritise options that acknowledge and balance acceptable risk against deliverable solutions, thus minimising regret and avoiding maladaptation [9][11]. Assessing a suite of physical, social, and institutional interventions in each future scenario will further help to prioritise the most resilient and actionable approaches [12]. For insights into future scenarios for infrastructure, refer to this report by the Global Infrastructure Hub. [26]

The following are three examples of uncertainties that should be considered in addition to the uncertainty of climate hazards themselves.

  • Population changes: When the prioritisation of infrastructure projects is made based on cost-benefit analysis and the other approaches described in this section, the results can be highly influenced by demographic and population data. Additionally, downstream decisions related to the operating capacity and location of infrastructure are also dependent on demographic data. Future-Oriented PlanningFuture-Oriented PlanningAs populations grow, shrink, and migrate, in part driven by climate trends, it is important to use best estimates of future population when prioritising and planning infrastructure projects to deliver infrastructure to those areas that will benefit from it most and avoid underutilized or overburdened assets. Projections related to both the number of people and where they are expected to live are needed.
  • Technology evolution: Just as populations are shifting dynamically, technology is also evolving at a rapid pace, including the rise of InfraTech (automation, Internet of Things, distributed ledger technology, visualization, BIM, AI and other advanced analytics) reducing manual labour needs in all phases of the infrastructure value chain[26]. Future-Oriented PlanningFuture-Oriented PlanningWhen decisions about the prioritisation of infrastructure are made based on assumptions such as number of users served, long-term costs of operation, and jobs created, it is important to evaluate future technology scenarios and how they might impact decision-making.
  • Level of resources and capacity available for maintenance: When decisions are being made about the selection of one option over another for a particular infrastructure project, Future-Oriented PlanningFuture-Oriented Planningthe decision-making must factor not only the costs associated with long-term maintenance as part of whole life cycle thinking but also the feasibility of the actual strategy for ensuring long-term maintenance needs are met. Capacity BuildingCapacity BuildingThis includes assessing the reliability of the funding source for long-term maintenance needs as well as the human resources and skill levels required for proper maintenance. Without these in place, a well-intentioned project with high climate-resilience value initially may degrade over time and not perform as intended.

Theme 3: Distinguishing among Decision-Making Tools

While Theme 2 covers guidance related to the general mindset for approaching prioritisation and decision-making for climate-resilient infrastructure, this section references specific decision-making tools and frameworks that can be employed by decision-makers in identifying and prioritising the most effective climate-resilient approaches, including when faced with deep uncertainty in the parameters of the decision-making or a lack of data. It should be noted that the tools described in this section may also apply at other stages of the infrastructure lifecycle when additional decisions are made regarding the direction of an infrastructure project, including in the project preparation phase (Lifecycle Phase 3) and the design phase (Lifecycle Phase 6).

2.3.1 Identify the appropriate decision-making tool

Multi-criteria analysis, cost-benefit analysis and life cycle cost analysis are useful in identifying an optimal solution when there is agreement on the probabilities of various future risk scenarios playing out and sound data are available, which are rarely the case in the context of climate change. As described in Theme 1, robust decision-making can be considered as the broad umbrella for decision-making in the face of climate change as it can be used in situations when it is not possible or practical to characterize the most likely scenario to which infrastructure must be optimized (see Action 4.2 Hallegatte, et al.,2019). Using a robust decision-making approach, multi-criteria and cost-benefit analysis tools can be applied to a suite of climate risk scenarios and a suite of delivery options to identify the one that has the greatest benefit and lowest costs in aggregate for the most plausible future scenario or scenarios. In resource-scarce conditions, a real-options analysis can be used (see Action 2.3.2). Equity and Social Co-BenefitsEquity and Social Co-BenefitsAs part of any evaluation strategy used, a triple-bottom-line approach should be taken that considers the positive and negative social, environmental and economic impacts of a project. This valuation approach guide provides a decision tree to support in selecting among valuation and decision-making approaches.

  • Multi-Criteria Analysis (MCA): MCA covers a broad range of decision-making approaches. MCAs are used to evaluate a number of options using a set of weighted criteria. A score is obtained, for each option, and the highest selected. Equity and Social Co-BenefitsEquity and Social Co-BenefitsAn MCA is useful in instances where socio-cultural or environmental considerations are evaluated in non-monetary terms, as both quantitative and qualitative considerations can be taken into account. Page 28 of this UNFCCC Report [27] provides a succinct summary of the steps involved in conducting an MCA and case studies are provided on Pages 30, 33 and 35.
  • Cost-Benefit Analysis (CBA): If the main consideration of an analysis is efficiency, a CBA can be performed to evaluate the cost-benefit ratio using a single metric. Presenting the results in monetary terms allows decision-makers to efficiently compare options using a single value. Environmental Co-BenefitsEnvironmental Co-BenefitsThis tool is best used in conjunction with other, more holistic, ones that internalize non-market costs and benefits, such as ecosystem services. 12 of the UNFCC Report [27] outlines the considerations decision-makers must account for, with case studies on Pages 14, 16, 18 and 20.
  • Cost Effectiveness Analysis (CEA): Where benefits are not easily monetized, such as in the case of public health or ecosystem services, CEA can be used to identify the least costly approach amongst a suite of options. CEA are particularly appropriate in instances where prioritization of a single solution rather than a combination is the aim. [27] Pages 22–27 of the UNFCC Report provide guidance and case studies.
  • Lifecycle Cost Analysis (LCCA) LCCA is a cost driven assessment approach, used to evaluate and compare the lifecycle costs of various options, including capital, operations, management, and replacement costs. Equity and Social Co-BenefitsEquity and Social Co-BenefitsThough this approach does not typically consider environmental or social costs, it is an approach recommended by the American Society of Civil Engineers [28], which calls for sustainability, resilience, and environmental impacts to be considered alongside the economic lifecycle cost. Page 9 of this ASCE Report [28] points stakeholders to relevant LCCA methodologies.
  • Lifecycle Analysis (LCA): Environmental Co-BenefitsEnvironmental Co-BenefitsAn LCA is a cradle-to-grave assessment of environmental impacts, often performed in conjunction with an LCCA, as per ASCE’s recommendation [28]. The Envision guidance manual [29] briefly outlines the use of an LCA as part of an energy park development in The Netherlands.
  • Triple Bottom Line (TBL): To comprehensively assess the costs and benefits of project options across their whole life cycle, a TBL approach, one in which social and environmental impacts (immediate and cumulative) are considered alongside economic considerations, is recommended. These social, environmental, and economic impacts pertain not only to the infrastructure options themselves but also the climate shocks and stresses they may be exposed to in their lifetime. Future-Oriented PlanningFuture-Oriented PlanningMarginal higher upfront costs of solutions that anticipate an improved level of performance against climate hazards can then be compared against the increased benefits of avoided climate risks and losses. Other indirect impacts, including unintended negative social and environmental consequences or co-benefits of infrastructure can also be identified. The scalable nature of approaches such as the TBL Assessment Framework can facilitate TBL assessment at different levels including high-level, national decision making. A TBL assessment will identify both positive and negative impacts which can then be carried forward into a multi options evaluation process.

2.3.3 Perform real options analysis under resource scarce conditions

Future-Oriented PlanningFuture-Oriented PlanningIn circumstances where resources are limited and there is a lack of climate hazard data and other relevant data, and decisions can be made in stages with some degree of flexibility, Real Options Analysis (ROA) provides the ability to defer costly decisions that might reduce future flexibility and prematurely lock in potentially inadequate solutions. By evaluating response pathways, consisting of a series of decision points, the approach gives decision makers the opportunity to prioritize less-resource intensive short-to-medium term interventions that can be acted upon under less uncertainty while also avoiding a commitment to one specific long-term strategy. Partial and potentially reversible interventions or decisions can be made that preserve future options and allow time for more learnings and data to become available for more informed decision-making [30]. Resource-intense interventions can be postponed to a later stage, when uncertainty is reduced [4] [31] [32].

This paper provides more information on real options analysis for coastal adaptation, including several case studies. It also provides the following summary of how ROA differs from traditional economic analysis [30]:

“ROA shows that sometimes it makes more sense to wait for new information rather than investing immediately.”

“ROA shows that it may make sense to start the initial stages of a project (keep it alive) as the project may become more attractive at a later date.”

Case Study

The use of Real Options Analysis in the case of Nakdong River, South Korea

Flooding in the Nakdong River basin, in southeast South Korea, resulted in US$ 2.58 billion in the three decades leading up to 2015, despite the presence of flood prevention mechanisms throughout. With precipitation set to increase across South Korea due to climate change, the risk of more frequent and more severe flooding increases across 23 municipalities in the basin. Therefore, investments in further flood control facilities (FCFs) will be required over the coming decades. In the case of the Nakdong River basin, researchers defined the areas at risk of flooding and future climate scenarios. These were used to estimate potential damage costs under those future conditions and flood control criteria were identified. Next, a real Options Analysis (ROA) was conducted using a binomial lattice to calculate the option values in order to establish their economically feasibility (i.e., the cost of option implementation vs. profits occurring from flood damage avoidance). These were then further developed into adaptation strategies which recommended local priorities and their associated investment costs. The analysis performed allowed decision-makers to use managerial flexibility to hedge future uncertainties in climate and thus analyse the economic feasibility of various investments under climate change. In addition, the analysis identified higher-risk municipalities where FCFs must be priorities. Going forward municipalities should investigate future climate risks when establishing investment plans for FCF projectsa

a Kim, K. & Kim, J.-S., 2018. Economic Assessment of Flood Control Facilities under Climate Uncertainty: A Case of Nakdong River, South Korea. Sustainability, 10(308).


Co-Benefit Considerations


Climate Change Mitigation Considerations

Equity Considerations

Theme 1: Robust Decision-making Approach

While adaptive management strategies are appropriate in responding to and building resilience towards an evolving climate, climate change mitigation measures require more immediate and decisive action, to reduce the long-term impacts of climate change and the need for more extreme adaptation measures. Mitigation measures must be fully incorporated into all initiatives possible, with explicit plans for ramping up targets as conditions allow. 

When engaging stakeholders to inform a robust decision-making approach, it is important to identify all relevant stakeholders, including representatives of more marginalized groups. In this way, vulnerabilities and needs unique to these communities will not be overlooked. 

Theme 2: Holistic Thinking in Options Evaluation

When developing and evaluating project options, holistic approaches should account for mitigation considerations in addition to adaptation and resilience. Mitigation becomes particularly important when decisions are made for the long-term, as interventions that look to mitigate long-term climate change must be incorporated as early as possible, to be most effective. 

Prioritization of infrastructure projects raises important questions of equity. Decision-makers and those who hold power must acknowledge and address the following: 

Climate change impacts the poorest and most vulnerable most severely therefore, those in a position of power should equitably approach adaptation and climate-resilience building 

The most severe effects of climate change won’t be felt in the lifetime of current decision-makers. Nevertheless, these have a responsibility to address it now 

Theme 3: Distinguishing among Decision-Making Tools

When assessing the costs and benefits of any development, considerations about the long-term costs of non-mitigation should be weighed against the short-term cost of incorporating mitigation considerations into the project.

Where stakeholders are engaged during the decision-making process, the needs of historically marginalized communities must be prioritized over other groups. This requires comprehensively understanding the costs and benefits of project options on these communities and giving greater weight to these factors. In some cases, perceived benefits may incur costs for others. 

Downstream Benefits of a Resilience-based Approach in the Prioritisation Phase

Phase 2Prioritisation

Phase 3Feasibility & Preparation

The prioritisation phase of the infrastructure lifecycle has potentially the greatest influence on the ultimate resilience value that an infrastructure can deliver as it is the moment when key decisions are made about which projects move forward and what the optimal strategic direction of those projects should be to deliver social, environmental and economic impact while addressing climate risks. When prioritisation is done well, the feasibility phase can further refine and enhance the direction of the project and its resilience value. When a misguided project is prioritised, alternate options can be explored in the feasibility phase to improve it (or it might be rejected upon further evaluation) but it cannot achieve the value that it could have had the ‘right’ project been selected from the start.

Phase 4Financing

Resilience-based approaches to prioritisation identify and assign value to social, environmental and economic benefits including climate risk reduction and climate mitigation. In doing so, they can facilitate a diverse coalition of support including funding and financing because the broad value of the selected projects can be demonstrated.

Phase 5Design

Once a specific project delivery approach has been selected and a project is prepared for the final design phase, there are opportunities for adjustments and refinements in the design phase, such as selection of materials and construction methods and decisions regarding performance characteristics of specific infrastructure components, but most of the key decisions that impact the overall resilience value of a project have been made. It is for this reason that many designers and engineers working on the topic of climate resilience are pushing for more ‘upstream’ involvement in project prioritisation and conception processes.

Adaptive management approaches to decision-making in the prioritisation phase may also impact the design phase by favouring incremental or potentially reversible interventions that require new types of design solutions

Phase 6Procurement

Effective prioritization in Phase 2 should result in the selection of projects that deliver realistic and clearly defined climate resilience benefits. Well-conceived and achievable projects that prioritize resilience will facilitate a more straight-forward procurement process, with suppliers whose views, sourcing and delivery practices align with the objectives of the project. In addition, a more rigorous and involved prioritization stage will help to define the specifications required of the procuring agents and suppliers. 

Phase 7Construction

Similar to the design phase, there is not much opportunity to course-correct and embed more resilience value in a project at the construction phase, so the selection of the ‘right’ project during the prioritization phase is critical. Holistic prioritization approaches may also favour the use of less intrusive and less resource-intensive construction activities.  

Phase 8Operations and Maintenance

The use of life cycle cost analysis and triple bottom line approaches in the prioritization phase are critical to optimizing the performance of an infrastructure asset in the Operations and Maintenance phase. When the costs of long-term operation and maintenance as well as other ongoing social and environmental costs and benefits of the use of an infrastructure asset over its lifespan are factored into decision-making, solutions that minimize negative impacts and costs and maximize benefits can be identified. 

Phase 9End-of-Life

Decision-making approaches, such as life cycle analysis, may be used to prioritize infrastructure delivery options that minimize the ultimate negative impacts that infrastructure assets impose on the environment. 


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