Adaptation Cost Curve

An exploration of climate change adaptation actions
for the City of Melbourne in three movements.

Climate change adaptation
a connected view

A lot of work is being done to understand what our future climate might look like, and how this could affect the City of Melbourne's environment, people, and economy. This work describes a system full of interacting and moving parts, each with their own uncertainties and feedback loops. It's complex stuff.

The adaptation cost curve aims to connect the data, information and knowledge we already have. It builds a simplified model of the real world that lets us play with key assumptions and make connections that helps us better understand how climate change and actions for adaptation fit together. The model scaffolding and analysis that support the cost curve can help to:

Tell us about how the actions we are already taking are helping the city adapt to climate change; and
Support decisions about future actions and strategies that help us better adapt the municipality to climate change.

Concepts Climate risks Everyday hazards Climate change Impacts Thinking in systems

How might we think about the value of adapting climate change in more human terms?

In this section we outline an approach to considering the benefits of adaptation. It is a model-based approach that organises and connects what we know about climate change, with the different types of options we have for adapt. Although the framework includes many indicators that can be refined and added to over time, it is not intended to be 'comprehensive' version of reality. Instead, we focus on modeling the most practical and meaningful components of climate change adaptation to make better sense of how the system behaves.

A model of adaptation value weaves together expert input, longitudinal datasets, simplifying assumptions, and practical judgments. It very quickly becomes very complex. However the logic and algorithms used can be illustrated in very human terms by thinking about how climate change and adaptation actions 'fits' with what we experience, and what we can influence.

You can step though these concepts (and others on this site) by clicking through the green buttons above. Alternatively, you can use the menu navigation or scroll down to move ahead and learn more about how we might 'measure' the impacts of climate change and the value of adaptation actions.

Two ways to think about adaptation benefit?

REDUCE RISK RAISE RESILIENCE Avoid costs, damages, disruption and harm to people. Increase capacity to absorb, adapt, reorganise and evolve.

There are numerous ways to think about climate change adaptation: most are highly nuanced but all talk about quite abstract concepts like response measures, vulnerability, resilience, and systems. To make things (a bit) simpler, we'll be thinking about adaptation as a combination of measures that: reduce risk from climate hazards, and build resilience of the municipality to climate change. These are two quite different lenses that operate in the same system that binds the City's people, environment and economy.

So we need to find a way to consider both of these types of adaptation benefit. Let's start with climate risk...

These risks were identified as being the most relevant for the municipality in the City of Melbourne Climate Change Adaptation Strategy (2009). If we think of these risks in terms of extreme climate events, we can use meteorological data (from the BoM) to quantify their frequency and impact. Climate scientists use scenarios of emissions growth to predict how the frequency of future climate events might change. But there is not an agreed single scenario or model of the climate. These 'spotlights on the future illustrate a range of possible climate futures modeled by folks like CSIRO and the IPCC. What is clear is that climate risks are likely to increase over time. Think about extreme climate events and how they affect basic services and cause damage to the built environment. And then think about how this might impact on a series of social, environmental and economic indicators Now what if we thought about this as a connected system? We can make some logical connections to what we know Many connections have been researched which helps us to quantify their impact We can see that connections move in different directions across social, environmental and economic dimensions. They make up a system for us to explore and think about adaptation value. WE KNOW THE CITY OF MELBOURNE FACES CLIMATE RISKS WE EXPERIENCE THESE RISKS AS EVENTS WITH FREQUENCY AND THE BOFFINS SAY THESE FREQUENCIES WILL INCREASE WITH CLIMATE CHANGE HEAT HOT DAYS DROUGHT REDUCED RAINFALL FLOODING INTENSE RAINFALL AND SEA LEVEL RISE EXTREME WIND SEVERE WIND GUSTS HOT DAYS with temperatures between 30 and 35 degs VERY HOT DAY with temperatures over 35 degs HEATWAVES Three to five consecutive days over 30 degs DAYS OF DROUGHT Droughts last a long time. But we can think about the expected chance of drought (i.e. frequency) in terms of the average days per year over a long period of time. MINOR FLOOD One that might happen once in 20 years. A flood big enough to cause inundation up to 0.5m in properties. More than a nuisance! MEDIUM FLOOD One that might happen every 50 years A big flood causing more inundation (up to a metre) and damage to affected properties. MAJOR FLOODS One that might happen once every 100 years A really really big flood causing inundation up to 2 metres in affected properties. EXTREME WIND EVENT Really strong winds that damage stuff... but no one seems to able to predict these with any accuracy TODAY'S CLIMATE 21 per year 9 per year 2 per year 20 days on average per year 0.05 per year 0.02 per year 0.01 per year ?? per year ...AND SO BY 2100 35 per year between 27-55 days per year 24 per year between 15-36 days per year 29 per year between 23-30 days per year between 1.5-3 days per year 0.06 per year between 0.03 to 0.09 per year 0.03 per year between 0.01 to 0.04 per year 0.014 per year between 0.006 to 0.018 per year ?? HOW MIGHT WE THINK ABOUT CLIMATE CHANGE BY MAKING CONNECTIONS TO WHAT WE EXPERIENCE Built environment Health and wellbeing Livelihoods Liveability and connectedness Biodiversity and ecosystem services Productivity Direct costs We can adapt by taking actions that directly REDUCE EXPOSURE TO THESE RISKS and we can adapt by taking actions that IMPROVE THE RESILIENCE OF THE SYSTEM
Climate science Research and studies Risk indicators Measurement Valuing risk Resilience indicators

How can we begin to put some meaningful value on the benefits of climate change adaptation?

In this section we outline a lineage of research and inputs that could support a framework of adaptation risk indicators and resilience criteria. On the surface this would seem like a 'theoretical' framework, however its scope and detail have been shaped by and designed for the City of Melbourne's influence and decision making process.

The more quantifiable lens of risk is modeled using a 'reference case' which represents the future risk from extreme climate events if no additional adaptation actions are implemented. Put another way, this is the risk from extreme climate if we continue to do only what we are doing now.

The economic value of risk is limited to: i) damage to commercial and residential buildings; ii) damage to civil infrastructure; iii) business productivity loss from lost employee time (i.e. from climate-related disruptions and delays); and iv) increased costs of energy for cooling.

A reference case for social risk measures (heat-related deaths and disrupted services) is also presented, together with a set of resilience criteria for adaptation actions. These non-economic perspectives are critical to help us identify and recognise the more intangible value of adaptation.

HOW MIGHT WE START TO PUT SOME MEANINGFUL MEASURES AND VALUE ON CLIMATE IMPACTS We can estimate the frequency of future risks from climate change.. HOT DAYS DAYS OF DROUGHT VERY HOT DAYS MINOR FLOOD MEDIUM FLOOD MAJOR FLOOD We can research and model the impacts that climate change might have on physical assets assets and services that that affect people... This is simplified world requiring assumptions and the consideration of uncertainty. But this is designed to be added to and refined as better information becomes available. SOCIAL Livelihoods Liveability and connectedness Health and well-being ECONOMIC Damage to built environment Lost productivity Direct costs (energy & water) ENVIRONMENTAL Biodiversity and ecosystem services And we can start to think about and group a set of meaningful measures of climate risk. Mortality #deaths per year Illness # serious illnesses Disruption and Access # people denied access to basic services Access to nature # people with access to open space and parks Vegetation health % healthy vegetation Canopy cover (trees) % coverage and # trees Dollars $ value lost from the economy And here's what we have at the moment...a set of comparable 'headline' measures and ways to link the value of environmental assets to each of these meaures.
RAISE RESILIENCE Wellbeing Reconnecting with nature, relaxation, and outdoor physical activities Healthy Environment Cleaner air, waterways and vegetation health City identity Brand, reputation value, and leadership Community cohesion Better social interaction and trust within community and with Council Community readiness Education about climate change risks, issues and adaptation solutions Adaptive capacity Of council through staff awareness, knowledge and ability to consider adaptation; supported by organisational policies and structure

Resilience to climate change is a difficult concept to define, let alone measure. One way to to think about resilience is the capacity of a 'system' to absorb shocks, bounce back, evolve and transform. These ideas are not easy to quantify and are frequently woven into measures and actions that also reduce risk. However what we intuitively know however is that there is value in raising the resilience of people, environment and economy to climate risk.

In contrast to risk or avoided loss, we can think about resilience through a 'positive' lens. There is no 'stopping rule' for raising the level of resilience. And there is no baseline measure(s) of resilience. Instead, we need to think about improving resilience at the action level. The six resilience 'criteria' that are illustrated here are designed to be used alongside the risk indicators to better capture the broader adaptation benefit of individual actions.

Model estimate of the impact of future climate risk

Our actions and how they help the municipality adapt to climate change

In this movement we apply the adaption risk and resilience framework to a set of current, planned and 'speculative' City of Melbourne actions.

Many of the actions the City of Melbourne are taking are already helping to adapt the municipality to climate risks. Most of these actions are not driven by long-term adaptation concerns alone but do contain some 'co-benefit' for adaptation. This adaptation benefit is what we're trying to value here. We're isolating this component because we want to develop an evidence-based approach for thinking about and comparing adaptation actions.

With this in mind it is important to remember the adaptation value is additional part to a full 'business case'. Or put another way, you could think of this value as adaptation lens for comparing and actions.

How might we use the lenses of risk and resilience to better value adaptation benefit of our actions?

The City of Melbourne has identified over 100 current and planned actions that have adaptation value: by reducing risk or raising resilience to climate change. So what are they? And what can they us about how Council is currently adapting climate change?

In this section we'll take a closer look at the diverse range of adaptation actions and the challenges this presents in applying a consistent and comparable way of thinking about different actions. Let's start by taking a look at what the adaptation actions are and how they could be grouped.

This visualisation breaks down Councils adaptation actions in different ways. The size of each circle representing how likely an action is to be suited to being 'modeled' for adaptation risk. You can view the name of each action by hovering over them. The colours represent work streams of:

  • Preparing the Community
  • Improving Infrastructure and Planning
  • Working with the Environment
  • Sharing Knowledge and Learning

HOW MIGHT WE COMPARE DIFFERENT ACTIONS AND MODEL CLIMATE RISK BY CONNECTING HARD INFORMATION, ASSUMPTIONS AND SPECULATION Research and innovation Capacity development Collaboration Governance Legislation and regulation Design and trials Information and communication Capital works and infrastructure INFORMED STRATEGY AND PLANNING CONCRETE Responds to risk ABSTRACT Builds capacity SYSTEMIC & BEHAVIORAL RESPONSES ASSET & INFRASTRUCTURE RESPONSES TECHNOLOGICAL & PROCESS OPTIMISATION RESPONSES TYPES OF RISK BASED ADAPTATION RESPONSES There are lots more ways to categorise our adaptation actions. This schematic takes an evolutionary view of action types and is a useful way to think about the 'option' value of current actions, that will inform 'future' actions that have yet to be defined.The basic concept is that there are adaptation actions that build capacity and influence strategy and planning. These actions are higher in a 'chain' of actions that end with direct risk reduction. A simple example might be how a research project about flood modeling might lead to a trial and subsequent implementation of new emergency pumps. We can use this categorisation to find actions that are 'best candidates' for risk modeling - these are the more concrete actions - while other more abstract actions that don't directly interface with risk are still considered for their resilience benefit. The breakdown of actions by type reflects the City of Melbourne's influence and remit. The exact number will change over time, however currently around 20% of actions are good candidates for risk modeling. All risk models require assumptions about their costs and benefits. Estimates for costs like capital costs and contributed staff time are generally more readily available or can be estimated if similar actions have been done in the past. Estimating adaptation risk reduction is much trickier. This requires specific action modeling to wrangle data and map what we know about an action, to the system of of risk indicators that we have established. Dealing with more 'abstract' risk reduction actions - those that are higher in the 'chain' - requires a speculative approach to modeling costs and benefits. In these cases, design fictions can be used to establish a storyline of how a future action might be described. Cost and benefits can be extrapolated from what we know about similar actions, and referenced to our existing system of risk indicators. This helps us speculate under similar assumptions in a consistent framework. By applying this 'speculative' approach we can build on our understanding of adaptation to develop foresight about what our current actions might lead to, and their adaptation benefits.

You can use this page to view a snapshot of descriptions, approach and key modeling assumptions made for currently modeled actions.

About the action

Adaptation costs and risk benefits

Key risk model assumptions


In this final movement we explore how might we make this modeling and way of thinking useful to City of Melbourne staff and decision makers?

We take a visual and interactive approach to exploring the outputs of the action modeling, to make sense of what the 'numbers' are really telling us. Our starting point is a 'cost curve' - a tool widely used in economics - which ranks actions by their cost-effectiveness for economic risk reduction. This is a powerful decision support and communication tool but abstracts away most of the critical detail and systems thinking applied to this adaptation benefit framework.

To enhance the cost curve, we can add layers of social risk and our resilience criteria to help you understand the real texture behind the raw economic numbers. These lenses provide different perspectives and insights into the how to compare adaptation actions, and the City of Melbourne progressing towards adapting the municipality to climate change.

Exploring the cost-effectiveness of actions to reducing climate risk

Appendix: And that's it...right?!

The adaptation cost curve provides a number of different views and perspectives on the value of adaptation actions. Although there are social indicators and resilience criteria overlaid to this curve, it starting point is based in economic risk reduction - a language that is familiar, quantifiable and most easily recognised in the existing decision making paradigm.

As an addendum to the cost curve, we can look either delve deeper into the numbers - the risk reduction outputs of the modeling - or look at further ways to view and compare actions across the multiple risk and resilience criteria we have sought to measure. The two pages available in this section are provided for you to take your exploration in either of these directions.


Experimental views:
How might think about multi-criteria ranking and robustness

Below is a lo-fi prototype visualisation to help explore performance across risk and resilience dimensions. Each line represents an action with 'higher' lines indicator high relative performance against a criteria. Patterns can be explored using the movable and brushable axes. ITooltips and colour to identify actions coding will be added to make this easier to use!.

Sense checking of the risk model outputs

Modeled risk reduction actions - which totaled around 20 out of 40 better candidates, and included potential future actions - are expected to reduce economic climate risks by around a quarter, and could reduce heat related deaths by around 40% to 2100.

Estimated impact
of hazards

Current risk in 2015

Hot day: $0.5m

Very hot day: $1.1m

Minor flood: $180m

Medium flood: $360m

Major flood: $3,050m

And in 2015

Hot day: $1.2m (+160%)

Very hot day: $2.6m (+138%)

Minor flood: $190m (+2.7%)

Medium flood: $370m (+4.6%)

Major flood: $3,190m (+4.7%)

Estimated risk
(adjusted for hazard frequency)

Current annual risk in 2015

Estimated to be around $56m

In 2030

Between $82m and $92m (Median +27%)

In 2070

Between $118m and $158m (Median +94%)

In 2100

Between $141m and $224m (Median +163%)

Estimated risk reduction
from modeled actions

By headline risk indicator

Economic value: ~27%

Heat-related mortality: ~45%

Disruptions: ~0.6%

Economic value by risk

Heat: ~19%

Flooding: ~33%

Economic value by indicator area

Business productivity: ~13%

Energy and water costs: ~43%

Damage to commercial buildings: ~19%

Damage to civil infrastructure: ~57%

Damage to residential buildings ~50%

Note: all figures are ESTIMATES subject to modeled inputs and assumptions and are presented in $2015 terms