Climatic Change http://doi.org/h2w (2012)

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Investments in urban drainage and flood protection are based on impact assessments under a specified climate change scenario to identify a singular optimal adaptive strategy. However, such an approach is risky under a rapidly changing climate.

Berry Gersonius, of the UNESCO-IHE Institute for Water Education, The Netherlands, and colleagues advocate for a managed/adaptive strategy that allows investors to adjust to future uncertainties as they unfold, and propose 'real in options' (RIO) analysis as an appropriate method. RIO analysis is based on a multiple-step optimization model that includes setting scenarios for an uncertain process, identifying investment options under the different scenarios and optimizing them in terms of key objectives and constraints. They test the method in the case of an existing urban drainage system in West Garforth, England. They identify an optimal set of adaptive strategies with an expected net present cost of £1.70 million. The standard strategy of adapting to a single scenario would deliver, for the worst climate change path, a net present cost of £2.13 million.