As Nigel Arnell demonstrates in this extract from his book A Short Guide to Climate Change Risk, adopting a practical, risk management, approach to climate change offers significant benefits for your business and the planet.
There are two main ways of looking at adaptation to climate change. The first is to see climate change as a specific challenge, and to determine how to adapt to that challenge: to ask, for example, how we can continue to provide the same service under a changed climate. The second is to see climate change as one factor that needs to be included in a review or investment decision. Organisations are continually adjusting to altered circumstances and planning new developments, and climate change can be seen as simply one part of this. The question an organisation might ask could therefore be ‘how can we account for climate change risks in our investment planning’.
Regardless of whether adaptation to climate change is seen as a specific task or as part of a larger review or planning process, there are several different ways of approaching adaptation. These affect the design of adaptation options, and how adaptation options are evaluated. There are five basic approaches:
- Cope with climate change by adapting better to current vulnerabilities;
- ‘Predict and plan’: predict the future and plan accordingly;
- Take a precautionary approach: plan for the worst;
- Follow an adaptive approach: hedge and review;
- Implement win-win measures.
All these approaches have strengths and weaknesses.
Adapt to Current Vulnerabilities
The risk assessment process is likely to have identified a set of vulnerabilities to current climatic variability and extreme events. An organisation may have discovered that its operations would be significantly affected by a flood, or that its supply chain may be disrupted by a drought affecting crop production, or that a heatwave may adversely affect worker productivity. Even with no change in climate, measures to reduce exposure or vulnerability to flood, drought or heatwave would therefore reduce risks to the organisation. Adapting better to current variability in weather – improving resilience – therefore goes part of the way to adapting to future climate change. However, it is not necessarily sufficient, for two reasons. First, future extreme events may be different in character to events that occur at present. They may be more intense or more persistent, or occur closer together; they could even become less frequent. Second, what seems like an appropriate response to current vulnerability may not be an appropriate response to future vulnerabilities. Suppose for example that a facility is exposed to flood risk at present. One response could be to build a protecting wall around the facility to keep flood water out, and that could encourage further investment in the facility. However, as climate changes the chance of flood water breaching the defences could increase, or an increased frequency of heavy rainfall events could mean more water is ponded within the facility, and because investment in the facility has increased losses would be higher. In this case, the adaptation to current vulnerability would have led to increased exposure to loss in the future. Another adaptation – such as making the facility itself less vulnerable to being disrupted by water – might not be so appealing in the short term, but might be better in the long term.
Predict and Plan
A second potential approach is to make a forecast of the future effects of climate change, and design an adaptation plan accordingly. This may include incorporating some form of ‘safety factor’. Such an approach has traditionally been widely used in planning over a range of time-scales, and there is accordingly a large literature and much accumulated experience. However, whilst the approach might be appropriate over the weekly and perhaps monthly scales of weather forecasts, there are substantial problems in applying the approach over the medium and long terms. First, we cannot make forecasts of future climate – as explained in more detail in Chapters 2 and 5 – and can only make plausible projections conditional on specific assumptions. Second, there can be considerable uncertainty in these projections, and no individual projection is necessarily more plausible than another. It would therefore be rather risky to plan on the assumption that any one individual climate scenario turns out to be ‘true’. If the future were to turn out to be different, then the adaptation made may be quite inappropriate; it could be completely ineffective, or vastly over-engineered and expensive. ‘Predict and plan’ encourages us to put all our eggs in one basket. It does not encourage flexible or adaptable management.
Chapter 5 introduced probabilistic approaches to risk assessment, which involve the construction of probability distributions of potential impact from the use of many climate scenarios. Whilst these provide very useful information on the distribution of potential impacts, there can be a strong temptation to use a probabilistic approach to ‘predict and plan’. For example, it may appear tempting to plan to be able to cope with the impact as represented by the 90% value on the probability distribution. In the example given in Figure 5.9 there is a 10% chance that the impact indicator will reduce by more than 45%, so there is a 90% chance that the impact will be less than a reduction of 45%. On first sight, it could make sense to plan for a reduction in flows of 45% and be 90% confident that this will be sufficient. However, our probability distribution is itself uncertain (we do not know if there really is a 90% chance that the flow measure will reduce by less than 45%) and, as noted above, focusing our planning efforts on one number may mean we do not consider flexible or adaptable approaches.
The precautionary principle has been widely defined, and basically implies that action should be taken to reduce potential adverse consequences even if those consequences have not been clearly defined or quantified. A precautionary approach therefore in a sense seeks to ‘plan for the worst’, and can be seen as a variant on the traditional ‘predict and plan’ approach: it simply uses the ‘worst case’ scenario. This approach may be appropriate where the risks are extremely significant, or where we know what the ‘worst case’ might be, but like ‘predict and plan’ may not necessarily be appropriate in the context of climate change. Whilst we can estimate impacts under the most extreme scenario (for example with the highest temperature increase or largest reduction in rainfall), we cannot say whether these really represent the worst case. The most extreme scenario available may be highly unlikely or implausible, or on the other hand may not actually represent the most extreme change that could plausibly occur.
Adaptive management is defined as the sequential and continual process of making the best decision at each decision point, 1  and is an important potential strategy for handling uncertainties. It can be seen as a strategy of ‘hedge and adjust’ rather than ‘predict and plan’. Decisions are reviewed as more information becomes available, and plans and actions adjusted. Central to adaptive management is the idea that it is important to keep all potential future options open, and not to take decisions that might constrain future options. Adaptive management involves testing potential adaptation options against a range of scenarios.
Adaptive management is particularly suited to circumstances where decision lead times are short, where actions can be easily updated or revised, or where actions can be deferred. It is more difficult to apply where lead times are long and where, once committed, decisions are difficult to change. This may be the case with capital investments with long payback times or which are difficult to upgrade. For example, once installed an air-conditioning unit may be expensive to upgrade, or a building once completed might be expensive to refit.
Climate change is only one of a number of challenges facing an organisation. Some actions to cope with climate change risks may affect these other risks, and indeed some measures to address other risks may affect vulnerability to climate change. ‘Win-win’ measures are those which have multiple benefits. For example, office buildings can be designed to be less sensitive to heatwaves (adapting to climate change), whilst using less energy (reducing costs) and having better indoor air quality (improving worker productivity). Reducing water use lessens vulnerability to water shortages, and reduces costs. Win-wins are best identified by considering climate change alongside other risks and opportunities.
Adapted from A Short Guide to Climate Change Risk, Nigel Arnell 2014, Gower Publishing, Farnham.
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