Contingent Valuation for Climate Adaptation: Approaches and Database
The most critical challenge in calculating a project’s VRC generating capacity is estimating the avoided impact costs (AIC). The VRC Standard Framework provides the framework and permissible approaches, but each project type and sector shall have its own unique challenges. It is desirable for projects to incorporate all applicable AICs to the extent that this may be undertaken while meeting the Standard Framework’s outcomes confidence requirements.
Many of the real impacts of climate change cannot be measured using market pricing approaches, and require alternative approaches to incorporate their values into the avoided impact analysis. While AICs that are calculated from market prices are completely appropriate, non-market AICs are equally important and applicable, but may be more challenging to establish with sufficient confidence. Thus, this toolkit is intended to provide support in estimating the non-monetised factors, and refers to work HGF has undertaken in creating an accessible database of applicable studies.
For non-market goods, Contingent Valuation (CV) is the only method that is able to incorporate the existence or passive use component of the economic value into the valuation process. Passive-use is when consumers can get utility from a good without physically using it.
CV studies explicitly for adaptation are limited. Nonetheless, a large number of CV studies are appropriate for adaptation, and HGF undertook a research project to identify and categorise these in a user friendly database. While HGF is primarily interested in CV for VRC assessments, we suspect that this work will be of interest to the broader community of experts interested in estimating the impacts of climate change and climate adaptation measures to mitigate these impacts. Enabling a more comprehensive measure of economic impacts can serve to make the case for climate adaptation more compelling for policymakers, businesses, communities and individuals.
The Higher Ground Foundation invites sectoral experts in climate adaptation projects, economists and others with expertise in contingent valuation, and the broader community engaged in supporting and implementing climate adaptation projects, programs and policies to offer their insights and engage with us as we work to improve the capacities for applying VRCs for a broader set of adaptation interventions, and counting more holistically the benefits of these interventions.