Economic evaluation of climate change adaptation projects: approaches for the agricultural sector and beyond

This paper identifies key challenges and solutions for carrying out project-level economic analysis of adaptation to climate change, both stand-alone and integrated into broader development projects. Very few projects addressing adaptation thus far have been subject to in-depth and rigorous economic analysis for a variety of reasons, including a lack of guidance on how to deal with assessments of the impacts of climate change, as well as with estimating costs and benefits of adaptation under uncertainty. The focus is on the agricultural sector, where the impacts of climate change have the potential to disrupt the livelihoods of rural populations in many regions and where adaptation must be given urgent consideration. Nevertheless, some of the approaches discussed are suitable to projects in other sectors as well.