Getting Real about Adapting to Climate Change: Using ‘Real Options’ to Address the Uncertainties

Leo Dobes[1]

Table of Contents

Abstract
Introduction
Impacts assessment: the Mikado’s little list
Australian governments: more of the same
Uncertainty makes deterministic planning dangerous
‘Real options’: a cleverer option
Identifying and creating ‘real options’ in adapting to climate change
Steering, not rowing: the role of government
Conclusion
References

Abstract

Scientists predict that some climate change is already inevitable, even if greenhouse emissions are stabilised. Adaptation strategies will be of comparable importance to reducing emissions. However, the specific effects of climate change are currently unknowable, especially at the local level. Given this uncertainty, deterministic adaptation strategies are inappropriate. Rather than building ‘worst-case scenario’ sea walls, for example, strong foundations can be laid — so that walls can be built (or not built) in future to match actual climatic conditions without incurring unnecessary upfront expense. Other examples of such ‘real options’ are provided to illustrate the feasibility of the approach.




[1] Crawford School, the Australian National University, Leo.Dobes@dobes.com.au