Working Group II: Impacts, Adaptation and Vulnerability

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2.5. Methods for Costing and Valuation

Since the SAR, costing and valuation methods have been used increasingly to quantify the cost of potential impacts; these costs include the costs of adaptations required specifically to respond to climate change and climate variability, as well as the costs of residual damages. The bulk of this section focuses on the foundation of economic costs, but there are metrics other than the economic paradigm; these are reviewed briefly in Section 2.3.6.

Researchers have adapted fundamental costing and valuation techniques drawn from the economic paradigm to handle the complexities of increasingly intricate applications. Market mechanisms provide important ways with which we can aggregate across a diversity of individual valuations, but they are tied to historical distributions of resources. Other mechanisms have been exercised, and this section begins by displaying their conceptual foundations within the economic context from which they have all evolved. It proceeds by suggesting how relaxing each underlying economic assumption has been a conceptual challenge. Many of the responses to these challenges, however, are now part of the general economic paradigm.

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