Climate change will have drastic affects felt around the globe, and has already made its mark in many areas–in Australia, the estimated gross domestic product was reduced by 0.5 per cent due to the Queensland floods of 2010–11, and the Victorian bushfires of 2009 (commonly referred to as ‘Black Saturday’) cost more than $4 billion and resulted in the deaths of 173 people.
The Australian Government is looking to mitigate these kinds of outcomes from extreme weather events, and focused their attention on the Narrabeen Lagoon – located in the northern suburbs of Sydney, Australia – which is already subject to flooding. When the Narrabeen lagoon’s entrance is blocked, it can fill like a bathtub, thus flooding the surrounding land and houses. Because climate change is expected to increase flooding in the Narrabeen catchment over the coming century, decision makers needed a clearer understanding of the different possible adaptation measures.
The Australian Department of Climate Change commissioned AECOM, a professional technical and management support company, to evaluate the risk and costs of climate-change-related flooding of the Narrabeen Lagoon. Using @RISK to run Monte Carlo simulation and optimization techniques on their analysis, AECOM was able to estimate the social benefits of adaptation to climate change in terms of willingness to pay, rather than just costs avoided. Thanks to @RISK, they generated more realistic probabilities of overall costs and benefits, and modeling the expected future values of variables such as rainfall.
“The benefit of this approach is that it avoids the opportunity cost of early or no investment, while empowering decision makers to determine the options (i.e. pathways) that are the most suitable for adapting to climate change at a given point in time,” says Robert Kinghorn, who previously worked on the project as economists at AECOM.
Read the full case study here.