New developments in risk governance: exploring risk attitudes and preferences for climate adaptation

16:15 Wednesday 29 May

SP036

Room S9

 

Elisa Sainz De Murieta (Spain) 1,2; Ibon Galarraga (Spain) 1; Anil Markandya (Spain) 1

1 - Basque Centre for Climate Change (BC3); 2 - Grantham Research Institute (LSE)

Stakeholders are increasingly demanding science to provide actionable, solution-oriented insights that can inform climate adaptation policies. In this context, there is arising interest in using risk-based approaches, including appropriate methods and metrics, to support adaptation decision-making. Risk management is a well-established discipline, which is familiar not only to decision-makers but also to many stakeholders, financial entities and private companies, and it has been previously applied to deal with current natural hazards. Risk-based methodologies enable dealing with uncertainty and defining robust measures that perform well under a wide variety of scenarios, which is very relevant to build flexibility in a dynamic climate change setting.

Assessing the probability and magnitude of climate change impacts has received much of the attention so far. However, risk affects and is perceived differently by different actors, as they might present different exposures, vulnerability, attitudes and capabilities to deal with climate change risks. Actors may include individuals, policy-makers, businesses, NGOs, social groups, etc. As a result, risk preferences are strongly dependent on social, cultural, and economic contexts, which shapes what risks are considered acceptable, tolerable or intolerable.

Applying risk-based approaches to climate change adaptation has been suggested to be relevant to account for different perceptions of risk and corresponding social preferences, including identifying risk thresholds, prioritising interventions, discussing available strategies to manage and cope with risk and estimate the costs or trade-offs of the different options.

The aim of this session is to examine recent developments on risk-based approaches to adaptation and the opportunities and barriers of risk attitudes and preferences in policymaking. We will present different approaches to deal with risk preferences at different scales (national, local, individual) and analyse how the results can be used to increase policy effectiveness. We expect the session to: 1) deliver a future outlook and research agenda, 2) give practical examples of best practices, and 3) provide some convergence in the rapidly expanding discussions surrounding risk governance.

This work is currently being developed under the project COACCH_ Co-designing the Assessment of Climate CHange costs funded by the European Commission H2020 Research Programme (grant no. 776479).

Target audience

The session is aimed at researchers with different backgrounds, policymakers and practitioners that can provide a different understanding about how risk attitudes can shape risk preferences. The discussion should be relevant to other actors such as businesses (private adaptation, investments and finance), and stakeholders such as international organisations, NGOs or other groups.

Proposed format for the session

We propose to start the session with a 10-minute introductory talk (Mechler) that will give an overview of the opportunities and challenges of addressing risk preferences and limits to boost effective adaptation action.This will be followed by five contributions, each of which presents a different perspective of risk perceptions and adaptation. Contributions 1 and 2 (van Ginkel et al., and Sainz de Murieta et al.) address the different risk perspectives by stakeholders at different levels of governance. Contributions 3, 4 and 5 (Milan Ščasný and Iva Zvěřinová; Markanday et al., and Tesselaar et al.) analyse risk preferences from an individual perspective.

We welcome one or two external contributions to be selected by the session organisers. The timing of each presentation will depend on the final number of contributions but would range between 10 and 15 minutes. There will be a panel discussion at the end of the session that will be designed to encourage and facilitate an open dialogue with the audience.

Contributing Authors abstracts

Introductory presentation: Reinhard Mechler – The evolution of risk in socio-economic analysis of disaster management and climate change

Concepts, methodologies, methods and metrics associated with climate-related risks have been of fundamental and increasing saliency for informing policy and action on the mitigation and adaptation challenge. The talk traces the evolution in risk conceptualisation, modelling and assessment as well as policy for the examination and management of climate and disaster risks. This broad inter-and transdisciplinary field of research has seen important development in terms of framing, definitions as well as methodological development.

The central line of argumentation of this paper is to show how thinking and analysis over the last few years has seen important evolution towards broad-based debate concurrently encompassing epistemological, instrumental, reflective and participative discourses, thus providing great potential for informing action on key challenges associated with extreme event risks across multiple scales along the science-society interface.The argument is supported by tracing key contributions to the risk literature and debate with regard to conceptualizing, modelling and the assessment of disaster and climate risks, risk policy and governance. We will particularly focus in the roles of considering risk preference and any limits to adaptation.

Affiliation: IIASA

1. Kees van Ginkel1,2, Marjolijn Haasnoot1,3, Wouter Botzen2, Ad Jeuken1, Karl Steininger4, Gabriel Bachner4, Paul Watkiss5, Esther Boere6, Jochen Hinkel7Stakeholder perceptions of risks of climate-induced socio-economic tipping points

Gradual changes in climatic conditions may have disproportionally large effects on socio-economic systems, causing them to function fundamentally different. We refer to those changes as climate-induced socio-economic tipping points (SETPs). In the Horizon-2020 project COACCH, stakeholder consultation was used to draw an inventory of SETPs with policy relevance for Europe. Example SETPs are drought-induced migration towards Europe, financial collapse of low-lying ski resorts, alterations in flood insurance systems (see Tesselaar et al. in this session) and reconfigurations of agricultural systems. In this presentation, we discuss the characteristics of these SETPs; in particular the role of stakeholder perceptions and associated risk tolerance in defining SETPs. We show that stakeholder risk perceptions are decisive for the identification and impact analysis of SETPs, in particular in defining acceptability thresholds. Based on our findings, we give directions for further research on policy relevant climate-induced socio-economic tipping points in Europe.

Affiliation: (1) Deltares, Delft (2) Institute for Environmental Studies, VU University Amsterdam, (3) Utrecht University (4) University of Graz (5) Paul Watkiss Associates, Oxford (6) International Institute for Applied System Analysis, Laxenburg (7) Global Climate Forum, Berlin

2. Elisa Sainz de Murieta, Ibon Galarraga and Marta Olazabal (BC3) – Involving stakeholders in decision-making about risk: a case for sea-level rise

In this study we develop an elicitation approach to engage with city stakeholders to define acceptable risk levels (ARLs), using risk measures as a main input. We present an innovative risk-based approach in which we assess the combined effect of sea-level rise and coastal extremes in 600 cities in Europe accounting for extreme events at the high-risk tail of the probability distribution of damages, under three climate change scenarios (RCP2.6, 4.5 and 8.5). We estimate two risk measures well-known in financial economics, which have been extensively and successfully used to account for the uncertainty of many different economic variables. These are the Value at Risk (VaR(95%)) and the Expected Shortfall (ES(95%)); the former represents the damage at the 95th percentile of the distribution and the latter the average damages of the 5% worst cases. We argue that using risk-based approaches that allowto consider climate change uncertainty in combination with social preference elicitation methods can be a very relevant contribution to adaptation decision-making processes in cities.

Affiliation: Basque Centre for Climate Change (BC3).

3. Milan Ščasný and Iva Zvěřinová – Public acceptability of climate change adaptation measures to reduce negative impacts of droughts

We examine preferences of people to limit damages from droughts by adaptation programs that are described by measures, proportion of people at risk after implementation of the program, and household costs. We address three types of adaptation measures: nature-based, technical and non-structural measures. We used discrete choice experiments to analyse the trade-offs among the measures, the size of the risk and the costs. Preferences were elicited in a representative questionnaire survey (N=8,078) conducted in three EU countries (the Czech Republic, Italy, and the United Kingdom). We investigate to what extent the acceptability of adaptation programs is affected by type, perceived effectiveness and level of implementation of adaptation measures, respondents’ risk attitudes and exposure to drought risk. The larger share of people benefiting from the risk reduction, the higher is the willingness to pay (WTP) for an adaptation program. However, the type and perceived effectiveness of a measure increase the WTP even more. Rainwater harvesting is the most preferred measure in all countries, followed by small water reservoirs and wetlands in the Czech Republic, large reservoirs in the UK, and tax relief on water efficient technologies in Italy.The results are discussed in the context of current and planned policy options.

Affiliation: Charles University Environment Centre

4. Ambika Markanday1, Ibon Galarraga1and Steffen Kalbekken2 –  Seeing is believing: the power of visual and impact framing for determining risk acceptability on climate change

This study explores how individuals determine ‘acceptable levels’ of climate change risk for investment decision-making on adaptation. An incentivised laboratory experiment (n=161)is conducted on a sample of the general population in Bilbao, Basque Country (Spain). Based on a range of adaptation options with various costs and probabilities of impacts, participants are asked to assume the role of a policy maker and make adaptation investments at two decision points: period 1 and period 2. The effect of visual (photo vs. no photo) and impact (single value vs. range) framings on risk decision-making is tested. Emotional responses, experience, place attachment and socio demographic variables are also explored. The study finds people tend to invest more in protection when shown a photo of impacts. This effect is reduced in the range condition, possibly due to higher mental effort (and less emotive reasoning) required within this treatment. Photo framings are more effective at promoting greater concern and emotive response, particularly relating to feelings of guilt and fear. Interestingly, participants who ‘experience’ damages in period 1 invest more to protect themselves in period 2, despite costs and risks remaining the same. The study finds no significant difference in risk propensity between genders.

Affiliation: (1) Basque Centre for Climate Change (BC3); (2) CICERO Center for International Climate Research

5. Max Tesselaar1, Paul Hudson2, Wouter Botzen1,3 and Jeroen Aerts1 – Efficient and equitable flood insurance arrangements for future flood risk under climate change.

Adequate insurance arrangements are required in order to adapt to increasing flood risk resulting from climate- and socio-economic change. In particular, flood insurance markets may need reform to offer sufficient and affordable financial protection, as well as incentives for risk reduction. In this study we aim to evaluate which type of flood insurance arrangements in Europe are able to cope with trends in flood risk, using criteria that encompass economic efficiency and equity. We show that the average risk-based flood insurance premium could double between 2015 and2055, unless changes in behaviour increase risk mitigation efforts by households. We show that part of the projected increase in flood risk and flood insurance premiums could be limited by flood insurance mechanisms that enhance risk awareness and encourage policyholders to reduce this risk. The affordability of flood insurance can be improved by introducing key features of Public-Private-Partnerships (PPP), which include public reinsurance, limited premium cross-subsidization between low- and high-risk households, and incentives for household level risk reduction. These findings were evaluated in a comprehensive sensitivity analysis, and support ongoing reforms in Europe and abroad that move towards risk-based premiums and link insurance with risk-reduction, strengthen purchase requirements, and engage in multi-stakeholder partnerships.

Affiliation: (1) Institute for Environmental Studies (IVM), Vrije Universiteit (VU) Amsterdam, (2) Institute of Earth and Environmental Science, University of Potsdam, (3) Utrecht University School of Economics (USE), Utrecht University (UU).

6. Vera Ferreira – Climate change, human security and migration: an integrated approach

As the pernicious impacts of climate change accelerate, their disruptive repercussions on human security and migration dynamics also increase. We thus analyse these connections, identifying the adverse implications of climate change for human security and its decisive influence on human displacement.

According to the United Nations Development Programme definition, threats to human security can be considered under several interconnected dimensions: economic, food, health, environmental, personal, community and political – all of them are at risk from climate change. Indeed, relying on the most recent scenarios and projections from the Intergovernmental Panel for Climate Change (IPCC), the progressive degradation of ecosystems and natural resources, as well as climate-related extremes, are already and will further reduce (among other effects) the availability and quality of freshwater, fertile soils and crops, also causing the destruction and damaging of infrastructures and settlements. Consequently, the livelihoods and overall well-being of many populations are dangerously compromised (especially in developing countries), which plays a decisive role in their decision and effective capacity to migrate (either internally or internationally, temporarily or permanently). Hence, drawing on the consensus in recent literature, that establishes the complexity and multicausality of climate migrations, we interpret this outcome as the convergence and interaction between climate factors and pre-existing political, economic, social or demographic elements.

Therefore, as climate migrations illustrate, the vulnerability to be negatively affected by climate change does not result exclusively from its direct and physical impacts, but from the articulation between these climate factors and other equally relevant non-climatic aspects. As it is recognized by the IPCC, individuals and communities that live in contexts of profound and multidimensional – and, in many cases, growing – inequality and/or exclusion (whether of a political, social, economic, institutional or cultural nature), or that are discriminated due to gender, ethnicity, religion, class, age or disability, are particularly vulnerable to the consequences of climate change. Moreover, these conditions of internal inequality must be analysed in a larger scenario of structural disparity in the distribution of power and wealth at the global scale, which has been generating differentiated and uneven degrees of development. In sum, the regions, states, communities and individuals that benefit the least from current political and economic relations, will also be the most exposed to the impacts of climate variability – which, in turn, will intensify the already challenging issues of inequality, exclusion and poverty, creating new threats to human security and modifying migration fluxes.

Affiliation: Instituto de Ciências Sociais da Universidade de Lisboa