Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook (2020) / Chapter Skim
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6 Introduction Scientific studies widely show climate is beginning to exacerbate extreme weather. Higher temperatures mean more evaporation and moisture in the atmosphere and stronger storms, droughts, and heat waves.
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Cost-Benefit Analysis Overview 7 and recovery has shown that prevention is a worthwhile investment many times over. Several years of TRB workshops on climate change adaptation and CBA concluded that discounting the future and the magnitude of likely costs is a problem, pointing to a need to extend research and work toward prevention and mitigation.
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8 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook transportation assets and corridors for vulnerability and criticality, such as the Vulnerability Assessment and Adaptation Framework, 3rd Edition (https://www.fhwa.dot.gov/environment/ sustainability/resilience/adaptation_framework/index.cfm) , and Assessing Criticality in Transportation Adaptation Planning (https://www.fhwa.dot.gov/environment/sustainability/resilience/ publications/assessing_criticality/index.cfm)
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Cost-Benefit Analysis Overview 9 tions provide additional information about the conditions being used as the basis for the CBA. When determining assumptions, it is important to establish a baseline, that is, the status quo, against which identified alternatives will be evaluated.
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10 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook to evaluate among alternatives. The CBA metric used for selection will depend on the agency's priorities or means of doing business (metrics are discussed further in the sections that follow)
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Cost-Benefit Analysis Overview 11 discount rate of 7 percent has been used for federally financed projects. At one time this was conservative -- it meant more public investment or service now.
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12 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook Simple Payback Period Simple payback period is the number of years or months until capital is recouped by the flow of benefits or cash flow. The payback period is used to determine timing of the project or the length of time capital is at risk.
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Cost-Benefit Analysis Overview 13 discounting cash flows over time using the discount rate and summing the discounted values. This metric allows the time value of money to be taken into account because cash flows further into the future become more discounted.
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14 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook The DOT might have different criteria for making its decision about which alternative to pursue: • A budget-constrained agency might want to limit the first cost to accommodate low available capital. In this case, the agency would select Alternative A, as it has the lowest initial cost.
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Cost-Benefit Analysis Overview 15 them up to measure the TBL in dollars. Multiple interest rates might be used to reflect the different time frames associated with economic, social, and environmental benefits (see Appendix A for more detailed information about interest rate selection)
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16 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook resources and long-term public infrastructure. Public right-of-way, road bases, and so on are also long-term public investments.
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Cost-Benefit Analysis Overview 17 (Investopedia, 2020)
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18 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook agencies and private entities that enable greater private sector responsibility for a transportation project, including in design, delivery, financing, operation, and maintenance, beyond traditional design–bid–build procurements (Parsons Brinckerhoff et al., 2015)
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Cost-Benefit Analysis Overview 19 Box 1. Hooksett Rest Stop: A Successful Public-Private Partnership in New Hampshire Interstate 93 in New Hampshire serves as a main thoroughfare between Boston, the White Mountains, and Lake Winnipesaukee, where many visitors enjoy the natural beauty and outdoor activities of the area.
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20 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change -- Guidebook line (unless externalities such as pollution are internalized by giving them a market price or tax)
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