Understanding economic analysis for coastal adaptation (in prep)

Economic analysis in coastal climate adaptation provides a structured way to compare the costs and benefits of different strategies, helping decision-makers prioritise options that maximise long-term resilience under uncertainty. Many coastal impacts involve non-market values and uncertain futures, therefore it is important to include stakeholders in the process and to use multiple complementary methods rather than rely on a single approach.

by In prep: more to come.

At a glance

Coastal adaptation decisions must account for long timeframes, uncertainty, and climate risk, often using risk-based or flexible approaches.
There is a need for integrated, iterative appraisal frameworks combining economics with engineering, environmental, and community considerations.
Cost–benefit analysis (CBA) is the primary tool, but is often complemented by cost-effectiveness and multi-criteria analysis.

Economic analysis helps guide coastal climate adaptation decisions

Climate change impacts threaten coastal infrastructure, ecosystems, and communities and so require adaptation planning that is evidence based and supported by the community. Economic analysis plays a central role in this process by helping decision-makers allocate scarce resources efficiently and prioritise adaptation strategies that support fair adaptation and resilient communities.

Broadly, the aim of economic analysis for coastal adaptation is to compare the costs of implementing adaptation measures with the benefits of avoided damages, reduced risks, and improved resilience.

This is particularly important for coastal contexts, where adaptation investments often have substantial upfront costs, long timeframes for implementation and long-term implications under a future climate. It is also challenged by difficulties inherent in

Economic methods can provide a structured framework for coastal adaptation by enabling systematic comparison of options and supporting efficient investment decisions.

Challenges for economics of coastal adaptation

Commonly used economic methods

Commonly used economic methods in coastal adaptation

Cost benefit analysis

Multi-criteria analysis

LIfe cycle costing

Methods that consider undertainty

Real options analysis

Economics for nature-based strategies

State guidance for economic adaptation at the coast

State-based guidance for economic analysis in coastal adaptation reflects a spectrum from more prescriptive approach to economic appraisal through to flexible planning frameworks.

Broadly, they recommend a shift from standalone CBA toward integrated, flexible, and risk-based economic evaluation frameworks that take into account consider the uncertainty and complexity of coastal climate adaptation.

State	Program	Approach to economics	Key methods used
NSW	Coastal Management Manual & Coastal Management Programs (CMPs)	CBA-centred	CBA, monetisation tools
Queensland	QCoast2100 Coastal Hazard Adaptation Strategy (CHAS)	Structured integrated framework	MCA + CBA required
South Australia	Climate Ready Coasts Economic Analysis Technical Compendium	Practical toolkit	Full + rapid CBA Qualitative
Tasmania	State climate adaptation & coastal planning frameworks (no specific coastal program)	Strategic, high-level	Qualitative + external methods
Victoria	Victoria’s Resilient Coast. Adapting for 2100+	Flexible decision framework	CBA + MCA + qualitative
WA	Coastal Hazard Risk Management and Adaptation Planning (CHRMAP)	Planning-led	Variable, project-specific

READ:

a CoastAdapt case study that broadly outlines the economic value of adaptation for Victoria.