DECISION-ANALYSIS OF SHORELINE PROTECTION UNDER CLIMATE-CHANGE UNCERTAINTY

If global warming occurs, it could significantly affect water resource distribution and availability. Yet it is unclear whether the prospect of such change is relevant to water resources management decisions be ing made today. We model a shoreline protection decision problem with a stochastic dynamic program (SDP) to determine whether consideration of the possibility of climate change would alter the decision. Three q uestions are addressed with the SDP: (1) How important is climate chan ge compared to other uncertainties?, (2) What is the economic loss if climate change uncertainty is ignored?, and (3) How does belief in cli mate change affect the timing of the decision? In the case study, sens itivity analysis shows that uncertainty in real discount rates has a s tronger effect upon the decision than belief in climate change. Nevert heless, a strong belief in climate change makes the shoreline protecti on project less attractive and often alters the decision to build it.