For public actors, the subsequent decision node to be addressed is whether indirect outcomes of an adaptation option are important. This is relevant only for public decision makers, as in considering social welfare indirect outcomes can often have a significant effect. For private actors, it is unlikely that indirect outcomes will be of a magnitude to effect their own private interest. Indirect outcomes may be produced at more aggregated levels of society through, for example, cross-sectoral spillover effects.
For example, a particular option may result in a large segment of the population experiencing an economic benefit. These individuals, however, will not simply keep this benefit to themselves, on the contrary, they will likely increase their consumption as a result. This will create indirect effects throughout the economy, changing the relative prices of goods, and the output in different sectors. There are various methods for calculating the extent of these ripple effects. The simplest takes an empirically derived multiplier. A multiplier of 3, for example, would mean that for every euro in direct benefits, the society as a whole will experience €2 additional in indirect benefits, through the increase in consumption (Patt, 2010). A more involved method involves modeling the economy as a whole through, e.g., general equilibrium or input-output models. These partial or general equilibrium models allow one to estimate consumption levels, and hence total value, in the new equilibrium (Patt, 2010).
This section is based on the UNEP PROVIA guidance document |
1. | You want to appraise adaptation options. | |
2. | The focus is either on collective actions and there are no conflicting interests of private actors, or the focus is on individual collective actions. | |
3. | Decisions can be formalised. | |
4. | Either the set of options includes only short term ones or residual impacts can not be projected. | |
5. | There are risks are due to current climate variability and the relative costs of outcomes are high. | |
6. | Public decision. | |
7. | Either outcome attributes do have prices or contingent value has been addressed. | |
8. | As a next step you are faced with the question whether indirect outcomes are important. |