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In this report, policies for assessing effects of climate change risk and uncertainty on water-supply provision are discussed. The emphasis is on analytical insights derived using option-pricing arguments. Attention is also paid to portfolio approaches, problems of uncertainty and catastrophic risk.
This brief presents a portion of the research relating to project evaluation. Insights can improve decisions relating to investment in water-supply infrastructure by accounting explicitly for climate variability and for prospective climate change. These insights can be applied to other capital-intensive long-term investment projects undertaken...