Portfolio analysis as a means of managing uncertainties in climate change adaptation: some initial reflections

Alistair Hunt and Filippo Fraschini
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Alistair Hunt: Department of Economics, Unversity of Bath, UK
Filippo Fraschini: Catholic University, Milan

EKONOMIAZ. Revista vasca de Economía, 2020, vol. 97, issue 01, 63-81

Abstract: In order to counteract the challenge of climate uncertainties in investment planning, Portfolio Analysis (PA) aggregates diverse adaptation measures in different portfolios. Thus, instead of considering a single intervention, it attempts to identify the best portfolios according to their performance in relation to economic efficiency as well as risk (variance of the economic performance over different scenarios). However, whilst PA is recognised as having the potential for bringing about a more holistic economic analysis of adaptation, it remains rarely used. Our assessment of the key strengths and limitations of PA suggests that wider adoption of a portfolio approach will primarily depend on stakeholder recognition that by being selective about the numbers and composition of portfolios considered, data and analytical capacity constraints can be overcome.

Keywords: economic assesment; portfolio analysis; uncertainty (search for similar items in EconPapers)
JEL-codes: G11 Q51 Q56 (search for similar items in EconPapers)
Date: 2020
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