Using Cost-benefit Analysis to Identify Ecosystem-based Solutions to Climate Change Challenges



Ecosystems are fundamental to life on earth and provide goods and services that are essential to human well-being. This includes their role in helping human populations mitigate and adapt to climate change.

Natural ecosystems reduce global carbon dioxide concentrations through carbon capture and storage, and diminish the impacts of climate change through protection from extreme weather. Cost-benefit analysis is a valuable tool for estimating the value of these services, designing USAID programs that leverage them, and comparing them to conventional solutions. These analyses can then be used to support investments in biodiversity conservation or restoration approaches that use ecosystem services to realize climate adaptation and mitigation goals.

As an example, a recent report from USAID’s CEADIR project compared the costs and benefits of traditional and “green” approaches to climate change adaptation. As part of its climate change adaptation programming, USAID/Mozambique conducted a cost-benefit analysis of an earthen dike and mangrove restoration as two means of reducing storm damage to coastal communities. Although the costs of both approaches outweighed their benefits when considering only storm damage reduction, the benefits of mangrove restoration were far greater than its costs when the additional services of carbon sequestration and fish spawning habitat were considered. Analyses such as these are powerful tools for supporting investments in ecosystem-based solutions to climate change mitigation and adaptation.

In addition, USAID’s Office of Economic Policy and Office of Forestry and Biodiversity recently developed recommendations for incorporating ecosystems valuation into cost-benefit analysis as part of the USAID BRIDGE project. These recommendations include a step-by-step guide for USAID and practitioners, plus useful background information including key concepts, data sources and examples. Through these recommendations, USAID staff and others can help ensure ecosystem service values are taken into account during the design and implementation of development programs across sectors.

For more information, email Jenny Kane at FAB (jkane[at]usaid[dot]gov) or Paul Oliver at EP (poliver[at]usaid[dot]gov).

USAID’s Offices of Forestry and Biodiversity and Economic Policy presented this work on Thursday, February 28 as part of the National Ecosystem Services Partnership webinar series, and a recording of the event is available to the public.