Cost–benefit analysis of climate change adaptation measures in Bosnia and Herzegovina

Abstract

A cost–benefit analysis of proposed climate change adaptation measures in Bosnia and Herzegovina (B&H) was conducted during the development of the Third National Communication of B&H under the United Nations Framework Convention on Climate Change (UNFCCC). The main goal of the analysis was to quantify and present the financial consequences of floods and droughts for the sectors most affected by climate change. The analysis emphasised the costs and benefits of adaptation measures for agriculture, forestry and tourism. The cost–benefit analysis considered structural measures that included certain technical and technological solutions. These adaptation measures included the implementation of infrastructure and other works to reduce problems in the agriculture, forestry, tourism and other sectors. For the purposes of this analysis, the profitability index was calculated for each of the proposed measures based on the present values of the anticipated benefit, cost and investment of each measure. According to the implemented cost–benefit analysis, all of the proposed structural measures for adapting to climate change were acceptable except for one measure in the forestry sector that had a profitability index of less than one. The profitability index for the acceptable structural adaptation measures in all sectors ranged between 1.06 and 14.15, implying benefits corresponding to present values of between 1.06 and 14.15 euros per euro invested. These results should encourage state and private investors to develop the investment potential of the proposed climate change adaptation measures.