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Planning Urban Water Investments with an Uncertain Climate


  • I thank two anonymous referees, John Freebairn, Rod Keenan and participants at numerous seminars for their comments. More than usually any wrong views expressed here are mine. A less technical exposition of the main arguments here is in Clarke (2014). Financial support for this research was provided by the Victorian Centre for Climate Change Adaptation Research (VCCAR).


Policies for assessing the effects of climate change risk and uncertainty on urban water provision are analysed with reference to Australia. The emphasis is on analytical insights derived from use of low-order real option and stochastic dynamic programming models. Attention is also paid to insurance and portfolio approaches and to issues raised by uncertainty, gross ignorance and catastrophic risks.

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