Optimal Adaptation to Flood and Storm Surge Risks under Climate Change - Stochastic Volatility and Real Options

Project: Other

Description

Hurricanes, floods and storm surges cause significant damage in coastal regions. They have also been the leading cause of natural disaster fatalities worldwide. Adaptation projects can help to reduce catastrophic risks, but require significant investment costs. Accurate modelling of climate variables and more precise pricing of catastrophic risks will enable policy makers to make better decisions and improve the value of adaptation investment projects. This project will be the first to introduce a real options framework with stochastic volatility that helps to facilitate optimal adaptation decision making in coastal areas. The framework will be applied to New York City, Copenhagen and a region in the South East of Queensland, Australia.
Short titleReal options framework for adaptation to climate impacted flood risk
StatusActive
Effective start/end date1/01/1831/12/19