Prioritising climate adaptation options to minimise financial and distributional impacts of water supply disruptions

Abstract

Climate-related disruptions to water supply infrastructure services incur direct financial losses to utilities (e.g. to repair damaged assets) and externalise a societal cost to domestic customers due to additional costs that they may incur (e.g. to acquire water from alternative sources). The latter often represents an uncompensated social burden, which should be properly accounted for in investment planning. Here we present a new framework for quantifying direct financial risks burdened by utilities and alternative water purchase losses incurred by domestic customers, including those in low-income groups, during flood- and drought-induced utility water supply disruptions. This framework enables the comparison of benefit-cost ratios of a portfolio of flood protection and leakage reduction for water supply systems across the island of Jamaica. A system-level optioneering analysis allows the identification of the optimal adaptation option per system. We estimate that 34% of systems would benefit from flood defences and 53% would benefit from leakage reduction to adaptation to droughts. The benefit that could be achieved by implementing all system optimised adaptation options is estimated to be 720 million Jamaican dollars per year on average, representing a substantial saving for the utility and its customers, including low-income customers. We identify options that offer strong synergies between economic and equity objectives for both types of adaptation option. The proposed framework is established to support the business case for climate adaptation in the water supply sector and to prioritise across flood and drought mitigation options. We take a first step towards mainstreaming equity considerations in water supply sector optioneering frameworks by estimating the contribution of adaptation options towards reducing household costs for low-income customers.