Component 2
Social cost-benefit analysis
A social cost-benefit analysis (SCBA) helps estimate the broader societal impacts of policies, projects, or actions aimed at addressing climate change. Accounting for both financial and non-financial aspects, the analysis weighs the social, environmental, and economic costs against the long-term benefits of a given project. It ensures resources are used efficiently by selecting projects based on their potential in light of long-term and broader social costs, social benefits, and ethical and equity considerations. In the context of climate change effective action and resource allocation are essential for transitioning to zero emissions and climate-resilient pathways.
Additionally, Steps 6 and 7 of the SCBA could incorporate the evaluation of social factors, such as the distributional impacts of climate interventions, the enhancement of social equity, and the mitigation of negative consequences on vulnerable populations. This would ensure a more comprehensive assessment of the project’s overall societal value.
Step 6
Undertake an SCBA of the proposed mitigation and adaptation measures
Policymakers rely on economics to guide decision-making on the risks posed to society by climate change. In adaptation, economists often use Integrated Assessment Models (IAMs) to estimate the future costs of climate change impacts such as heat waves, flooding, and drought. Estimates are based on evidence gathered under the CCRA versus the economic benefits of preparing for them. In mitigation, models can also estimate the costs of proposed mitigation actions versus the reference scenario development goals.
Example: Jordan established a sector working group comprising ministry representatives, development partners, and civil society. This group identified thirty-five priority actions based on criteria such as impact, sustainable development potential, gender and vulnerability considerations, and readiness of each action. These actions were then translated into specific project interventions, sequenced through cost-benefit analysis and stakeholder input, ensuring alignment with national climate objectives and effective resource allocation.
Step 7
Communicate the risk of doing nothing and the cost of proposed mitigation and adaptation measures
The cost-benefit analysis will translate climate change risks and opportunities into economic and financial terms, helping to prioritize specific climate adaptation and mitigation measures when compared to a baseline of inaction. Communicate these results to the policymakers and public entities linked to climate investment planning and execution, as identified in Stage 1.
Support resources
The following resources can be considered. Explore the NDC Partnership Knowledge Portal Climate Toolbox for additional social cost-benefit analysis resources.