No.223 Evaluating the Robustness of Project Performance Under Deep Uncertainty of Climate Change: A Case Study of Irrigation Development in Kenya

While financing for climate adaptation projects is gaining prominence worldwide, the methods of performance evaluation of adaptation-related projects have not as yet been established. One reason for this is that future project effects are subject to deep uncertainty. As a case study of the evaluation of adaptation benefits under the uncertainty of climate change, we evaluate the robustness of the project performance of a Kenyan irrigation development project. Based on a simulation analysis carried out using the Robust Decision Making (RDM) approach, we assess the robustness of the positive expected outcomes of the project and find that the development of irrigation facilities, especially when combined with the soft adaptation measures of farming practices, could bring about an increase of household income in the future under a large variety of conditions. These beneficial effects are partly a reflection of the reduced damage from climate change achieved by the project. We conduct this study by utilizing the available resources and capacity of a development agency that has a scope of future applications to actual infrastructure projects. In this paper, we also discuss factors that could become relevant for the application of RDM-based project evaluation in the field of climate finance.

Keywords: climate change adaptation, climate finance, uncertainty, Robust Decision Making (RDM), economic assessment, irrigation, agriculture, Africa