A coastal urban adaptation model with time-discounting, optimizing and satisficing decision making

We develop a discrete-time coastal urban adaptation model where the ‘present’ and ‘future’ time periods are distinguished. In the model, the city anticipates sea level rise and related coastal hazards with adverse impacts on urban economy in the future period. However, the magnitude of future sea level rise and induced climate damages are known with uncertainty. The urban planning agent has to make at present a decision on how much to invest in climate adaptation (in the form of construction of coastal protection). We explore three complementary models of decision making. They include the intertemporal maximization of time-discounted expected utility of consumption and two versions of the VIABLE modelling framework with an optimizing and a satisficing urban planning agent, respectively. It is shown that in certain model setups, investment decisions depend discontinuously on the value of key model parameters. In particular, when these parameters are varied, the urban planner can discontinuously switch from the ‘business-as-usual’ (BaU) strategy, when no adaptation investment is taken, to a proactive adaptation.