Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports (2019)

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7 1.1 Objectives The purpose of this handbook is to help airport practitioners assess the benefits, costs, and financial feasibility of infrastructure projects that are designed to improve resilience to the impacts of climate change and extreme weather events. This handbook presents up-to- date methods for conducting benefit–cost and financial feasibility analyses that explicitly recognize risks and uncertainties that are inherent in long-term climate projections and their potential effects on long-lived airport infrastructure. Topics covered include: • The types of investment projects that account for climate resilience and that lend themselves to benefit–cost analysis (BCA) or financial feasibility analysis (FFA); • The components of an FFA or BCA that need to be taken into account; in the case of a BCA, these will include guidelines on incorporating market and nonmarket valuation strategies as well as qualitative/quantitative data and methods; • Environmental and social benefits and costs as inputs to the analytical process; • How components of climate risk and uncertainty can be incorporated into the analysis; • How current project funding options and constraints may affect the analysis; and • Methods for airports that can be realistically implemented, given the differing levels of resources that may be available. There is a large amount of literature on climate-related topics relevant to airports. This handbook builds off the existing knowledge base for information on an expansive variety of issues, including: • Risk and uncertainty planning, • Airport enterprise risk management, • Alternative evaluation methods, • Available climate change data, • Airport asset vulnerability and criticality assessments, and • BCA and FFA. 1.2 Handbook Overview While this handbook provides necessary technical information and instruction, it was impor- tant for it to be accessible to high-level decision makers such as airport directors, chief financial officers, and planning executives. Section 1.3 provides a high-level discussion targeted to that audience of why and how airports should assess climate change. C H A P T E R 1 Introduction

8 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports The methods and analyses presented here focus on two specific areas of climate change likely to affect airports: (1) the potential for extreme flooding events due to storm surge and sea level rise (SLR) near coastal airports, and (2) the potential for rising temperatures to require weight restrictions on aircraft takeoffs (or possibly cause full flight delays) at airports in warmer climates. While other aspects of climate change may also affect airports—including, for example, increasing likelihood of localized thunderstorms or air turbulence affecting take- offs and landings—the methodologies presented in this handbook focus on these two areas because specific quantifiable projections are currently available for these climate measures. However, if comparable projections become available for other climate change measures, the basic methodology of the handbook could be adapted to those risks. Chapter 2 discusses a two-step methodology for analyzing climate risks at a high level. Step 1 shows how an airport could begin to assess climate risks using information from prior ACRP publications; a detailed numerical example using the approach is provided. This approach should be useful to most airports as an initial screening tool, regardless of the level of resources available. Step 1 is a useful way to decide whether further analysis is required in Step 2, which features the methods that are suggested for further analysis of climate risks; these techniques form the core of the handbook for fully analyzing climate risk and uncertainty. The methodol- ogy shows how an airport can estimate the vulnerability (likelihood of exposure) of specific infrastructure or operations to flood risk due to extreme water rise or aircraft payload penalties due to increasing exposure to high temperatures. The details of the methodology are imple- mented in two Microsoft Excel spreadsheet simulation files. (These may be found by searching for “ACRP Research Report 199” at www.TRB.org.) Descriptions of the spreadsheet models, including step-by-step instructions for their use, can be found in Appendices E and F. Chapter 3 provides a description of the climate science literature relevant for airports’ expo- sure to extreme flooding events or high temperatures. This is followed in Chapter 4 with a higher-level discussion of how to identify and classify potential airport impacts based on vulnerability and criticality of airport infrastructure assets. Chapter 5 addresses issues related to how an airport can identify and assess possible mitigation responses or adaptations to expected climate change events. (In the climate science context, the term “mitigation” is typi- cally used specifically for efforts to reduce greenhouse gas (GHG) emissions, while “adapta- tions” are actions taken to help cope with changing climate conditions. In this handbook, the terms are used interchangeably to refer to projects or actions that airports may undertake to offset the effects of climate change.) The results from implementing the procedures discussed in these chapters can be used to identify one or more specific infrastructure projects that could be considered to address the risks posed by climate change. Chapter 6 discusses other topics related to defining benefit–cost and financial scenarios and interpreting them correctly. An important aspect of this project was to test the approach and methods via a series of case studies involving specific airports. The specific goal of these case studies was to introduce an illustrative analysis relevant for each airport that demonstrated the methodology, and then to get feedback and amend the handbook as needed. Chapter 7 provides a detailed description of the case studies undertaken with four different airports—Phoenix (PHX), New Orleans (MSY), Boston (BOS), and Little Rock (LIT). A sample analysis was presented using localized climate data for each airport. This project necessarily assumed some knowledge of institutional airport realities and involved some rather technical material. Topics related to these issues are in the appendices. Appendix A discusses how making decisions about climate resilience fits into existing airport functions and overall institutional arrangements. Appendix B provides an overview of other climate risk

Introduction 9 evaluation methods besides those discussed in the main body of this handbook. Appendix C provides a more detailed description of the Monte Carlo and value-at-risk (VaR) methods sug- gested in Chapter 2 to help analyze the impacts of climate risk and uncertainty. Appendix D presents a detailed description of available climate projections and how they can be accessed and interpreted. Appendix E describes the two Microsoft Excel templates that have been developed in conjunction with this handbook: one can be used to assess potential extreme water events due to expected SLR near coastal airports in the United States, and the other analyzes the incidence of increased high temperatures and their effects on weight restrictions for aircraft takeoffs; both use the methods and analytical approach discussed in the handbook. Appendix F provides two numerical examples using the Excel templates. Appendix G provides technical material relat- ing to FAA guidance on BCA and related topics. Appendix H provides more details of the case studies that are described in Chapter 7. Finally, Appendix I is a reprint of a table of potential climate change effects and illustrative responses for airports from ACRP Synthesis 33: Airport Climate Adaptation and Resilience (Baglin 2012). 1.3 Why and How Airports Should Assess Climate Change The effects of climate change on infrastructure are already being realized, as demonstrated through impacts from increased precipitation and flooding, sea level rise, longer stretches of hot and cold days, and increased frequency and strength of extreme weather events such as hurricanes and tornados. As a result, there has been an emphasis on improving infrastructure to be more resilient and capable of withstanding these events in order to continue normal operations. Airports are no less subjected to the threats of climate change and are potentially more at risk due to their locations, which are often flat, low-lying areas that may be prone to flooding and storm surge. Additionally, many airports may face an increased risk from rising tempera- tures that can limit their flight operations. High temperatures reduce air density, which in turn reduces the amount of lift that an aircraft wing can generate. This means that an aircraft must go faster to provide enough lift to take off, and thus it takes more runway to reach the higher speed. If the runway is not long enough, then the only other option is to reduce the aircraft’s weight in order to lower its required takeoff speed, which is accomplished by removing payload (passengers and cargo; i.e., imposing a weight restriction). As the climate changes, these types of incidents are forecast to become more frequent and intense, thereby increasing the risk to facilities and operations. But it is important to understand that there can be wide variances in future projections across different climate forecasts. Dealing with this uncertainty is an important objective of this handbook. Understanding the risks to airport infrastructure and operations allows decision makers the ability to plan for what can be done to mitigate the effects of climate change. Planning efforts can include assessing possible infrastructure upgrades, continued maintenance for state of good repair, and potential changes to operations, all of which will require funding or financing. Background: Climate Risk and Impacts of Climate Change The World Economic Forum lists extreme weather events (e.g., floods and storms) and major natural disasters (e.g., earthquakes, tsunamis, and volcanic eruptions) as two of the top five global risks in terms of likelihood and impact (World Economic Forum 2017). These two categories encompass an enormous breadth of climate events: small and frequent (chronic) to catastrophic (acute), expected to unpredictable, and man-made to entirely out of human control.

10 Climate Resilience and Benefit–Cost Analysis: A Handbook for Airports A number of sources emphasize the significance of differentiating between extensive or chronic events, which are less severe and more frequent weather events that nonetheless can cause significant damage, and intensive or acute events that happen less often but may cause substantial mortality. While the United Nations’ Global Assessment Report notes that chronic events are increasing in frequency, economic cost, and mortality (United Nations 2015a), ana- lysts also believe that acute events are much harder to manage or mitigate once they have begun (Shang and Vincelli 2015). The effects of climate change on transportation infrastructure have already become apparent. According to the federally supported National Climate Assessment: 1. The impacts from sea level rise and storm surge, extreme weather events, higher temperatures and heat waves, precipitation changes, Arctic warming, and other climatic conditions are affecting the reliability and capacity of the U.S. transportation system in many ways. 2. Sea level rise, coupled with storm surge, will continue to increase the risk of major coastal impacts on transportation infrastructure, including both temporary and permanent flooding of airports, ports and harbors, roads, rail lines, tunnels, and bridges. 3. Extreme weather events currently disrupt transportation networks in all areas of the country; projections indicate that such disruptions will increase. 4. Climate change impacts will increase the total costs to the nation’s transportation systems and their users, but these impacts can be reduced through rerouting, mode change, and a wide range of adaptive actions (Schwartz et al. 2014). The range of impacts of a given event may extend far beyond physical damage to infrastruc- ture. Multiple studies have been conducted to assess the economic consequences due to loss of business, evacuations, and impacts to the workforce, including injuries, psychological trauma, and employee difficulty in getting to work (Bouwer 2013, Santos et al. 2014). These impacts can be compounded by interdependencies, in which physical infrastructure depends on other systems, especially utilities, which are often damaged by chronic and acute events (Chang et al. 2014). An electricity outage can halt public transit, causing transportation problems. A flood can back up plumbing and sewage systems, leading to secondary effects that the flood itself did not cause. The response to critical climate events also can create financial risks if public (or private) entities take on debt in order to finance infrastructure improvements or rehabilitation (Collier 2015). All of these impacts are more difficult to quantify or predict than the direct loss in physical infrastructure, but, where possible, they should be accounted for in estimating the value of any investment in climate-resistant infrastructure. Examples of Assessments of Climate Resiliency Some airports and other entities have prepared their own reports on climate resilience or undertaken analyses to assess and improve their responses to significant local climate events. Following are some examples of how airports and other entities have assessed the risks from climate change. A publication entitled Report of the Heathrow Winter Resilience Enquiry discussed factors that contributed to a major disruption of operations at London Heathrow Airport (LHR) dur- ing the Christmas travel season in 2010 (Heathrow Airport 2011a). The airport closed after it received more than 3.5 in. of new snow on December 18th, and it did not fully recover until December 22nd. At one point, 9,500 passengers were stranded in the terminals. The report noted that the meteorological record indicates that a 3.5-in. snowfall is expected to occur once every 5 years at LHR. What was unusual was the occurrence of only one snowfall of that magnitude in the previous 22 years, leading the staff to regard such a storm as unlikely.

Introduction 11 Although LHR made large investments in upgraded snow removal equipment after the event, most of the report’s 14 recommendations were directed at planning, communications, coor- dination between stakeholders, and other noncapital investments aimed at improving LHR’s ability to plan for and execute a resilient response to such an event. An initiative sponsored by the City of Boston called “Climate Ready Boston” produced a report that presents projections for climate scenarios related to sea level rise, coastal storms, extreme precipitation, and extreme temperatures out to the year 2100 (Climate Ready Boston 2016). This is an initial step in the initiative’s primary goal to find solutions for resilient infrastructure and buildings in the coming years. For example, Boston Logan Airport uses the 500-year storm level as the criterion for establishing design criteria to set critical elevations for airport infrastructure. The Port Authority of New York and New Jersey (PANYNJ) prepared a report that lists effects on bridges, rail, landscaping, mechanical systems, drainage/utility design, and build- ings and infrastructure from higher temperatures, increased precipitation, sea level rise, and severe storms (Port Authority of New York and New Jersey 2015). Proposed design improve- ments for buildings and infrastructure should increase the design flood elevation as a result of sea level rise from severe storms. PANYNJ has also adopted projections into its infrastructure planning guidelines for increased air temperature, precipitation, and sea level rise from the 2020s into the 2100s. The state of Alaska has estimated the potential costs for upgrades to its public infrastruc- ture that is at risk from climate change, concluding that costs could increase by $3.6 billion to $6.1 billion through 2030 (Larsen et al. 2008). Airports are part of this total, and it is estimated that adapting Alaska’s airports to climate change could save 15% over the next few decades. In fact, the study estimated that 24% of the infrastructure costs will be for airports by 2030. From these examples, it is evident that many airports or governmental units overseeing them have already begun to assess both existing and potential climate change issues. Never- theless, the key issue of future climate uncertainty and how to incorporate it into analyses and plans has typically not been addressed explicitly. One of the primary goals of this handbook is to provide a how-to guide to allow airport practitioners to do this in a straightforward way.