Transformational adaptation goes beyond improving existing systems to cope with climate change. It can involve fundamental changes in how economies, infrastructure and social-ecological systems function. Yet the economic analysis needed to inform such far-reaching decisions remains comparatively underdeveloped. An ACCREU policy brief sets out a research agenda for the economics of transformational adaptation, identifying where established approaches can contribute and where new or extended methods are needed.

Moving beyond the economics of incremental change

Much of conventional adaptation appraisal focuses on individual measures and incremental change. Transformational adaptation raises a different set of questions. Decisions may involve structural change over long time horizons, substantial uncertainty and unevenly distributed costs and benefits. The policy brief examines what these characteristics mean for economic analysis. Among the issues identified are time preference and discounting, climate and distributive justice, decision-making under deep uncertainty, macroeconomic effects and financing.

A central argument is that economics has more to contribute than conventional cost-benefit analysis. Rather than beginning with the appraisal of an individual project, economic analysis may need to move further upstream and examine the systemic case for transformation: why fundamental change might become necessary, which pathways are available and how their wider economic and distributional consequences can be assessed.

What happens when adaptation has to scale up?

The brief also considers scenarios in which incremental adaptation may no longer be sufficient. Climate shocks, climate-related tipping points or socio-economic developments could increase the pressure for more fundamental change. Understanding these dynamics requires analysis not only of the costs and benefits of specific interventions but also of the conditions that enable or constrain transformation. This includes institutions, behaviour, financing and the political economy of adaptation.

The resulting research agenda maps both the current state of knowledge and areas where further work is particularly important. Its purpose is not to prescribe a single economic methodology for transformational adaptation but to identify the questions and analytical approaches needed to build a stronger economic evidence base.

About the policy brief

A Future Research Agenda for the Economics of Transformational Adaptation was developed within ACCREU following a multidisciplinary reflexive workshop held in April 2026. Around 40 researchers and policymakers from different disciplines contributed to the discussion on the economics of transformational adaptation and future research needs.