Although the ‘real options’ approach outlined above is addressed by established economic theory, it reflects the common sense that most humans apply to situations where there is uncertainty about the future. By not fully committing to a policy or course of action until more information becomes available, better outcomes are ultimately more likely. In economic terms, society as a whole can improve its wellbeing because it can attain its objectives using fewer resources, and those resources can be used for other purposes.

It may not always be easy to identify appropriate ‘real options’ for measures designed to adapt to climate change. But unless a serious effort is made to do so, governments will be tempted to spend too much, too soon.