Investment decision for coastal urban development projects considering the impact of climate change: Case study of the Great Garuda Project in Indonesia

Seungik Oh, Kyeongseok Kim, Hyoungkwan Kim

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


As the impact of climate change increases, coastal cities are negatively affected by sea level rise, extreme rainfall, and storm surges. To cope with such climate change impacts, it is essential to invest in climate change adaptation procedures in coastal cities. This paper proposes a rainbow option-based methodology to accurately valuate investments in coastal city development considering climate change. This model is a tool for evaluating the economic feasibility considering the uncertainties of the impacts of climate and urban development projects. The National Capital Integrated Coastal Development (NCICD) project by Indonesian government was used as a case study to validate the effectiveness and applicability of the proposed methodology. The option value of the NCICD project using the proposed model was estimated at US$ 7021 million. The rainbow option, dealing with both climate and market uncertainties, enables decision makers to reasonably assess the value of coastal development projects for their successful execution.

Original languageEnglish
Pages (from-to)507-514
Number of pages8
JournalJournal of Cleaner Production
Publication statusPublished - 2018 Mar 20

Bibliographical note

Funding Information:
This research was supported by grants (17CTAP-C133290-01) from Infrastructure and transportation technology promotion research Program funded by Ministry of Land, Infrastructure and Transport (MOLIT) of Korean government. Appendix Table A-1 Detailed information about National Capital Integrated Coastal Development (NCICD) [adapted from Keuning (2014) ]. Table A-1 Investment (US$ million) O & M (US$ million) Revenue (US$ million) Flood Safety (Phase A) Coastal defense −582 −200 River dikes −476 −100 Pumping stations −294 −100 Resettlement −725 −200 Subtotal −2077 −600 Integrated Development (Phase B) Outer seawall −3765 −1100 Pumping stations −665 −200 Locks/Sluices −198 −200 Land reclamation (1250 ha) −8930 −1000 22,600 Toll (national roads) −3439 −800 1626 MRT −958 −160 2023 City roads/Toll −643 −200 612 Lagoon operations −292 Subtotal −18,598 −3952 26,861 Total −20,675 −4552 26,861

Publisher Copyright:
© 2018 Elsevier Ltd

All Science Journal Classification (ASJC) codes

  • Renewable Energy, Sustainability and the Environment
  • Environmental Science(all)
  • Strategy and Management
  • Industrial and Manufacturing Engineering


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