Developing an adaptation option is challenging for long-term engineering decisions due to uncertain future climatic conditions; this is especially true for urban flood risk management. This study develops a real options approach to assess adaptation options in urban surface water flood risk management under climate change. This approach is demonstrated using a case study of Waterloo in London, UK, in which three Sustainable Drainage System (SuDS) measures for surface water flood management, i.e., green roof, bio-retention and permeable pavement, are assessed. A trinomial tree model is used to represent the change in rainfall intensity over future horizons (2050 s and 2080 s) with the climate change data from UK Climate Projections 2009. A two-dimensional Cellular Automata-based model CADDIES is used to simulate surface water flooding. The results from the case study indicate that the real options approach is more cost-effective than the fixed adaptation approach. The benefit of real options adaptations is found to be higher with an increasing cost of SuDS measures compared to fixed adaptation. This study provides new evidence on the benefits of real options analysis in urban surface water flood risk management given the uncertainty associated with climate change.

Vulnerability analysis of urban drainage networks plays an important role in urban flood management. This study analyzes and compares the vulnerability of tree and loop systems under various rainfall events to structural failure represented by pipe blockage. Different pipe blockage scenarios, in which one of the pipes in an urban drainage network is assumed to be blocked individually, are constructed and their impacts on the network are simulated under different storm events. Furthermore, a vulnerability index is defined to measure the vulnerability of the drainage systems before and after the implementation of adaptation measures. The results obtained indicate that the tree systems have a relatively larger proportion of critical hydraulic pipes than the loop systems, thus the vulnerability of tree systems is substantially greater than that of the loop systems. Furthermore, the vulnerability index of tree systems is reduced after they are converted into a loop system with the implementation of adaptation measures. This paper provides an insight into the differences in the vulnerability of tree and loop systems, and provides more evidence for development of adaptation measures (e.g., tanks) to reduce urban flooding.