Probabilistic Wind Hazard and Economic Valuation Framework for Coastal Transmission Infrastructure Resilience: Application to Investment Thresholds Under Climate-Induced Wind Risk in Shoreline Renewable Energy Development

Abstract

This study develops a probabilistic modeling framework—PWDRIV (Probabilistic Wind-hazard Damage and Resilience Investment Valuation)—to assess the economic viability of climate resilience investments in the coastal transmission sector. Focusing on the Tampa Bay region, the model incorporates climate change-induced trends in extreme wind hazards through stationary and non-stationary Gumbel distributions. Using Monte Carlo simulations and a calibrated cubic excess-over-threshold (CEOT) damage function, the framework translates future wind hazards into annual damage cost projections. These are then evaluated using both Net Present Value (NPV) and Decoupled Net Present Value (DNPV) methodologies to quantify maximum justifiable investments under varying climate and financial scenarios. Results show that non-stationary climate assumptions significantly increase estimated damages and justifiable resilience investments. The DNPV method more accurately reflects the long-term benefits of resilience by separating risk and time-value effects, supporting its adoption in policy and planning. This work offers a replicable tool for guiding infrastructure adaptation decisions under deep climate uncertainty.