This working paper aims to inform the development community about the current state-of-knowledge and emerging thinking on the economics of adaptation and the application to development. The paper explores a number of key challenges on the economics of adaptation, and investigates examples of how these are being addressed in practical case studies. The case studies are drawn from the portfolio of the International Development Research Centre (IDRC) and the wider literature. The key areas of focus have been to assess: Mainstreaming adaptation into development planning The analysis and appraisal of building (adaptive) capacity and non-technical adaptation. The consideration of distributional effects. The phasing and prioritisation of adaptation and the application of light-touch approaches for decision making under uncertainty.