Flood and coastal erosion risk management has always faced the challenge of decision making in the face of multiple uncertainties relating to the climate, the economy and society. Traditionally, this has been addressed by adopting a precautionary approach that seeks to protect against a reasonable worst case. However, a managed adaptive approach can offer advantages. The benefits include improved resilience to negative changes, enabling opportunities from positive changes and greater cost effectiveness. The absence of clear methods and tools to value adaptive approaches has been recognised as an obstacle to wider adoption. This paper proposes a staged approach to building in adaptive capacity, which systematically analyses uncertainties, identifies opportunities to incorporate adaptability and appraises benefits through the analysis of decision trees. A case study is presented. The methodology is set in the context of appraisal processes used in England by the Environment Agency, based on cost–benefit analysis guidance issued by HM Treasury. The approach is transferable to other situations worldwide, where decision making is based on quantified assessment of costs and benefits. The work should help decision makers fully appraise the benefits of building in adaptive capacity and make the economic and technical case for adaptive flood risk management in an uncertain environment.