Agreeing on Robust Decisions : New Processes for Decision Making under Deep Uncertainty

Kalra, Nidhi; Hallegatte, Stephane; Lempert, Robert; Brown, Casey; Fozzard, Adrian; Gill, Stuart; Shah, Ankur

Agreeing on Robust Decisions : New Processes for Decision Making under Deep Uncertainty

2014

Investment decision making is already difficult for any diverse group of actors with different priorities and views. But the presence of deep uncertainties linked to climate change and other future conditions further challenges decision making by questioning the robustness of all purportedly optimal solutions. While decision makers can continue to use the decision metrics they have used in the past (such as net present value), alternative methodologies can improve decision processes, especially those that lead with analysis and end in agreement on decisions. Such "Agree-on-Decision" methods start by stress-testing options under a wide range of plausible conditions, without requiring us to agree ex ante on which conditions are more or less likely, and against a set of objectives or success metrics, without requiring us to agree ex ante on how to aggregate or weight them. As a result, these methods are easier to apply to contexts of large uncertainty or disagreement on values and objectives. This inverted process promotes consensus around better decisions and can help in managing uncertainty. Analyses performed in this way let decision makers make the decision and inform them on (1) the conditions under which an option or project is vulnerable; (2) the tradeoffs between robustness and cost, or between various objectives; and (3) the flexibility of various options to respond to changes in the future. In doing so, they put decision makers back in the driver's seat. A growing set of case studies shows that these methods can be applied in real-world contexts and do not need to be more costly or complicated than traditional approaches. Finally, while this paper focuses on climate change, a better treatment of uncertainties and disagreement would in general improve decision making and development outcomes.

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AGROVOC Keywords

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Bibliographic information

Publisher

World Bank, Washington, DC

Other Subjects

Climate projections; Terrorism; Opportunity cost; Return; Hurricane; Climate change indicators; Public transport subsidy; Future climate change; Worst-case; Climate scientists; Climate sensitivity; Crossings; Distributional impacts; Travel costs; Resource economics; Degree of risk; Abatement; Environmental costs; Greenhouse; Investing; Trading system; Emissions trends; Forest; Climate model; Futures; Information on climate; Emissions reduction; Scientific consensus; Sensitivity analyses; Beneficiaries; Climate response; Global climate; Risk management strategies; Jobs; Regulatory policies; Emissions reductions; Long-term investments; Climate forecasts; Impact of climate; Floods; Approach to climate change; Discount rate; Financial markets; Present value; Traffic lanes; Urban planners; Ecosystem; Valuation techniques; Road; Investment alternatives; Climate risks; Market value; Mangrove forest; Transparency; Cost-benefit; Portfolios; Investment decisions; Ghg; Total cost; Climate information; Economic analyses; Future climate scenarios; Impact of climate change; Intangibles; Climate signal; Emission scenario; Excessive rain; Cars; Climate uncertainty; Climate policies; Insurance companies; Negative impact; Lower costs; Regional climate; Car crash; Carbon emissions; Cost of carbon; Impacts of climate change; Rapid climate change; Abatement costs; Housing affordability; Atmosphere-ocean general circulation; Emissions scenarios; Lower discount rate; Shadow price; Emissions; Environmental groups; Risk aversion; Road traffic; Social cost of carbon; Climate modelers; Marginal abatement cost; Investment decision; Traffic congestion; Climate variables; Global mean temperature; Rainy days; Public transport; Feasibility; Climate change scenarios; Marginal abatement; Deep uncertainty; Sea level rise; Trading; Market price; Greenhouse gas; Climate factors; Intensity of storms; Discount rates; Political economy; True; Climate scenarios; Settlement; Ipcc; Risk neutral; Road tunnel; Treasury; Market values; Car; Storm surge; Temperature change; Scenarios; Damages; Land use patterns; Probability distributions; Uncertainty in climate change projections; Climate effects; Government policies; Uncertainties; Carbon budget; Climates; Federal reserve; Climate statistics; Cost-benefit analysis; Seismic event; Emission reduction target; Relative prices; Valuations; Climate conditions; Green belt; Credibility; Probability distribution; Hurricane protection; Policy makers; Climate changes; Routes; Climate change impacts; Utility function; Congestion costs; Probability of occurrence; Monetary value; Drivers; Climate threats; Climate experts; Carbon price; Temperatures

Language

English

Format

application/pdf, text/plain

License

CC BY 3.0 IGO, http://creativecommons.org/licenses/by/3.0/igo/

In AGRIS since: 2024-10-18

Modification date: 2025-04-17

Format: Dublin Core

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