Polasky decision making under great uncertainty

Decision-Making under Great Decision-Making under Great Uncertainty: Environmental Uncertainty: Environmental

Management in an Era of Global Management in an Era of Global

ChangeChange

Stephen PolaskyStephen Polasky

University of MinnesotaUniversity of Minnesota

IntroductionIntroduction

Two large related issues of ecosystem Two large related issues of ecosystem management:management:

Management of ecosystems to provide multiple Management of ecosystems to provide multiple ecosystem services ecosystem services Spatially-explicit integrated ecological-economic Spatially-explicit integrated ecological-economic

analysisanalysis

Management under uncertainty in an era of Management under uncertainty in an era of global change global change Global change clouds our ability to accurately predict Global change clouds our ability to accurately predict

future conditionsfuture conditions

Current state of affairsCurrent state of affairs

Ecosystems provide a wide array of goods and Ecosystems provide a wide array of goods and services of value to people (“ecosystem services of value to people (“ecosystem services”)services”)

Human actions affect ecosystems and the Human actions affect ecosystems and the services they provideservices they provide

The provision of ecosystem services often is not The provision of ecosystem services often is not factored into important decisions that affect factored into important decisions that affect ecosystemsecosystems

As a result, we often do a poor job of ecosystem As a result, we often do a poor job of ecosystem management management

The Millennium Ecosystem Assessment (2005)

Ecosystems and biodiversity are essential for human well-being

Ecosystem services as a central organizing principle

Current state of affairsCurrent state of affairs

New global era – “anthropocene”New global era – “anthropocene” Human actions driving global environmental Human actions driving global environmental

conditions (“global change”)conditions (“global change”)

If humanity is driving – If humanity is driving – where are we headed?where are we headed?


Global change issues are complex and the Global change issues are complex and the consequences of decisions are often consequences of decisions are often highly uncertain highly uncertain

Large spatial and temporal scales Large spatial and temporal scales Large stakes involved Large stakes involved Vitally important to try to take account of Vitally important to try to take account of

present and potential future consequences present and potential future consequences in decision-making in decision-making

But very difficult to do soBut very difficult to do so


How can we best guide decision-making to How can we best guide decision-making to meet present and future meet present and future human needshuman needs* in * in an era of global change given pervasive an era of global change given pervasive uncertainty? uncertainty?

Note: could substitute alternative Note: could substitute alternative objectives for human needs objectives for human needs Biodiversity conservationBiodiversity conservation Environmental healthEnvironmental health Evolutionary processEvolutionary process

OutlineOutline An approach to ecosystem management taking An approach to ecosystem management taking

account of multiple ecosystem services at account of multiple ecosystem services at landscape scaleslandscape scales Examples from Minnesota and Oregon Examples from Minnesota and Oregon

Approaches to decision-making under Approaches to decision-making under uncertainty:uncertainty: Decision theoryDecision theory Scenario planningScenario planning Thresholds approachThresholds approach Resilience thinkingResilience thinking

Thoughts on integrated assessment of Thoughts on integrated assessment of ecosystem management under great uncertaintyecosystem management under great uncertainty

Assessing multiple ecosystem Assessing multiple ecosystem services at landscape scalesservices at landscape scales

(1) Incentives

(2) Actions

Ecological production functions

A research agenda for ecosystem servicesA research agenda for ecosystem services

(6) Valuation

(3) Non-anthropocentric approaches

Other considerations

Benefitsand costs

Decisions by firms and individuals

Policy decisions

Ecosystems

Ecosystem services

(7) Economicefficiency

(5) Biophysical tradeoffs

(4)

Polasky & Segerson Annual Review of Resource Economics 1: 409-434.

The Natural Capital Project:The Natural Capital Project:Mainstreaming ecosystem servicesMainstreaming ecosystem services

“InVEST”Integrated Valuation of Ecosystem

Services and Tradeoffs

http://www.naturalcapitalproject.org/InVEST.htmlFrontiers of Ecology and EnvironmentFeb 2009

Modeling multiple ecosystem services and Modeling multiple ecosystem services and tradeoffs at landscape scalestradeoffs at landscape scales

Nelson et al. 2009. Frontiers in Ecology and Environment 7(1): 4–11.

Modeling multiple services under Modeling multiple services under alternative scenariosalternative scenarios

Three scenarios of land use / land cover Three scenarios of land use / land cover change for the Willamette Basin change for the Willamette Basin developed by the Willamette Partnership developed by the Willamette Partnership for 1990 – 2050for 1990 – 2050

• Plan trendPlan trend• DevelopmentDevelopment• Conservation Conservation

Modeling multiple services under Modeling multiple services under alternative scenariosalternative scenarios

Model outputs: service provision and biodiversityModel outputs: service provision and biodiversity Water qualityWater quality Storm peak mitigation Storm peak mitigation Soil conservation (sediment retention) Soil conservation (sediment retention) Climate stabilization (carbon sequestration)Climate stabilization (carbon sequestration) Biodiversity (species conservation) Biodiversity (species conservation) Market returns to landowners (agricultural crop Market returns to landowners (agricultural crop

production, timber harvest and housing values) production, timber harvest and housing values)

Outputs through time Outputs through time

Ranking of scenarios depends on set of Ranking of scenarios depends on set of ecosystem services consideredecosystem services considered

The Impact of Land Use Change on Ecosystem The Impact of Land Use Change on Ecosystem Services, Biodiversity and Returns to Landowners: Services, Biodiversity and Returns to Landowners:

A Case Study in the State of MinnesotaA Case Study in the State of Minnesota

Polasky et al. Environmental and Resource Economics 2011

Photo by Raymond Gehman, National Geographic


Use InVEST to analyze how changes in Use InVEST to analyze how changes in land use in Minnesota affect ecosystem land use in Minnesota affect ecosystem services and biodiversity conservation services and biodiversity conservation

Compare the impact on ecosystem Compare the impact on ecosystem services & biodiversity from: services & biodiversity from: Actual land use change from 1992- 2001 Actual land use change from 1992- 2001 Alternative land use change scenariosAlternative land use change scenarios

Land use scenariosLand use scenarios

Use National Land Cover Database (NCLD) for 1992 to Use National Land Cover Database (NCLD) for 1992 to 2001 for data on actual land use change in Minnesota2001 for data on actual land use change in Minnesota

Alternative land use scenarios:Alternative land use scenarios: No agricultural expansionNo agricultural expansion No urban expansionNo urban expansion Agricultural expansion into highly productive soilsAgricultural expansion into highly productive soils Forestry expansion into highly productive forest parcelsForestry expansion into highly productive forest parcels Conservation: low productivity ag land and ag land within a 100 Conservation: low productivity ag land and ag land within a 100

m buffer of waterways in MN River watershed were converted to m buffer of waterways in MN River watershed were converted to pre-settlement vegetationpre-settlement vegetation

InVEST outputsInVEST outputs

Ecosystem servicesEcosystem services Carbon sequestrationCarbon sequestration Water quality (phosphorus exports in the Minnesota River Basin)Water quality (phosphorus exports in the Minnesota River Basin)

BiodiversityBiodiversity Grassland bird habitatGrassland bird habitat Forest bird habitatForest bird habitat Overall biodiversity (all natural habitat)Overall biodiversity (all natural habitat)

Returns to landownersReturns to landowners Value of agricultural productionValue of agricultural production Value of timber productionValue of timber production Value of urban/suburban developmentValue of urban/suburban development

Change from 1992 to 2001 by scenario: carbon sequestration

Mg

C

Change in phosphorus exports to mouth of Minnesota River

Mg

P/y

r

Percentage change in habitat quality for

grassland breeding birds

Percentage change in habitat quality for forest breeding birds

Change from 1992 to 2001 by scenario: market returns to agriculture, forestry, urban

Agriculture

Forestry

Urban

Million 1992 US $

Annual value from land use change Annual value from land use change

scenarios 1992-2001scenarios 1992-2001 Actual land Actual land useuse

No ag No ag expansionexpansion

No urban No urban expansionexpansion

Ag Ag expansionexpansion

Forest Forest expansionexpansion

Conser-Conser-vationvation

Change in total value: Change in total value: carbon, water quality, ag carbon, water quality, ag & forest production, & forest production, urban using actual urban using actual prices (M1992 $)prices (M1992 $)

$3,328$3,328 $3,407$3,407 $3,040$3,040 $2,742$2,742 $3,300$3,300 $3,380$3,380

Change in returns to Change in returns to landowners: ag & forest landowners: ag & forest production, urban using production, urban using actual prices (M1992 $)actual prices (M1992 $)

$3,320 $3,320 $3,343 $3,343 $3,027 $3,027 $3,418 $3,418 $3,292 $3,292 $3,221 $3,221

SummarySummary

The failure to incorporate the value of ecosystem The failure to incorporate the value of ecosystem services in land use planning can result in poor services in land use planning can result in poor outcomesoutcomes

Low level of ecosystem servicesLow level of ecosystem services Low value of total goods and services from landscapeLow value of total goods and services from landscape

Agricultural land use change had a bigger effect on Agricultural land use change had a bigger effect on ecosystem service value and biodiversity than ecosystem service value and biodiversity than urbanizationurbanization

Result is largely due to the fact that there is far more agricultural land Result is largely due to the fact that there is far more agricultural land than urban landthan urban land

Urban land: generates negative externalities but the direct value of Urban land: generates negative externalities but the direct value of urban land use is high urban land use is high

Agriculture: generates negative externalities but with lower direct land Agriculture: generates negative externalities but with lower direct land use valueuse value

ChallengeChallenge

Analysis assumes we know the links between Analysis assumes we know the links between Action and ecosystem impactAction and ecosystem impact Ecosystem functions and ecosystem servicesEcosystem functions and ecosystem services Ecosystem services and human well-beingEcosystem services and human well-being

Each link is subject to considerable uncertaintyEach link is subject to considerable uncertainty Global change means that future cause-effect Global change means that future cause-effect

relationships may look quite different than relationships may look quite different than current relationshipscurrent relationships

Decision-making under uncertaintyDecision-making under uncertainty

Decision theoryDecision theory

Standard approach for rational choice under uncertaintyStandard approach for rational choice under uncertainty Specify objective function (e.g., maximize expected Specify objective function (e.g., maximize expected

human well-being)human well-being) Define uncertainty: probability of alternative states Define uncertainty: probability of alternative states Use best available information to specify how states and Use best available information to specify how states and

actions combine to form outcomes (probability of actions combine to form outcomes (probability of outcomes)outcomes)

Define the net benefits of different outcomesDefine the net benefits of different outcomes Choose action that maximizes the objective functionChoose action that maximizes the objective function

Example: guilty or not guilty? Example: guilty or not guilty?

Actual conditionActual condition

DecisionDecision

GuiltyGuilty InnocentInnocent

GuiltyGuilty Correct Correct decisiondecision

False conviction False conviction (Type I error)(Type I error)

InnocentInnocent False release False release (Type II error)(Type II error)

Correct Correct decisiondecision

Example: guilty or not guilty? Example: guilty or not guilty? Version 1 Version 1


(Unknown)(Unknown)

DecisionDecision

Guilty (p)Guilty (p) Innocent Innocent (1-p)(1-p)

GuiltyGuilty 2020 -40-40

InnocentInnocent -5-5 1010

Guilty or not guilty? Guilty or not guilty?

How high does the probability of guilt need How high does the probability of guilt need to be before you issue a guilty verdict? to be before you issue a guilty verdict?

Expected value of guilty verdict: Expected value of guilty verdict: 2020PP+(-40)(1-+(-40)(1-PP) = -40+60) = -40+60PP

Expected value of innocent verdict:Expected value of innocent verdict:-5-5PP+10(1-+10(1-PP) = 10-15) = 10-15PP

As long as the probability of guilty is at As long as the probability of guilty is at least 2/3, then issue a guilty verdict least 2/3, then issue a guilty verdict (otherwise not)(otherwise not)

Example: guilty or not guilty? Example: guilty or not guilty? Version 2 Version 2


(Unknown)(Unknown)

DecisionDecision

Guilty (p)Guilty (p) Innocent Innocent (1-p)(1-p)

GuiltyGuilty 2020 -400-400

InnocentInnocent -5-5 1010

Guilty or not guilty? Guilty or not guilty?

As long as the probability of guilty is at As long as the probability of guilty is at least 0.9425 then issue a guilty verdict least 0.9425 then issue a guilty verdict (otherwise not)(otherwise not)

If the cost of false imprisonment is high If the cost of false imprisonment is high then you must have a very high probability then you must have a very high probability of guilt before issuing a guilty verdictof guilt before issuing a guilty verdict

““Innocent until proven guilty” – high cost of Innocent until proven guilty” – high cost of false imprisonment (US criminal law)false imprisonment (US criminal law)

Application to climate change and Application to climate change and mitigation actions mitigation actions


(Unknown)(Unknown)

DecisionDecision

Low sensitivity Low sensitivity to climate to climate change (p)change (p)

High sensitivity High sensitivity to climate to climate change (1-p)change (1-p)

Business-as-Business-as-usualusual

2020 -400-400

Reduce GHG Reduce GHG emissionsemissions

-5-5 1010


Would only choose to continue on Would only choose to continue on business-as-usual path if you placed a business-as-usual path if you placed a probability of 0.9425 of low sensitivity to probability of 0.9425 of low sensitivity to climate changeclimate change


Decision theory is NOT hypothesis testing Decision theory is NOT hypothesis testing Do not need to be 95% sure that climate Do not need to be 95% sure that climate

change is real before we actchange is real before we act Decision theory applied here minimizes Decision theory applied here minimizes

expected losses expected losses Even if potential loss is uncertain, the optimal Even if potential loss is uncertain, the optimal

action is often to avoid large potential lossesaction is often to avoid large potential losses

Risk versus uncertaintyRisk versus uncertainty Critics of decision-theory say that you may not Critics of decision-theory say that you may not

know what the probabilities areknow what the probabilities are ““True uncertainty” True uncertainty”

Unknown probabilities (Unknown probabilities (PP) ) Unknown outcomes (don’t know possible states)Unknown outcomes (don’t know possible states)

Former Defense Secretary Donald Rumsfeld: Former Defense Secretary Donald Rumsfeld: ““As we know, there are known knowns. There are As we know, there are known knowns. There are

things we know we know. We also know there are things we know we know. We also know there are known unknowns. That is to say we know there are known unknowns. That is to say we know there are some things we do not know. But there are also some things we do not know. But there are also unknown unknowns, the ones we don't know we don't unknown unknowns, the ones we don't know we don't know.” know.”

Typology of uncertaintyTypology of uncertainty

Risk versus uncertaintyRisk versus uncertainty

With known probabilities of all possible With known probabilities of all possible events – maximizing expected utility is a events – maximizing expected utility is a reasonable rulereasonable rule

With “unknown unknowns” what do you With “unknown unknowns” what do you do?do?

Almost all important global change issues Almost all important global change issues have some element of “unknown have some element of “unknown unknowns”unknowns”

Decision theory response to Decision theory response to uncertainty challengeuncertainty challenge

Assign subjective probabilities then proceed to maximize Assign subjective probabilities then proceed to maximize expected utilityexpected utility

Subjective probabilities – combination of available Subjective probabilities – combination of available information and best guesses (or opinion)information and best guesses (or opinion)

Predicting future mean global temperature in 100 years Predicting future mean global temperature in 100 years with triple the greenhouse gas concentration from pre-with triple the greenhouse gas concentration from pre-industrial times industrial times

• With some basic physics we can probably “narrow” the possible With some basic physics we can probably “narrow” the possible rangerange

• Could assign equal probability to every temperature in this rangeCould assign equal probability to every temperature in this range• Or use best available information to assess probabilities, for Or use best available information to assess probabilities, for

example, a normal distribution with a mean of +3C from today and example, a normal distribution with a mean of +3C from today and standard deviation of +/- 2Cstandard deviation of +/- 2C

Other approaches to decision-Other approaches to decision-making under uncertaintymaking under uncertainty

Social-ecological systems are complex systemsSocial-ecological systems are complex systems The future trajectory of social-ecological The future trajectory of social-ecological

systems under global change is subject to systems under global change is subject to considerable uncertaintyconsiderable uncertainty

Hard to understand system behavior and harder Hard to understand system behavior and harder still to predict the likely impacts of decisionsstill to predict the likely impacts of decisions

Complexity has led some to think the decision Complexity has led some to think the decision theory approach is not well suited to provide theory approach is not well suited to provide guidance for managing social-ecological guidance for managing social-ecological systems under global changesystems under global change

Scenario PlanningScenario Planning

Natural Capital Project

Scenario planningScenario planning Scenario planning is a method for thinking Scenario planning is a method for thinking

creatively and systematically about complex creatively and systematically about complex futures futures

Scenarios: sets of plausible stories, supported Scenarios: sets of plausible stories, supported with data and simulations, about how the future with data and simulations, about how the future might unfold from current conditions under might unfold from current conditions under alternative human choicesalternative human choices

Scenarios can address many important Scenarios can address many important uncertainties and contrasting beliefs about the uncertainties and contrasting beliefs about the future of the systemfuture of the system

Example: IPCC scenarios of future emissions Example: IPCC scenarios of future emissions and consequences and consequences

Scenario planningScenario planning

Scenarios were first used in the analysis of Scenarios were first used in the analysis of global change during the 1970s global change during the 1970s

More recent efforts: More recent efforts: Global Environmental Outlook Global Environmental Outlook Special Report on Emissions Scenarios (SRES) of the Special Report on Emissions Scenarios (SRES) of the

Intergovernmental Panel on Climate Change (IPCC) Intergovernmental Panel on Climate Change (IPCC) Millennium Ecosystem Assessment Millennium Ecosystem Assessment

These studies explored widely contrasting These studies explored widely contrasting alternative visions using quantitative models and alternative visions using quantitative models and a diverse set of quantitative indicatorsa diverse set of quantitative indicators

Scenario planningScenario planning Advantage of scenario planning is that it expands horizons (“blue Advantage of scenario planning is that it expands horizons (“blue

sky thinking”) that gets people thinking about potential outcomessky thinking”) that gets people thinking about potential outcomes Weakness: difficulty of assessing the likelihood of alternative Weakness: difficulty of assessing the likelihood of alternative

futuresfutures SRES presented six scenarios – all “equally sound”SRES presented six scenarios – all “equally sound”

High uncertainty prevented realistic assessments of probabilitiesHigh uncertainty prevented realistic assessments of probabilities Criticism that the lack of probabilities limited the value of the scenarios Criticism that the lack of probabilities limited the value of the scenarios

to decision-makersto decision-makers Scenario planning can be combined with more quantitative decision Scenario planning can be combined with more quantitative decision

theory analysistheory analysis Scenario planning as first stage – get universe of potential outcomesScenario planning as first stage – get universe of potential outcomes Robust decision-making to analyze more and less desirable decisions in Robust decision-making to analyze more and less desirable decisions in

light of potential outcomeslight of potential outcomes

Thresholds approachThresholds approach

Rockstrom et al. Nature 2009

Thresholds ApproachThresholds Approach

Social–ecological systems are complex Social–ecological systems are complex adaptive systems that can exhibit adaptive systems that can exhibit nonlinear dynamics, historical nonlinear dynamics, historical dependency, have multiple basins of dependency, have multiple basins of attraction and limited predictability attraction and limited predictability

When crossed, thresholds between When crossed, thresholds between multiple basins of attraction can lead to multiple basins of attraction can lead to fundamental transformations in system fundamental transformations in system feedbacks and dynamicsfeedbacks and dynamics

Thresholds ApproachThresholds Approach Focus attention on critical boundaries that have major Focus attention on critical boundaries that have major

consequences if crossedconsequences if crossed Examples of the application of thresholds in global Examples of the application of thresholds in global

change:change: Planetary boundaries (Rockstrom et al. 2009)Planetary boundaries (Rockstrom et al. 2009) Limits on emissions to avoid dangerous climate change (e.g. cap Limits on emissions to avoid dangerous climate change (e.g. cap

of 450 ppm CO2e)of 450 ppm CO2e) Thresholds are often used in regulatory or legal contexts to Thresholds are often used in regulatory or legal contexts to

distinguish permissible from impermissible activities distinguish permissible from impermissible activities Thresholds can be used as a screen to rule out actions Thresholds can be used as a screen to rule out actions

thought to have too high a risk of crossing a threshold or thought to have too high a risk of crossing a threshold or to rank actions based on riskto rank actions based on risk

Thresholds approach Thresholds approach

There is often uncertainty about the exact level There is often uncertainty about the exact level of a thresholdof a threshold

Decision-making involves choices about what Decision-making involves choices about what risks are acceptable: putting more stress on the risks are acceptable: putting more stress on the system can increase current benefits but at a system can increase current benefits but at a cost of having a higher probability of crossing a cost of having a higher probability of crossing a critical thresholdcritical threshold

Thresholds have been criticized as giving a false Thresholds have been criticized as giving a false impression that degradation below the threshold impression that degradation below the threshold level is ‘safe’ and improvements beyond a level is ‘safe’ and improvements beyond a threshold are of no valuethreshold are of no value

Resilience thinkingResilience thinking

Resilience Alliance


Resilience thinking focuses on critical Resilience thinking focuses on critical thresholds for system performancethresholds for system performance

If current situation is desirable then If current situation is desirable then manage in ways to increase resilience manage in ways to increase resilience Resilience: ability to withstand shocks/perturbations Resilience: ability to withstand shocks/perturbations

and remain within one basin of attraction (Hollings and remain within one basin of attraction (Hollings resilience)resilience)

Build capacity to recognize and respond to Build capacity to recognize and respond to emerging transformations before they occuremerging transformations before they occur

Build capacity to adapt should transformation Build capacity to adapt should transformation occuroccur

ResilienceResilience

Multiple basins of attraction and hysteresisMultiple basins of attraction and hysteresis

Source: Scheffer et al. Nature 2001

ResilienceResilience

Ways to shift between stable equilibriaWays to shift between stable equilibria

Source: Scheffer et al. Nature 2001


Resilience thinking: Resilience thinking: How can we remain within certain dynamic How can we remain within certain dynamic

limits to avoid crossing thresholds and remain limits to avoid crossing thresholds and remain in a desirable statein a desirable state

In addition, how can be build capacity to cope In addition, how can be build capacity to cope with change should a change of regime occur with change should a change of regime occur

Resilience thinking is more of a general Resilience thinking is more of a general framework for thinking than specific framework for thinking than specific management prescriptionsmanagement prescriptions

Application to climate change and Application to climate change and ecosystem managementecosystem management

Application to climate changeApplication to climate change

Question: how much and how fast should we Question: how much and how fast should we reduce GHG emissions?reduce GHG emissions?

Dueling approaches to answering this questionDueling approaches to answering this question Nordhaus Dynamic Integrated Climate Economy Nordhaus Dynamic Integrated Climate Economy

(DICE) Model (DICE) Model Stern Review of Climate ChangeStern Review of Climate Change

Framing climate change as minimizing risk of Framing climate change as minimizing risk of crossing a threshold or maximizing expected crossing a threshold or maximizing expected utility utility

Stern Review on the Economics of Stern Review on the Economics of Climate ChangeClimate Change

It is a “stern review” but in reality it is It is a “stern review” but in reality it is named for Nicholas Stern, an economist, named for Nicholas Stern, an economist, who headed the studywho headed the study

UK Treasury Department 2006UK Treasury Department 2006 Created a splashCreated a splash

Proponents of strong action to address Proponents of strong action to address climate change trumpet the reportclimate change trumpet the report

Critics say the report is fundamentally flawed Critics say the report is fundamentally flawed and the conclusions are unwarranted and the conclusions are unwarranted

Stern Review on the Economics of Stern Review on the Economics of Climate ChangeClimate Change

Main findings:Main findings: “…“…the benefits of strong, early action considerably the benefits of strong, early action considerably

outweigh the costs.”outweigh the costs.” “…“…if we don’t act, the overall costs and risks of climate if we don’t act, the overall costs and risks of climate

change will be the equivalent to losing 5% of global GDP change will be the equivalent to losing 5% of global GDP each year, now and forever. If a wider range of risks and each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage impacts is taken into account, the estimates of damage could rise to 20% of GDP or more…”could rise to 20% of GDP or more…”

““Resource cost estimates suggest that an upper bound Resource cost estimates suggest that an upper bound for the expected annual cost of emissions reductions for the expected annual cost of emissions reductions consistent with a trajectory leading to stabilization at consistent with a trajectory leading to stabilization at 550ppm CO550ppm CO22e is likely to be around 1% of GDP by e is likely to be around 1% of GDP by 2050.” 2050.”

Nordhaus DICE ModelNordhaus DICE Model Strong action at present is at odds with most prior Strong action at present is at odds with most prior

economic analyses of the climate change (e.g. Nordhaus economic analyses of the climate change (e.g. Nordhaus analysis)analysis)

Nordhaus policy recommendations: “climate change Nordhaus policy recommendations: “climate change ramp” - low initial price of carbon that ramps up over ramp” - low initial price of carbon that ramps up over timetime

Costs of moderate action are lower than rapid adjustmentCosts of moderate action are lower than rapid adjustment Technological change lower future costsTechnological change lower future costs Society will be richer in future and better able to afford costs Society will be richer in future and better able to afford costs

associated with climate changeassociated with climate change This approach will not result in stabilization at 550 ppm This approach will not result in stabilization at 550 ppm

CO2 – concentrations will continue to riseCO2 – concentrations will continue to rise

Why do Nordhaus and Stern Why do Nordhaus and Stern disagree?disagree?

DiscountingDiscounting Estimates of damagesEstimates of damages Uncertainty – and general approach to Uncertainty – and general approach to

climate change policy questionclimate change policy question

Uncertainty and general approach Uncertainty and general approach to climate change policy questionto climate change policy question

Nordhaus: question of balancing costs Nordhaus: question of balancing costs and benefitsand benefits Takes estimates of benefits of avoided Takes estimates of benefits of avoided

damages along with costsdamages along with costs Use integrated assessment model and inter-Use integrated assessment model and inter-

temporal optimization to find the efficient temporal optimization to find the efficient climate change policy climate change policy

Uncertainty and general approach Uncertainty and general approach to climate change policy questionto climate change policy question

Stern: risk assessment and costStern: risk assessment and cost First do an analysis of risk and find a target for atmospheric First do an analysis of risk and find a target for atmospheric

concentrations (550 ppm of CO2e)concentrations (550 ppm of CO2e) Second figure out cost-effective way of achieving the targetSecond figure out cost-effective way of achieving the target

On the standard cost-benefit analysis approach: On the standard cost-benefit analysis approach: ““As I have argued, it is very hard to believe that models where As I have argued, it is very hard to believe that models where

radically different paths have to be compared, where time radically different paths have to be compared, where time periods of hundreds of years much be considered, where risk periods of hundreds of years much be considered, where risk and uncertainty are of the essence, and where many crucial and uncertainty are of the essence, and where many crucial economic, social, and scientific features are poorly understood, economic, social, and scientific features are poorly understood, can be used as the main quantitative plan in a policy argument.” can be used as the main quantitative plan in a policy argument.”

Modeling of costs and benefits to optimize emissions is “still less Modeling of costs and benefits to optimize emissions is “still less credible” credible”

Application to ecosystem Application to ecosystem managementmanagement

Social-ecological systems: dynamic and interconnectedSocial-ecological systems: dynamic and interconnected Climate change problem is almost easy by comparison Climate change problem is almost easy by comparison

Single dimension – CO2 concentrationSingle dimension – CO2 concentration Ecosystem management – multiple dimensionsEcosystem management – multiple dimensions

Water qualityWater quality Water flow (flood protection, drought mitigation)Water flow (flood protection, drought mitigation) Habitat and speciesHabitat and species Agriculture & timber productivityAgriculture & timber productivity Livelihoods and jobs…Livelihoods and jobs…

Do we understand systems well enough to predict short-Do we understand systems well enough to predict short-term and long-term consequences of management term and long-term consequences of management actions on services? actions on services?

Application to ecosystem Application to ecosystem managementmanagement

Path forward in ecosystem management Path forward in ecosystem management Building systems models to improve understanding of Building systems models to improve understanding of

potential system dynamicspotential system dynamics Verification of models with dataVerification of models with data Sensitivity analysis to probe uncertaintySensitivity analysis to probe uncertainty Scenario thinking to broaden scope of analysis Scenario thinking to broaden scope of analysis

(reduce blindspots)(reduce blindspots) Focus on potential thresholds with dramatic Focus on potential thresholds with dramatic

consequences for system performanceconsequences for system performance Provide early warning to avoid thresholds and plan for Provide early warning to avoid thresholds and plan for

adaptation in case thresholds are crossedadaptation in case thresholds are crossed

ConclusionsConclusions

Paul Krugman writing about the financial Paul Krugman writing about the financial crisis (September 2009): crisis (September 2009): “…“…an all-purpose punch line has become an all-purpose punch line has become

‘nobody could have predicted. . . .’ It’s what ‘nobody could have predicted. . . .’ It’s what you say with regard to disasters that could you say with regard to disasters that could have been predicted…”have been predicted…”


Essential role for conservation Essential role for conservation professionalsprofessionals Provide better understanding of social-Provide better understanding of social-

ecological systemsecological systems Highlight potential large-scale changes that Highlight potential large-scale changes that

could have detrimental impactscould have detrimental impacts Provide early warning signs of dangerProvide early warning signs of danger Provide guide-rails to keep us from crossing Provide guide-rails to keep us from crossing

thresholdsthresholds


We do not know enough BUT…We do not know enough BUT… We know enough to improve on current We know enough to improve on current

performanceperformance The long road rather than the quick fix: The long road rather than the quick fix:

Better science to improve understandingBetter science to improve understanding Better institutions/policy that incorporates Better institutions/policy that incorporates

science and reduces risksscience and reduces risks Adaptive process that learns through timeAdaptive process that learns through time

Technology

Polasky decision making under great uncertainty