Scenarios for Uncertainty

Risk Analysis for Water Resources Planning and Management

Institute for Water Resources

2008

UncertaintiesAverage house valueHurricane trackForward speed of stormFootprint of projectSea level riseChannel depthBudgets and funding

Mean stream flowMean day percent of shadeCost/yd. concreteLand use patterns/ratesRedevelopment rate in NOLA

Some uncerta

inties d

warf all o

thers

Landscape Scale StudiesGlobal importanceAffect millions of peopleGreat variety of wickedly complex problemsMajor uncertainties commonMany possible futures

ExamplesLaCPRMsCIPUpper Mississippi and TributariesMuskingum Watershed Conservancy District Puget SoundColumbia RiverCoastal LouisianaEverglades

When One Is Not EnoughSingle most likely without project condition exists

Traditional planning approachAddress quantity and model uncertainty within that scenario

More than one possible future and they are significantly different

Scenario planningProbabilistic scenario analysis

When to Use Scenario Planning

Scenario Planning Deterministic Planning

Deterministic Planning Standard DecisionMaking

Consequence

Uncertainty Much

Grave

Little

Minor

Scenario Planning Is ConsistentWith P&G

It is not an alternative to P&GIt is an enhancement for situations with significantly different futures possible Scenario planning modifies tasks in some steps

Traditional P&G PlanningIt’s largely deterministicProcess relies on a single most likely alternative future forecast

Desire for single right answerOften anchored in present Adversarial--legitimate differences in views of uncertain future

Forecasting & Comparing Criteria

Plan

Effe

cts

Baseline Risk

Existing Risk

Future Risk if No Action

Future Risk with Management Option A

Before & AfterComparison

With & WithoutOption Comparison

Target Gap Analysis

Time

Most Likely Future Condition

We labor in uncertaintyA single forecast of the future will be wrongThus, planning is based on what could be not necessarily what will beWhat could be is wide open to debate

We cannot ignore it

The consequences of being wrong may be serious

Scenario PlanningDeveloped in second half of 20th century (Europe) Result of failure of traditional planning

Deterministic view of futureForecasts were wrong

Barrow Coastal Problem

Even small projects can be complex!

Barrow’s Coast

Change

Storms and erosionGlobal warmingLess ice cover-major issue

Social & economic infrastructureCultural consequences

Ivu

Erosion rate& Beach recovery

Consequence forQuality of life

Severe

Severe

Minor

Minor

Goodbye Barrow

Happy Days

Troubled Times

Surviving

What Scenarios AreNarratives of alternative environments in which today’s decisions may be played outNeither predictions nor strategiesHypotheses of different futures specifically designed to highlight the risks and opportunities involved in problem solving

Steps to Scenarios1) Scenario team2) Decision focus3) Brainstorm a list of key factors4) Distinguish pre-determined elements from

uncertainties 5) Identifying a few scenario logics 6) Flesh out scenarios

Scenario TeamParticipants carefully recruited to include people with

Thorough knowledge of the problemDiverse backgrounds

Range of levels of management, perspectives, and roles

Variety of intellectual disciplines

Decision FocusIdentify key decision Develop useful questions to ask about the decision

To be useful scenarios must teach relevant lessons to decision makers

Must speak to decisions or direct concerns

Define time frame of scenarioAffects range of movement and creativity within scenario

Brainstorm Key FactorsNo idea is evaluated at firstIdentify driving forces and key trends

The most significant elements in external environmentConsider 5 general categories that interact to create complex, interesting plots

Social Technological Economic Environmental Political forces.

Each study must compile its own driving forces and key trends

What Are We Looking For?Which key forces seem inevitable or pre-determined?

Trends unlikely to vary significantly in any scenario should be reflected, implicitly or explicitly, in each scenario

Which forces are most likely to define or significantly change the nature or direction of the scenarios?

Measured by two criteria How uncertain are you of its outcome? How important is it to solving your problem(s)?

Scenarios address things that are both very important and very uncertain

How Can I Construct ScenariosDeductive approach

Prioritize list of key factors Construct a 2 x 2 scenario matrix based on 2 most critical uncertainties

One method each participant gets 25 points to assign to different the forces on the list

How Do We Flesh Out Scenarios?Consider Systems and Patterns: Systems Thinking

Studying the way the parts of a system interactUseful to map out events, patterns, and structure individually then create systems diagrams together

Build Narratives Once basic logics of different worlds are determined, weave pieces together to form a narrative

Beginning Middle End

How could we get from present to this new scenario? What events are necessary?

Flesh Out Scenarios (cont.)Identify characters to tell story around

Individuals, stakeholders or institutions that espouse specific changes

Known (real) Invented (hypothetical)

May be driving forces May crystallize logic of scenario

Typical PlotsEach scenario should be different, yet relevant to focal questionSome archetypical plot lines arise regularly

Common PlotsWinners & losersCrisis & responseGood news/bad newsEvolutionary changeRevolution Tectonic Change

CyclesInfinite PossibilityThe Lone RangerGenerationsPerpetual Transition

Tips for Scenarios1. Stay Focused 2. Keep It Simple 3. Keep It Interactive 4. Plan to Plan and Allow

Enough Time 5. Don’t Settle for a Simple

High, Medium, and Low6. Avoid Probabilities or “Most

Likely” Plots

7. Avoid Drafting Too Many Scenarios

8. Invent Catchy Names for the Scenarios

9. Make the Decision Makers Own the Scenarios

10. Budget Sufficient Resources for Communicating the Scenarios

Then What?Identify future scenarios Do analysis

(good science)Evaluate plans against all scenariosChoose most robust plan

Runoff

P-loading

Wetter

Dryer

Heavy Light

Two Basic Ways to Proceed

Evaluate each plan against each of the four scenarios (e.g., using MCDA results) Results of this evaluation are compared across plans to select a planWhich plan does best (robustness) regardless of the future realized?

Two Basic Ways to Proceed

Choose one of the four scenarios as most likely Proceed as usual through the selection processEvaluate the recommended plan against the other three remaining scenariosUnacceptable results in any scenario

Adaptive managementReformulateAnother plan is selected

Who’s Doing It?Industry Europe COE

Take Away PointsLandscape scale problems complex & diverseUncertainty is everywhere Scenario planning to address uncertaintyMCDA needed to address complexity & collaborative planning initiativeScenario analysis--MCDA in scenario planning context is a potential solution

What’s the Without Condition?It is critical to plan formulationIt is critical to plan evaluationIt is a source of adversarial processes

See Washington Post vs. COE--Upper Miss

And you do not know what it is!