Publication: Multidimensional Stress Test for Hydropower Investments Facing Climate, Geophysical and Financial Uncertainty
Loading...
Files in English
439 downloads
Date
2018-01
ISSN
0959-3780
Published
2018-01
Author(s)
Wi, Sungwook
Yang, Yi-Chen E.
Karki, Pravin
Garcia, Luis E.
Rodriguez, Diego J.
Brown, Casey M.
Editor(s)
Abstract
Investors, developers, policy makers and engineers are rightly concerned about the potential effects of climate change on the future performance of hydropower investments. Hydroelectricity offers potentially low greenhouse-gas emission, renewable energy and reliable energy storage. However, hydroelectricity developments are large, complicated projects and possibly critically vulnerable to changes in climate and other assumptions related to future uncertainties. This paper presents a general assessment approach for evaluating the resilience of hydroelectricity projects to uncertainty in climate and other risk factors (e.g., financial, natural hazard). The process uses a decision analytic framework based on a decision scaling approach, which combines scenario neutral analysis and vulnerability-specific probability assessment. The technical evaluation process involves identification of project objectives, specification of uncertain factors, multi-dimensional sensitivity analysis, and data mining to identify vulnerability-specific scenarios and vulnerability-specific estimations of risk. The process is demonstrated with an application to a proposed hydropower facility on the Arun River in Nepal. The findings of the case study illustrate an example in which climate change is not the critical future uncertainty, and consequently highlight the importance of considering multiple uncertainties in combination.
Link to Data Set
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Citations
- Cited 64 times in Scopus (view citations)
Collections
Related items
Showing items related by metadata.
Publication Toward Climate-Resilient Hydropower in South Asia(World Bank, Washington, DC, 2016-05)The decision tree offers a cost effective, scientifically sound, replicable, and transparent method for demonstrating the robustness of a development project in the face of the risks posed by climate change, natural hazards, and other factors. The framework is most effective when a wide range of risks must be considered, as is typically the case with high-value hydropower investments. In order to gain maximum benefit from the framework, it should be conducted at both project and basin scale, first to answer questions immediately relevant to investors and then to provide perspective on alternative investment portfolios that may yield greater returns.Publication Investment Decision Making Under Deep Uncertainty : Application to Climate Change(World Bank, Washington, DC, 2012-09)While agreeing on the choice of an optimal investment decision is already difficult for any diverse group of actors, priorities, and world views, the presence of deep uncertainties further challenges the decision-making framework by questioning the robustness of all purportedly optimal solutions. This paper summarizes the additional uncertainty that is created by climate change, and reviews the tools that are available to project climate change (including downscaling techniques) and to assess and quantify the corresponding uncertainty. Assuming that climate change and other deep uncertainties cannot be eliminated over the short term (and probably even over the longer term), it then summarizes existing decision-making methodologies that are able to deal with climate-related uncertainty, namely cost-benefit analysis under uncertainty, cost-benefit analysis with real options, robust decision making, and climate informed decision analysis. It also provides examples of applications of these methodologies, highlighting their pros and cons and their domain of applicability. The paper concludes that it is impossible to define the "best" solution or to prescribe any particular methodology in general. Instead, a menu of methodologies is required, together with some indications on which strategies are most appropriate in which contexts. This analysis is based on a set of interviews with decision-makers, in particular World Bank project leaders, and on a literature review on decision-making under uncertainty. It aims at helping decision-makers identify which method is more appropriate in a given context, as a function of the project's lifetime, cost, and vulnerability.Publication Room for Improvement(Elsevier, 2015-12)The Brahmaputra river is the largest (by annual discharge) of the three in the Ganges-Brahmaputra-Meghna (GBM) system, and by itself carries more flow than all but 4 rivers in the world. It is the primary water source for over 130 million people, many of whom are mired in chronic poverty. The potential in the Brahmaputra River basin for poverty-reducing development of agriculture and hydropower is great. However, progress in these sectors and others has been hindered by significant natural and anthropogenic challenges. As they attempt to develop their water resources in a manner that reduces water-related vulnerabilities, the people of the Tibet Autonomous Region of China, Bhutan, Northeast India, and Bangladesh face a number of challenges, including: endemic poverty; floods; droughts; groundwater over-abstraction; political unrest; and the broader development ambitions of the member nations (leading to net import or export of resources from the basin). To those challenges have recently been added climate change and difficult decisions regarding hydropower development. A critical compounding factor in the Brahmaputra basin is the lack of an authoritative, reliable, and comprehensive network of basin-wide information on climate, streamflow, natural hazards, and economic factors, such as agricultural production, prices, and trade. Anthropocentric development in the Brahmaputra basin must balance the goal of immediate poverty reduction with the preservation of the vulnerable, rich natural heritage of the basin, in the interest both of intergenerational human equity, and biocentric egalitarianism. In the space allotted here, we provide a snapshot of the demographic and hydroclimatic characteristics of the basin of greatest concern to water system planners aiming at poverty reduction through sustainable development. We propose that the basin's hydro-climatological, economic, and political complexities are such that a basin-wide water system knowledge platform is needed to organize quantitative thinking on potential water-related investments in the basin.Publication Confronting Climate Uncertainty in Water Resources Planning and Project Design(Washington, DC: World Bank, 2015-08-25)The Decision Tree Framework described in this book provides resource-limited project planners and program managers with a cost-effective and effort-efficient, scientifically defensible, repeatable, and clear method for demonstrating the robustness of a project to climate change. At the conclusion of this process, the project planner will be empowered to confidently communicate the method by which the vulnerabilities of the project have been assessed, and how the adjustments that were made (if any were necessary) improved the project’s feasibility and profitability. The framework adopts a “bottom-up” approach to risk assessment that aims at a thorough understanding of a project’s vulnerabilities to climate change in the context of other nonclimate uncertainties (for example, economic, environmental, demographic, or political). It helps to identify projects that perform well across a wide range of potential future climate conditions, as opposed to seeking solutions that are optimal in expected conditions but fragile to conditions deviating from the expected.Publication Indus Basin of Pakistan : Impacts of Climate Risks on Water and Agriculture(Washington, DC: World Bank, 2013-05)This study, Indus basin of Pakistan: the impacts of climate risks on water and agriculture was undertaken at a pivotal time in the region. The weak summer monsoon in 2009 created drought conditions throughout the country. This followed an already tenuous situation for many rural households faced with high fuel and fertilizer costs and the impacts of rising global food prices. Then catastrophic monsoon flooding in 2010 affected over 20 million people, devastating their housing, infrastructure, and crops. Damages from this single flood event were estimated at US dollar 10 billion, half of which were losses in the agriculture sector. Notwithstanding the debate as to whether these observed extremes are evidence of climate change, an investigation is needed regarding the extent to which the country is resilient to these shocks. It is thus timely, if not critical, to focus on climate risks for water, agriculture, and food security in the Indus basin of Pakistan.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.