Publication:
Investment Decision Making Under Deep Uncertainty : Application to Climate Change

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dc.contributor.authorShah, Ankur
dc.contributor.authorHallegatte, Stéphane
dc.contributor.authorLempert, Robert
dc.contributor.authorBrown, Casey
dc.contributor.authorGill, Stuart
dc.date.accessioned2013-01-02T19:49:27Z
dc.date.available2013-01-02T19:49:27Z
dc.date.issued2012-09
dc.description.abstractWhile 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.en
dc.identifierhttp://documents.worldbank.org/curated/en/2012/09/16708533/investment-decision-making-under-deep-uncertainty-application-climate-change
dc.identifier.doi10.1596/1813-9450-6193
dc.identifier.urihttps://hdl.handle.net/10986/12028
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper; No. 6193
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAFFORESTATION
dc.subjectAIR
dc.subjectAIR TEMPERATURE
dc.subjectANNUAL RAINFALL
dc.subjectAPPLICATION TO CLIMATE CHANGE
dc.subjectATMOSPHERE
dc.subjectATMOSPHERIC RESEARCH
dc.subjectBOARD MEMBERS
dc.subjectCALCULATION
dc.subjectCAPACITY BUILDING
dc.subjectCATCHMENT AREA
dc.subjectCLIMATE
dc.subjectCLIMATE CHANGE
dc.subjectCLIMATE CHANGE ADAPTATION
dc.subjectCLIMATE CHANGE DAMAGES
dc.subjectCLIMATE CHANGE IMPACT
dc.subjectCLIMATE CHANGE INFORMATION
dc.subjectCLIMATE CHANGE MITIGATION
dc.subjectCLIMATE CHANGE PROJECTIONS
dc.subjectCLIMATE CHANGE SCENARIOS
dc.subjectCLIMATE CHANGES
dc.subjectCLIMATE CONDITIONS
dc.subjectCLIMATE DATA
dc.subjectCLIMATE EFFECTS
dc.subjectCLIMATE IMPACTS
dc.subjectCLIMATE INDICATORS
dc.subjectCLIMATE INFORMATION
dc.subjectCLIMATE MODEL
dc.subjectCLIMATE MODELERS
dc.subjectCLIMATE MODELING
dc.subjectCLIMATE MODELS
dc.subjectCLIMATE POLICIES
dc.subjectCLIMATE PROJECTIONS
dc.subjectCLIMATE RESPONSE
dc.subjectCLIMATE RISK
dc.subjectCLIMATE RISK ASSESSMENT
dc.subjectCLIMATE SCENARIOS
dc.subjectCLIMATE SCIENCE
dc.subjectCLIMATE SENSITIVE
dc.subjectCLIMATE SENSITIVITY
dc.subjectCLIMATE SIGNAL
dc.subjectCLIMATE STATISTICS
dc.subjectCLIMATE SYSTEM
dc.subjectCLIMATE UNCERTAINTY
dc.subjectCLIMATE VARIABILITY
dc.subjectCLIMATE VARIABLES
dc.subjectCLIMATE VULNERABILITIES
dc.subjectCLIMATE VULNERABILITY
dc.subjectCLIMATES
dc.subjectCLIMATIC CHANGES
dc.subjectCLIMATIC PARAMETERS
dc.subjectCO
dc.subjectCO2
dc.subjectCOASTAL AREAS
dc.subjectCOASTAL ZONES
dc.subjectCONVECTION
dc.subjectCOPE WITH CLIMATE CHANGE
dc.subjectCOST BENEFIT ANALYSIS
dc.subjectCOST-BENEFIT
dc.subjectCOST-BENEFIT ANALYSES
dc.subjectCOST-BENEFIT ANALYSIS
dc.subjectCOST-BENEFIT FRAMEWORK
dc.subjectDAMAGES
dc.subjectDECISION MAKERS
dc.subjectDECISION MAKING
dc.subjectDECISION MAKING PROCESS
dc.subjectDECISION MAKING PROCESSES
dc.subjectDECISION PROCESS
dc.subjectDECREASE IN RAINFALL
dc.subjectDEEP UNCERTAINTY
dc.subjectDISCOUNT RATE
dc.subjectDISCOUNT RATES
dc.subjectECOLOGICAL SYSTEMS
dc.subjectECOSYSTEM
dc.subjectEMISSION
dc.subjectEMISSION SCENARIO
dc.subjectEMISSION SCENARIOS
dc.subjectEMISSIONS
dc.subjectENERGY EFFICIENCY
dc.subjectENERGY PRODUCTION
dc.subjectENERGY SECURITY
dc.subjectENERGY USE
dc.subjectENVIRONMENTAL GROUPS
dc.subjectEXTREME EVENTS
dc.subjectFINANCIAL MARKETS
dc.subjectFLOOD CONTROL
dc.subjectFLOOD MANAGEMENT
dc.subjectFLOOD PROTECTION
dc.subjectFLOOD RISK
dc.subjectFLOODS
dc.subjectFORECAST CLIMATE CHANGE
dc.subjectFOREST
dc.subjectFOREST MANAGEMENT
dc.subjectFORESTRY
dc.subjectFORESTRY SECTOR
dc.subjectFUTURE CLIMATE CHANGE
dc.subjectFUTURE CLIMATE CHANGES
dc.subjectGCM
dc.subjectGHG
dc.subjectGLACIERS
dc.subjectGLOBAL CLIMATE
dc.subjectGLOBAL CLIMATE CHANGE
dc.subjectGLOBAL MEAN TEMPERATURE
dc.subjectGLOBAL SCALE
dc.subjectGLOBAL WARMING
dc.subjectGREENHOUSE
dc.subjectGREENHOUSE GAS
dc.subjectGREENHOUSE GAS EMISSIONS
dc.subjectGREENHOUSE GASES
dc.subjectGROUNDWATER LEVEL
dc.subjectHURRICANE
dc.subjectHURRICANE INTENSITY
dc.subjectHURRICANE PROTECTION
dc.subjectHURRICANES
dc.subjectICE
dc.subjectIMPACT OF CLIMATE
dc.subjectIMPACT OF CLIMATE CHANGE
dc.subjectIMPACTS OF CLIMATE CHANGE
dc.subjectINCOME
dc.subjectINFORMATION ON CLIMATE
dc.subjectINSURANCE
dc.subjectINSURANCE COMPANIES
dc.subjectINSURANCE INDUSTRY
dc.subjectINVESTMENT DECISIONS
dc.subjectINVESTMENT STRATEGIES
dc.subjectIPCC
dc.subjectJOBS
dc.subjectLAKE LEVEL
dc.subjectLAKE LEVELS
dc.subjectLAKES
dc.subjectLAND MANAGEMENT
dc.subjectLOWER COSTS
dc.subjectLOWER RAINFALL
dc.subjectMONSOON
dc.subjectMONSOONS
dc.subjectNEGATIVE IMPACTS
dc.subjectOCEANS
dc.subjectPALEOCLIMATE
dc.subjectPHYSICS
dc.subjectPORTFOLIO
dc.subjectPRECIPITATION
dc.subjectPRESENT VALUE
dc.subjectPROBABILITY DISTRIBUTION
dc.subjectPROBABILITY DISTRIBUTIONS
dc.subjectPROBABILITY OF OCCURRENCE
dc.subjectQUANTITATIVE ANALYSIS
dc.subjectRAIN
dc.subjectRAINFALL
dc.subjectRAINFALL INTENSITY
dc.subjectRAINY DAYS
dc.subjectREGIONAL CLIMATE
dc.subjectRENEWABLE ENERGY
dc.subjectRESPONSE TO CLIMATE CHANGE
dc.subjectRISK AVERSION
dc.subjectRISK MANAGEMENT
dc.subjectRUNOFF
dc.subjectSAFE WATER
dc.subjectSALINE INTRUSION
dc.subjectSCENARIOS
dc.subjectSCIENTIFIC INFORMATION
dc.subjectSEA LEVEL RISE
dc.subjectSEA WALLS
dc.subjectSTAKEHOLDER INVOLVEMENT
dc.subjectSTAKEHOLDER PARTICIPATION
dc.subjectSTORM SURGE
dc.subjectSTORMS
dc.subjectSUMMER TEMPERATURE
dc.subjectTEMPERATURE
dc.subjectTEMPERATURE CHANGE
dc.subjectTEMPERATURE CHANGES
dc.subjectTEMPERATURE VARIABILITY
dc.subjectTEMPORAL SCALES
dc.subjectTIMBER MANAGEMENT
dc.subjectTROPICS
dc.subjectUNCERTAINTIES
dc.subjectURBAN WATER
dc.subjectURBAN WATER MANAGEMENT
dc.subjectUTILITY FUNCTION
dc.subjectUTILITY FUNCTIONS
dc.subjectWASTEWATER SYSTEMS
dc.subjectWATER AVAILABILITY
dc.subjectWATER CONSUMPTION
dc.subjectWATER DEMAND
dc.subjectWATER DEVELOPMENT
dc.subjectWATER INFRASTRUCTURE
dc.subjectWATER MANAGEMENT
dc.subjectWATER MANAGERS
dc.subjectWATER RESOURCES
dc.subjectWATER SUPPLY
dc.subjectWATER USE
dc.subjectWATER USERS
dc.subjectWEATHER
dc.subjectWEATHER PATTERNS
dc.subjectWORST-CASE
dc.subjectWORST-CASE SCENARIOS
dc.titleInvestment Decision Making Under Deep Uncertainty : Application to Climate Changeen
dspace.entity.typePublication
okr.crosscuttingsolutionareaClimate Change
okr.crossref.titleInvestment Decision Making under Deep Uncertainty - Application to Climate Change
okr.date.disclosure2012-09-01
okr.date.doiregistration2025-04-10T10:31:58.932600Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2012/09/16708533/investment-decision-making-under-deep-uncertainty-application-climate-change
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeTransport and ICT
okr.globalpracticeEnvironment and Natural Resources
okr.globalpracticeWater
okr.identifier.doi10.1596/1813-9450-6193
okr.identifier.externaldocumentum000158349_20120906142854
okr.identifier.internaldocumentum16708533
okr.identifier.reportWPS6193
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/09/06/000158349_20120906142854/Rendered/PDF/wps6193.pdfen
okr.topicScience and Technology Development::Science of Climate Change
okr.topicWater Supply and Sanitation::Water Supply and Sanitation Governance and Institutions
okr.topicMacroeconomics and Economic Growth::Climate Change Economics
okr.topicEnvironment::Climate Change Mitigation and Green House Gases
okr.topicEnvironment::Global Environment Facility
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublication2fea2b63-4a74-5fbd-b964-71ef895df009
relation.isAuthorOfPublication.latestForDiscovery2fea2b63-4a74-5fbd-b964-71ef895df009
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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