Publication:
Making Informed Investment Decisions in an Uncertain World : A Short Demonstration

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dc.contributor.authorBonzanigo, Laura
dc.contributor.authorKalra, Nidhi
dc.date.accessioned2014-03-18T20:20:34Z
dc.date.available2014-03-18T20:20:34Z
dc.date.issued2014-02
dc.description.abstractGovernments invest billions of dollars annually in long-term projects. Yet deep uncertainties pose formidable challenges to making near-term decisions that make long-term sense. Methods that identify robust decisions have been recommended for investment lending but are not widely used. This paper seeks to help bridge this gap and, with a demonstration, motivate and equip analysts better to manage uncertainty in investment decisions. The paper first reviews the economic analysis of ten World Bank projects. It finds that analysts seek to manage uncertainty but use traditional approaches that do not evaluate options over the full range of possible futures. Second, the paper applies a different approach, Robust Decision Making, to the economic analysis of a 2006 World Bank project, the Electricity Generation Rehabilitation and Restructuring Project, which sought to improve Turkey's energy security. The analysis shows that Robust Decision Making can help decision makers answer specific and useful questions: How do options perform across a wide range of potential future conditions? Under what specific conditions does the leading option fail to meet decision makers' goals? Are those conditions sufficiently likely that decision makers should choose a different option? Such knowledge informs rather than replaces decision makers' deliberations. It can help them systematically, rigorously, and transparently compare their options and select one that is robust. Moreover, the paper demonstrates that analysts can use the same data and models for Robust Decision Making as are typically used in economic analyses. Finally, the paper discusses the challenges in applying such methods and how they can be overcome.en
dc.identifierhttp://documents.worldbank.org/curated/en/2014/02/18895127/making-informed-investment-decisions-uncertain-world-short-demonstration
dc.identifier.doi10.1596/1813-9450-6765
dc.identifier.urihttps://hdl.handle.net/10986/17310
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 6765
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAPPROACH
dc.subjectAVAILABILITY
dc.subjectBALANCE
dc.subjectCAPACITY BUILDING
dc.subjectCAPACITY UTILIZATION
dc.subjectCAPITAL COST
dc.subjectCAPITAL COSTS
dc.subjectCARBON
dc.subjectCLIMATE
dc.subjectCLIMATE CHANGE
dc.subjectCLIMATE CHANGE IMPACTS
dc.subjectCLIMATE CHANGE MITIGATION
dc.subjectCLIMATE UNCERTAINTY
dc.subjectCOAL
dc.subjectCOAL PLANT
dc.subjectCOST OF ENERGY
dc.subjectCOST OF GAS
dc.subjectCOST-BENEFIT
dc.subjectCOST-BENEFIT ANALYSIS
dc.subjectDEEP UNCERTAINTY
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPING COUNTRY
dc.subjectDISCOUNT RATE
dc.subjectDISCOUNT RATES
dc.subjectDUST
dc.subjectECONOMIC ANALYSES
dc.subjectECONOMIC ANALYSIS
dc.subjectECONOMIC DEVELOPMENTS
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC MODEL
dc.subjectECONOMIC MODELS
dc.subjectECONOMICS
dc.subjectELECTRICITY
dc.subjectELECTRICITY DEMAND
dc.subjectELECTRICITY GENERATION
dc.subjectELECTRICITY MARKETS
dc.subjectELECTRICITY PRICES
dc.subjectELECTRICITY PRODUCTION
dc.subjectELECTRICITY SUPPLY
dc.subjectENERGY PRICES
dc.subjectENERGY PRODUCTION
dc.subjectENERGY PRODUCTION PLANT
dc.subjectENERGY SECURITY
dc.subjectENERGY SUPPLY
dc.subjectFEASIBILITY
dc.subjectFINANCIAL ANALYSES
dc.subjectFLUE GASES
dc.subjectFUTURES
dc.subjectGAS
dc.subjectGAS COSTS
dc.subjectGAS DESULFURIZATION
dc.subjectGAS PRICE
dc.subjectGAS PRICES
dc.subjectIMPORTS
dc.subjectINFRASTRUCTURE INVESTMENTS
dc.subjectINSURANCE
dc.subjectINTERNAL RATE OF RETURN
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL DEVELOPMENT
dc.subjectINTERNATIONAL LENDING
dc.subjectINVESTING
dc.subjectINVESTMENT DECISION
dc.subjectINVESTMENT DECISIONS
dc.subjectINVESTMENT PROJECTS
dc.subjectINVESTMENTS ­ IN ENERGY
dc.subjectLAND USE
dc.subjectLENDING DECISIONS
dc.subjectLOAN
dc.subjectLONG-TERM COST
dc.subjectLOW-CARBON
dc.subjectLOWER DISCOUNT RATE
dc.subjectMINIMUM PRICE
dc.subjectNATURAL GAS
dc.subjectNATURAL GAS MARKET
dc.subjectNUCLEAR PLANT
dc.subjectPOLICY ANALYSIS
dc.subjectPOLICY MAKERS
dc.subjectPORTFOLIOS
dc.subjectPOWER
dc.subjectPOWER PLANT
dc.subjectPOWER PLANTS
dc.subjectPOWER SYSTEMS
dc.subjectPRICE OF ELECTRICITY
dc.subjectPRICE OF GAS
dc.subjectPROBABILITY DISTRIBUTION
dc.subjectPROBABILITY DISTRIBUTIONS
dc.subjectRATE OF RETURN
dc.subjectRATES OF RETURN
dc.subjectRENEWABLE GENERATION
dc.subjectRETURNS
dc.subjectRISK AVERSION
dc.subjectRISK INSURANCE
dc.subjectRISK MANAGEMENT
dc.subjectRISK MITIGATION
dc.subjectSCENARIOS
dc.subjectSENSITIVITY ANALYSES
dc.subjectSULFUR
dc.subjectSULFUR DIOXIDE
dc.subjectTERRORISM
dc.subjectUNCERTAINTIES
dc.subjectUNCERTAINTY ANALYSIS
dc.subjectURBAN DEVELOPMENT
dc.subjectWHOLESALE PRICE
dc.subjectWHOLESALE PRICES
dc.subjectWIND
dc.subjectWIND PLANT
dc.titleMaking Informed Investment Decisions in an Uncertain World : A Short Demonstrationen
dspace.entity.typePublication
okr.crosscuttingsolutionareaClimate Change
okr.crossref.titleMaking Informed Investment Decisions in an Uncertain World: A Short Demonstration
okr.date.disclosure2014-02-01
okr.date.doiregistration2025-04-10T09:48:40.465460Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2014/02/18895127/making-informed-investment-decisions-uncertain-world-short-demonstration
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeEnvironment and Natural Resources
okr.globalpracticeFinance and Markets
okr.globalpracticeEnergy and Extractives
okr.guid465701468330278549
okr.identifier.doi10.1596/1813-9450-6765
okr.identifier.externaldocumentum000158349_20140203130155
okr.identifier.internaldocumentum18895127
okr.identifier.reportWPS6765
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/02/03/000158349_20140203130155/Rendered/PDF/WPS6765.pdfen
okr.region.countryTurkiye
okr.sectorEnergy and mining::Renewable energy
okr.sectorTransportation
okr.themeEconomic management::Economic statistics, modeling and forecasting
okr.themeEnvironment and natural resources management::Climate change
okr.topicEnvironment::Climate Change Mitigation and Green House Gases
okr.topicMacroeconomics and Economic Growth::Climate Change Economics
okr.topicFinance and Financial Sector Development::Non Bank Financial Institutions
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicEnergy::Energy Production and Transportation
okr.unitOffice of the Chief Economist, Sustainable Development Network
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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