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Impact of Uncertainty Parameter Distribution on Robust Decision Making Outcomes for Climate Change Adaptation under Deep Uncertainty

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  • Julia Reis
  • Julie Shortridge

Abstract

Deep uncertainty in future climatic and economic conditions complicates developing infrastructure designed to last several generations, such as water reservoirs. In response, analysts have developed multiple robust decision frameworks to help identify investments and policies that can withstand a wide range of future states. Although these frameworks are adept at supporting decisions where uncertainty cannot be represented probabilistically, analysts necessarily choose probabilistic bounds and distributions for uncertain variables to support exploratory modeling. The implications of these assumptions on the analytical outcomes of robust decision frameworks are rarely evaluated, and little guidance exists in terms of how to select uncertain variable distributions. Here, we evaluate the impact of these choices by following the robust decision‐making procedure, using four different assumptions about the probabilistic distribution of exogenous uncertainties in future climatic and economic states. We take a water reservoir system in Ethiopia as our case study, and sample climatic parameters from uniform, normal, extended uniform, and extended normal distributions; we similarly sample two economic parameters. We compute regret and satisficing robustness decision criteria for two performance measures, agricultural water demand coverage and net present value, and perform scenario discovery on the most robust reservoir alternative. We find lower robustness scores resulting from extended parameter distributions and demonstrate that parameter distributions can impact vulnerabilities identified through scenario discovery. Our results suggest that exploratory modeling within robust decision frameworks should sample from extended, uniform parameters distributions.

Suggested Citation

  • Julia Reis & Julie Shortridge, 2020. "Impact of Uncertainty Parameter Distribution on Robust Decision Making Outcomes for Climate Change Adaptation under Deep Uncertainty," Risk Analysis, John Wiley & Sons, vol. 40(3), pages 494-511, March.
  • Handle: RePEc:wly:riskan:v:40:y:2020:i:3:p:494-511
    DOI: 10.1111/risa.13405
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    1. Julia Reis & Julie Shortridge, 2022. "Robust decision outcomes with induced correlations in climatic and economic parameters," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(1), pages 1-23, January.

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