Adapting to climate change and managing climate risks by using real options

2007 ◽  
Vol 58 (10) ◽  
pp. 985 ◽  
Author(s):  
Greg Hertzler
Keyword(s):  
Climate Change ◽  
Real Options ◽  
Decision Makers ◽  
Community Leaders ◽  
Catchment Management ◽  
Decision Diagrams ◽  
Climate Risks ◽  
Optimal Decisions ◽  
Decisions Under Risk ◽  
New Type

Adapting to climate change and managing climate risks are new challenges for farmers, community leaders, and catchment management authorities. To meet this challenge, a new method of making decisions under risk may help. This method is called real options. It begins with common sense and adds rigour. It helps us decide when to keep our options open and when to foreclose options and create new ones. In this paper, real options are explained and applied to several examples by developing a new type of decision diagram. The diagrams are a language for thinking about complex decisions under risk. Farmers, community leaders, and catchment management authorities can develop similar diagrams and use them to communicate with other decision makers and with researchers. Finally, the decision diagrams are related to new mathematical tools to help find optimal decisions for managing climate risks.

scholarly journals Environmental Exigencies and the Efficient Voter Rule

Economies ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 100
Author(s):  
David A. Anderson
Keyword(s):  
Climate Change ◽  
Mass Extinction ◽  
Decision Makers ◽  
Pigouvian Taxes ◽  
Optimal Decisions ◽  
Private Incentives ◽  
Manufactured Goods ◽  
Energy Transportation ◽  
Coasian Bargaining ◽  
Voting Mechanism

Externality problems hinder solutions to existential threats, including climate change and mass extinction. To avert environmental crises, policymakers seek mechanisms that align private incentives with societal exigencies. Successful solutions bring individuals to internalize the broad repercussions of their behavior. In some cases, privatization, Coasian bargaining, or Pigouvian taxes effectively place the weight of externalities on the relevant decision makers. Yet, the available remedies often fail to provide satisfactory outcomes, and inefficiencies persist in the markets for energy, transportation, and manufactured goods, among others. This article explains how a simple voting mechanism can achieve socially optimal decisions about many of the innumerable externality problems that remain.

Keeping Up the Momentum: Early Career Scientists in Policy-making and Community Science

2020 ◽  
Author(s):  
Caitlyn Hall ◽  
Ethan Howley ◽  
Evvan Morton ◽  
Erin Murphy ◽  
Hannah Bercovici ◽  
...  
Keyword(s):  
Climate Change ◽  
Native American ◽  
Science Policy ◽  
Early Career ◽  
Decision Makers ◽  
Community Leaders ◽  
Policy Network ◽  
Community Members ◽  
Policy Makers ◽  
The Impact

<p>To make an impact on science policy, a relationship between scientists, community leaders, and decision-makers cannot stop at one successful event – it must grow and evolve. The Arizona Science Policy Network aims to facilitate collaboration between early career scientists and decision-makers to draft science-informed policy. Beyond providing interactive and cross-disciplinary training and curriculum to scientists, we facilitate opportunities to practice in real situations, including speaking at town halls and public hearings, organizing public science science cafes and science days, writing policy memos and briefs, and advising on bills. In 2019, we successfully brought more than 60 early career scientists to the Arizona State Capitol to discuss drafts of the complex, multi-state Drought Contingency Plan with decision-makers. Since then, the state government has invited us to help draft sustainability- and climate change-focused legislation. We consider issues like climate change, water quality and availability, heat adaptation and mitigation, science education, ecological and social impacts of mining and industry, waste management, and emerging technologies. As we worked in impacted communities, we soon realized that we were missing the voices of community leaders in the conversation between scientists and policy-makers. In order to correct this, we hosted several science forums in breweries and cafes throughout Arizona. The science cafes initiated collaboration between policy-makers, scientists and community stakeholders, including Native American tribes. These meetings gave scientists, community members, and policy-makers a platform to discuss the environmental and socio-economic  impact of mining sites specific to each forum’s location. Early career scientists contributed their scientific expertise to explain how we can address region-specific problems. Community members also shared their knowledge of each unique area and context of the impact of current business and policy. Policy-makers brought their perspective on how science is used to enact change. From these efforts, we have fostered a more equitable and inclusive environment to ensure that all perspectives and knowledge are included in new bills and policies. Our program has provided a unique experience for scientists to further understand the broader impacts of science on communities and society. This presentation will reflect on the lessons learned in drafting policy with decision-makers and community leaders.</p>

Prospect Theory and due process paranoia: what behavioural models say about arbitrators’ assessment of risk and uncertainty

2020 ◽  
Vol 36 (2) ◽  
pp. 233-252
Author(s):  
Rutger Metsch ◽  
Rémy Gerbay
Keyword(s):  
Decision Making ◽  
Prospect Theory ◽  
Due Process ◽  
Decision Makers ◽  
Risk And Uncertainty ◽  
Optimal Decisions ◽  
Arbitral Award ◽  
Decisions Under Risk ◽  
Behavioural Model ◽  
Low Probability

Abstract The term ‘due process paranoia’ is used to describe a perceived reluctance by arbitral tribunals to act decisively in certain situations for fear of the arbitral award being challenged on the basis of a party not having had the chance to present its case fully. This article approaches due process paranoia from the perspective of Prospect Theory, which is a behavioural model describing how individuals make decisions under risk and uncertainty. The authors examine how Prospect Theory’s insight that decision makers tend to overweight low-probability events in their decision-making (the ‘possibility effect’) affects decision-making by arbitrators when faced with the threat of challenge to their awards on due process grounds (the ‘enforcement risk’). The article concludes that the possibility effect is prone to contribute to an overweighting by arbitrators of the enforcement risk, thereby explaining the perceived tendency by tribunals to make sub-optimal decisions when faced with due process-related complaints or threats.

People versus Policies: Decision-makers have divergent preferences for decisions about individuals and equivalent policies that affect individuals

2020 ◽  
Author(s):  
David Mauricio Munguia Gomez ◽  
Emma Levine
Keyword(s):  
Real World ◽  
College Admissions ◽  
Decision Makers ◽  
Preference Reversal ◽  
Lay People ◽  
Admissions Officers ◽  
New Type ◽  
Selection Policies

Across nine main studies (N = 7,024) and nine supplemental studies (N = 3,279), we find that people make systematically different choices when choosing between individuals and choosing between equivalent policies that affect individuals. In college admissions and workplace hiring contexts, we randomly assigned participants to select one of two individuals or choose one of two selection policies. People were significantly more likely to choose a policy that would favor a disadvantaged candidate over a candidate with objectively higher achievements than they were to favor a specific disadvantaged candidate over a specific candidate with objectively higher achievements. We document these divergent choices among admissions officers, working professionals, and lay people, using both within-subject and between-subject designs, and across a range of stimuli and decision contexts. We find evidence that these choices diverge because thinking about policies causes people to rely more on their values and less on the objective attributes of the options presented, which overall, leads more people to favor disadvantaged candidates in selection contexts. This research documents a new type of preference reversal in important, real-world decision contexts, and has practical and theoretical implications for understanding why our choices so frequently violate our espoused policies.

The Controllability Precautionary Principle: Justification of a Climate Policy Goal Under Uncertainty

2018 ◽  
Author(s):  
Eugen Pissarskoi
Keyword(s):  
Climate Change ◽  
Climate Policy ◽  
Precautionary Principle ◽  
Decision Makers ◽  
Policy Goal ◽  
The Precautionary Principle ◽  
Climate Change Policies

How can we reasonably justify a climate policy goal if we accept that only possible consequences from climate change are known? Precautionary principles seem to offer promising guidelines for reasoning in such epistemic situations. This chapter presents two versions of the precautionary principle (PP) and defends one of them as morally justifiable. However, it argues that current versions of the PP do not allow discrimination between relevant climate change policies. Therefore, the chapter develops a further version of the PP, the Controllability Precautionary Principle (CPP), and defends its moral plausibility. The CPP incorporates the following idea: in a situation when the possible outcomes of the available actions cannot be ranked with regard to their value, the choice between available options for action should rest on the comparison of how well decision makers can control the processes of the implementation of the available strategies.

scholarly journals Development of a Shipment Policy for Collection Centers

Mathematics ◽  
2021 ◽  
Vol 9 (12) ◽  
pp. 1385
Author(s):  
Irais Mora-Ochomogo ◽  
Marco Serrato ◽  
Jaime Mora-Vargas ◽  
Raha Akhavan-Tabatabaei
Keyword(s):  
Climate Change ◽  
Natural Disasters ◽  
Markov Decision Process ◽  
Decision Process ◽  
Necessary Conditions ◽  
Decision Makers ◽  
Humanitarian Organizations ◽  
The World ◽  
Markov Decision ◽  
Unsatisfied Demand

Natural disasters represent a latent threat for every country in the world. Due to climate change and other factors, statistics show that they continue to be on the rise. This situation presents a challenge for the communities and the humanitarian organizations to be better prepared and react faster to natural disasters. In some countries, in-kind donations represent a high percentage of the supply for the operations, which presents additional challenges. This research proposes a Markov Decision Process (MDP) model to resemble operations in collection centers, where in-kind donations are received, sorted, packed, and sent to the affected areas. The decision addressed is when to send a shipment considering the uncertainty of the donations’ supply and the demand, as well as the logistics costs and the penalty of unsatisfied demand. As a result of the MDP a Monotone Optimal Non-Decreasing Policy (MONDP) is proposed, which provides valuable insights for decision-makers within this field. Moreover, the necessary conditions to prove the existence of such MONDP are presented.

scholarly journals Are there similarities between the Corona and the climate crisis?

2021 ◽  
Author(s):  
Robert C. Schmidt
Keyword(s):  
Climate Change ◽  
Political Parties ◽  
Decision Procedures ◽  
Free Rider ◽  
Decision Makers ◽  
Short Paper ◽  
Political Decision ◽  
Look Back ◽  
Policy Measures ◽  
Climate Crisis

AbstractIn this short paper, I look back at the early stages of the Corona crisis, around early February 2020, and compare the situation with the climate crisis. Although these two problems unfold on a completely different timescale (weeks in the case of Corona, decades in the case of climate change), I find some rather striking similarities between these two problems, related with issues such as uncertainty, free-rider incentives, and disincentives of politicians to adequately address the respective issue with early, farsighted and possibly harsh policy measures. I then argue that for complex problems with certain characteristics, it may be necessary to establish novel political decision procedures that sidestep the normal, day-to-day political proceedings. These would be procedures that actively involve experts, and lower the involvement of political parties as far as possible to minimize the decision-makers’ disincentives.

Linking disaster risk reduction, climate change and development

2016 ◽  
Vol 7 (2) ◽  
pp. 216-228 ◽  
Author(s):  
E. Lisa F. Schipper ◽  
Frank Thomalla ◽  
Gregor Vulturius ◽  
Marion Davis ◽  
Karlee Johnson
Keyword(s):  
Climate Change ◽  
Risk Reduction ◽  
Disaster Risk Reduction ◽  
Political Action ◽  
Disaster Risk ◽  
Content Type ◽  
Climate Risks ◽  
Emerging Risk ◽  
Or Practice ◽  
Future Work

Purpose The purpose of this paper is to advance the dialogue between the disaster risk reduction (DRR) and adaptation community by investigating their differences, similarities and potential synergies. The paper examines how DRR and adaptation can inform development to tackle the underlying drivers of disaster risk. Design/methodology/approach Based on a risk-based approach to the management of climate variability and change, the paper draws from a critical review of the literature on DRR and adaptation. The study finds that known and emerging risk from disasters continues to increase dramatically in many parts of the world, and that climate change is a key driver behind it. The authors also find that underlying causes of social vulnerability are still not adequately addressed in policy or practice. Linking DRR and adaptation is also complicated by different purposes and perspectives, fragmented knowledge, institutions and policy and poor stakeholder coordination. Findings The author’s analysis suggests that future work in DRR and adaptation should put a much greater emphasis on reducing vulnerability to environmental hazards, if there is truly a desire to tackle the underlying drivers of disaster and climate risks. Originality/value This will require coherent political action on DRR and adaptation aimed at addressing faulty development processes that are the main causes of growing vulnerability. The study concludes with a first look on the new Sendai Framework for Disaster Risk Reduction and how it aims to connect with adaptation and development.

scholarly journals A Comparative Analysis of Climate-Risk and Extreme Event-Related Impacts on Well-Being and Health: Policy Implications

2018 ◽  
Vol 15 (2) ◽  
pp. 331 ◽  
Author(s):  
Walter Leal Filho ◽  
Abul Al-Amin ◽  
Gustavo Nagy ◽  
Ulisses Azeiteiro ◽  
Laura Wiesböck ◽  
...  
Keyword(s):  
Climate Change ◽  
Extreme Events ◽  
Extreme Event ◽  
Well Being ◽  
Lessons Learned ◽  
Policy Implications ◽  
Health Impacts ◽  
Climate Risks ◽  
Wide Range ◽  
Mental Problems

There are various climate risks that are caused or influenced by climate change. They are known to have a wide range of physical, economic, environmental and social impacts. Apart from damages to the physical environment, many climate risks (climate variability, extreme events and climate-related hazards) are associated with a variety of impacts on human well-being, health, and life-supporting systems. These vary from boosting the proliferation of vectors of diseases (e.g., mosquitos), to mental problems triggered by damage to properties and infrastructure. There is a great variety of literature about the strong links between climate change and health, while there is relatively less literature that specifically examines the health impacts of climate risks and extreme events. This paper is an attempt to address this knowledge gap, by compiling eight examples from a set of industrialised and developing countries, where such interactions are described. The policy implications of these phenomena and the lessons learned from the examples provided are summarised. Some suggestions as to how to avert the potential and real health impacts of climate risks are made, hence assisting efforts to adapt to a problem whose impacts affect millions of people around the world. All the examples studied show some degree of vulnerability to climate risks regardless of their socioeconomic status and need to increase resilience against extreme events.

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