Communicating Trade-offs amid Controversial Science: Decision Support for Climate Policy

• Published in: Ecological economics 2012-05, Vol.77, p.74-90
• Main Author: Iverson, Terrence
• Format: Article
• Language: English
• Subjects: Ambiguity; Climate; Climate change; climate change policy; Decision making; Decision making under uncertainty; decision support; Ecology; Economic development; Economics; Environment; Environmental policy; Forecasting; Knightian uncertainty; minimax regret; Policy making; Science; Stakeholder; Uncertainty
• ISSN: 0921-8009; 1873-6106
• DOI: 10.1016/j.ecolecon.2012.01.010

The paper considers the decision that arises in climate policy where there is expert disagreement about the correct scientific model and where a group of stakeholders needs to agree on a common policy target. Policy choice is posed as a decision under Knightian uncertainty, where decision-makers lack grounds for assigning a particular probability distribution across contending forecasting models. The decision is then framed as one of balancing two competing objectives that plausibly align with the dominant concern of stakeholders from each side in the policy debate. A decision criterion is proposed to identify options for compromise that balance these objectives in different ways. The criterion spans three standard non-Bayesian decision criteria. Policies generated by the criterion are combined with visual tools to communicate “what's at stake” in an environmental policy decision in which stakeholders disagree both about scientific models and about the relative importance of risks to the environment versus risks to economic growth. The approach summarizes information that could be useful to policy-makers tasked with negotiating a compromise. The framework is applied to climate policy using DICE-2007 (Nordhaus 2008). The results highlight a basic asymmetry between the mistake of “doing too little” and that of “doing too much” that suggests a strong argument for avoiding the current status quo of global inaction. ► We develop tools to facilitate compromise in contested environmental policy decisions. ► Stakeholders disagree about the correct scientific model. ► Disagreements are accommodated by posing choice as a decision under Knightian uncertainty. ► Decision framed in terms of balancing competing stakeholder objectives. ► Applied to climate policy using DICE-2007 (Nordhaus 2008)