Abstract
Is the prospect of possible climate change relevant to water resources decisions being made today? And, if so, how ought that prospect be considered? These questions can be addressed by decision analysis, which we apply to two investments in the Great Lakes region: a regulatory structure for Lake Erie, and breakwaters to protect Presque Isle State Park, PA. These two decisions have the elements that potentially make climate change relevant: long lived, "one shot" investments; benefits or costs that are affected by climate-influenced variables; and irreversibilities. The decision analyses include the option of waiting to obtain better information, using Bayesian analysis to detect whether climate change has altered water supplies. The analyses find that beliefs about climate change can indeed affect optimal decisions. Furthermore, ignoring the possibility of climate change can lead to significant opportunity losses—in the cases here, as much as 10% or more of the construction cost. Yet the consequences of climate uncertainty for Great Lakes management do not appear to be qualitatively different from those of other risks, and thus do not deserve different treatment. The methods of sensitivity analysis, scenario planning, and decision analysis, all of which are encouraged under US federal guidelines for water planning, are applicable. We recommend increased use of decision trees and Bayesian analysis to consider not only climate change risks, but also other important social and environmental uncertainties.
Similar content being viewed by others
References
Arrow, K.J, Parikh, J., Pillet, G. et al.: 1996, ‘Decision-Making Frameworks for Addressing Climate Change’, in J.P. Bruce, H. Lee, and E.F. Haites, Climate Change 1995, Contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, NY.
Bloczynski, J.A., Bogart, W.T., Hobbs, B.F., and Koonce, J.F.: 1996, ‘Irreversible Investment in Wetlands Preservation: Making Optimal Decisions Under Uncertainty’, presented at the 1996 Meeting, Canadian Resource and Environmental Economics Study Group, Montreal, Oct. 5–6.
Brand, K.P., and Small, M.J.: 1995, ‘Updating Uncertainty in an Integrated Risk Assessment: Conceptual Framework and Methods’, Risk Analysis 15(6), 719–731.
Carter, T., Parry, M., Harasawa, H., and Nishioka, S.: 1994, IPCC Technical Guidelines for Assessing Climate Change Impacts and Adaptations, Intergovernmental Panel on Climate Change, Geneva.
Changnon, S.A., and Glantz, M.H.: 1996, ‘The Great Lakes Diversion at Chicago and Its Implications for Climate Change’, Climatic Change 32, 199–214.
Chao, P.T., Hobbs, B.F., and Venkatesh, B.N.: 1997, Great Lakes Management and Climate Change Workshops, Cleveland OH, 4–6 January and 4–5 March 1995, Institute for Water Resources, US Army Corps of Engineers, Ft. Belvoir, VA.
Chao, P.T., and Hobbs, B.F.: 1997, ‘Decision Analysis of Shoreline Protection Under Climate Change Uncertainty’, Water Resources Research 33(4), 817–830.
Chao, P.T., Hobbs, B.F., and Stakhiv, E.Z.: 1994, ‘Evaluating Climate Change Impacts on the Management of the Great Lakes of North America’, in E. Parent and L. Duckstein (eds.), Engineering Risk and Reliability in the Management of Natural Resources under Physical Change with Special Emphasis on Climate Change, Kluwer, Amsterdam.
Chankong, V., and Haimes, Y.Y.: 1983, Multiobjective Decision Making: Theory and Methods. Amsterdam: North-Holland.
Clemen, R.T.: 1995, Making Hard Decisions, 2nd Edition. Boston, MA: PWS-Kent Publishing.
Croley, T.E.: 1990, ‘Laurentian Great Lakes Double-CO2 Climate Change Hydrological Impacts’, Climatic Change 17(1), 27–47.
Croley, T.E.: 1992, CCC GCM 2xCO2 Hydrological Impacts on the Great Lakes, IJC Water Levels References Study, Working Committee 3, Task Group 3, Task 19.1— Climate and climate Change, Subtask 19.1.2, Climate Scenario Development, Appendix. Great Lakes Environmental Research Laboratory, Ann Arbor, MI.
Dakins, M.E., Toll, J.E., and Small, M.J.: 1996, ‘Risk-based Environmental Remediation: Bayesian Monte Carlo Analysis and the Expected Value of Sample Information’, Risk Analysis 16(1), 67–79.
Davis, D.R., Duckstein, L., and Krzysztofowicz, R.: 1979, ‘The Worth of Hydrologic Data for Nonoptimal Decision Making’, Water Resources Research 15(6), 1733–1742.
Donahue, M.J.: 1993, ‘Great Lakes Global Climate Change; Implications for Water Policy and Management’, Unpublished manuscript, Great Lakes Commission, Ann Arbor, MI.
Ellis, H., Jiang, M.X., and Corotis, R.B.: 1995, ‘A Partially Observable Markov Decision Process Model for Bridge Inspection, Maintenance, and Repair’. Journal of Infrastructure (ASCE) 1(2), 92–99.
Fiering, M.B., and Rogers, P.: 1991, Climate Change and Water Resources Planning Under Uncertainty. Draft Report, Institute for Water Resources, US Army Corps of Engineers, Ft. Belvoir, VA.
Frederick, K.D.: 1994, ‘Integrated Assessments of the Impacts of Climate Change on Natural Resources’, Climatic Change 28(1), 1–14.
Grima, A.P.L.: 1993, ‘Enhancing Resilience in Great Lakes Water Levels Management’, International Journal of Environmental Studies 44(1), 97–111.
Grygier, J.C., and Stedinger, J.R.: 1990, SPIGOT: A Synthetic Streamflow Generation Software Package, Technical Description, Version 2.6, Cornell University, Ithaca, NY.
Hammit, J.K., Lempert, R.J., and Schlesinger, M.E.: 1992, ‘A Sequential Decision Strategy for Abating Climate Change’, Nature 357. 315–318
Hobbs, B.F.: 1997, ‘Bayesian Methods for Analyzing Risks From Climate Change’, Journal of Environmental Management 49(1), 53–72.
Horvath, F.J., Jannereth, M.R., and Shafer, C.A.: 1989, ‘Impacts of Water Level Fluctuations’, in Great Lakes Water Levels: Shoreline Dilemmas, National Academy Press, Washington, D.C., 27–45.
Institute for Water Resources: 1992, Guidelines for Risk and Uncertainty Analysis in Water Resources Planning, IWR Reports 92-4-1,2, US Army Corps of Engineers, Ft. Belvoir, VA.
Intergovernmental Panel on Climate Change: 1994, Climate Scenarios and Socioeconomic Projections for IPCC WG II Assessment, Working Group II, Geneva, March.
International Joint Commission: 1993, Levels Reference Study: Great Lakes-St. Lawrence River Basin, Ottawa, ON and Washington, D.C., March 31.
James, I.C., Bower, B.T., and Matalas, N.C.: 1969, ‘Relative Importance of Variables in Water Resources Planning’, Water Resources Research 5(6), 1165–1173.
Krzysztofowicz, R.: 1983, ‘Why Should a Forecaster and a Decision Maker Use Bayes Theorem’, Water Resources Research 19(2), 327–336.
Krzysztofowicz, R.: 1994, ‘Strategic Decisions Under Nonstationary conditions: A Stopping-control Paradigm’, in E. Parent and L. Duckstein (eds.), Engineering Risk and Reliability in the Management of Natural Resources under Physical Change with Special Emphasis on Climate Change, Kluwer, Amsterdam.
Krzysztofowicz, R., and Davis, D.R.: 1983, ‘A Methodology for Evaluation of Flood Forecast-Response Systems, Part 2: Theory’, Water Resources Research 19,(6), 1431–1440.
Lambert, D.K., McCarl, B.A., He, Q., Kaylen, M.S., Rosenthal, W., Chang, C.C., and Nayda, W.I.: 1995, ‘Uncertain Yields in Sectoral Welfare Analysis: An Application to Global Warming’, Journal of Agricultural and Applied Economics 27(2), 423–436.
Leavesley, G.H.: 1994, ‘Modeling the Effects of Climate Change on Water Resources — A Review’, Climatic Change 28, 159–177.
Lempert, R.J., Schlesinger, M.E., and Hammit, J.K.: 1994, ‘The Impact of Potential Abrupt Climate Changes on Near-Term Policy Choices’, Climatic Change 26, 351–376.
Liebetrau, A.M., and Scott, M.J.: 1991, ‘Strategies for Modeling the Uncertain Impacts of Climate Change’, Journal of Policy Modeling 13(2), 184–204.
Morgan, M.G., Henrion, M., and M. Small: 1990, Uncertainty, A Guide to Dealing with Uncertainty in Quantitative Risk and Policy Analysis, Cambridge University Press, NY.
Mortsch, L.D., and Quinn, F.H.: 1995, ‘Climate Scenarios for Great Lakes Ecosystems Studies’, Unpublished manuscript, Grcat Lakes Environmental Research Laboratory, Ann Arbor, MI.
Moser, D.A.: 1997, ‘Climate Change and Federal Water Resources Project Planning and Decision Making’, Climatic Change, this issue.
Paoli, G. (ed.).: 1994, Climate Change, Uncertainty and Decision-Making, International Geosphere-Biosphere Programme, Core Project Biospheric Aspects of the Hydrological Cycle, Report No. 3, Institute for Risk Research, University of Waterloo, Ontario.
Paté-Cornell, E.: 1996, ‘Uncertainties in Global Climate Change Estimates’, Climatic Change 33, 145–149.
Patwardhan, A., and Small, M.: 1992, ‘Bayesian Methods for Model Uncertainty Analysis with Application to Sea-Level Rise’, Risk Analysis 12(4), 513–525.
Patwardhan, A., and Small, M.: 1993, ‘Decision-making for Coastal Protection with Uncertain Future Sea Level’, Unpublished manuscript. Carnegie-Mellon University, Pittsburgh, PA.
Raiffa, H.: 1968. Decision Analysis, Introductory Lectures on Choices under Uncertainty. Reading, MA: Addison-Wesley.
Rhodes, S.L., and Wiley, K.B.: 1993, ‘Great Lakes Toxic Sediments and Climate Change: Implications for Environmental Remediation’, Global Environmental Change 3, 292–305.
Rogers, P.: 1994, ‘Assessing the Socioeconomic Consequences of Climate Change on Water Resources’, Climatic Change 28, 179–208.
Rogers, P.: 1997, ‘Engineering Design and Uncertainties Related to Climate Change’, Climatic Change, this issue.
Schimmelpfennig, D.: 1996, ‘Uncertainty in Economic Models of Climate-Change Impacts’, Climatic Change 33, 213–234.
Shlyakhter, A., Valverde, Jr., A.L.J., and Wilson, R.: 1995, ‘Integrated Risk Analysis of Global Climate Change’, Chemosphere 30(8), 1585–1618.
Smith, J.B.: 1993, ‘Adaptation: A Focus for Great Lakes Climate Change Impacts Research’, RCG/Hagler Bailly, Inc., Boulder, CO.
Smith, J.B., and Tirpak, D.A.: 1990, The Potential Effects of Global Climate Change on the United States, Hemisphere Publishing, NY.
Stakhiv, E.Z., Ratick, S.J., and Du, W.: 1991, ‘Risk-Cost Aspects of Sea Level Rise and Climate Change in the Evaluation of Shore Protection Projects’, in Water Resources Engineering Risk Assessment, ed. by J. Ganoulis, Springer-Verlag, Berlin.
U.S. Army Corps of Engineers: 1986, ‘Presque Isle Peninsula, Erie, Pennsylvania, Shoreline Erosion Control Project, Phase II-General Design Mcmorandum-Detailed Project Design’, Buffalo District, Buffalo, NY, April.
U.S. Dept. of State and Canadian Dept. of External Affairs: 1986, Letters to the International Joint Commission, Aug. 1.
U.S. Water Resources Council: 1983, Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, US Govt. Printing Office, Washington, D.C., March 10.
Venkatesh, B.N.: 1996, Analyzing Investments under Climate Change Uncertainty: Managing Levels of the Great Lakes, Ph.D. Dissertation, Dept. of Systems, Control, and Industrial Engineering, Case Western Reserve University, Cleveland, OH.
von Winterfeldt, D., and Edwards, W.: 1986, Decision Analysts and Behavioral Research, Cambridge University Press, NY.
Yohe, G.W.: 1991, ‘Uncertainty, Climate Change, and The Economic Value of Information: An Economic Methodology for Evaluating the Timing and Relative Efficacy of Alternative Responses to Climate Change with Application to Protecting Developed Property from Greenhouse Induced Sea Level Rise’, Policy Sciences 24, 245–269.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Hobbs, B.F., Chao, P.T. & Venkatesh, B.N. Using Decision Analysis to Include Climate Change in Water Resources Decision Making. Climatic Change 37, 177–202 (1997). https://doi.org/10.1023/A:1005376622183
Issue Date:
DOI: https://doi.org/10.1023/A:1005376622183