Building resilience into World Bank operations. Julie Rozenberg London November 13 th 2015

Transcription

1 Building resilience into World Bank operations Julie Rozenberg London November 13 th

2 Many investment decisions have long term consequences. Infrastructure in particular can shape development for decades or centuries, a duration that often extends beyond infrastructure s lifetime because the economic system reorganizes itself around them. Hallegatte et al., Investment Decision Making Under Deep Uncertainty, World Bank

3 Prediction is very difficult, especially about the future (N. Bohr) Year 2000, seen from 1900 (From Hildebrands)

4 What will people want/like in 2050? What technologies will we have? What climate will we have?

5 Climate models try to guess that The Meteo-France model, from IPCC

6 But they disagree with each other The Meteo-France and the Australian model, from IPCC

7 and we have a lot of models

8 and future climates depend on future climate policies

9 Is it hopeless? KOSHI BASIN, NEPAL

10 No, but we need to change the way we make decisions

11 Traditional Planning Asks What Will The Future Bring? Traditional Planning What will the future be? What is the best near-term decision? How sensitive is our decision to our prediction? Works well when: Conditions are stable or easy to predict There is consensus among stakeholders

12 What if I m wrong?

13 Using Historical data with unpredictable variables can lead to bad decisions In the early 1970s forecasters made projections of U.S energy use based on a century of data Gross national product (trillions of 1958 dollars) Energy use (10 15 Btu per year) 1975 Scenarios Historical trend continued

14 Using Historical data with unpredictable variables can lead to bad decisions In the early 1970s forecasters made projections of U.S energy use based on a century of data they were all wrong Gross national product (trillions of 1958 dollars) Actual 2000 Actual Energy use (10 15 Btu per year) 1975 Scenarios Historical trend continued

15 Decision Making Under Uncertainty Runs the Analysis Backwards Predict Then Act What will the future be? What is the best near-term decision? How sensitive is our decision to our predictions? Decision Making Under Uncertainty (DMU) What are the available strategies? Identify vulnerabilities of these strategies Develop strategy adaptations to reduce vulnerabilities

16 Decision Making Under Uncertainty Runs the Analysis Backwards Robust decision making Decision scaling Robust optimization Adaptation pathways Decision Making Under Uncertainty (DMU) What are the available strategies? Identify vulnerabilities of these strategies Develop strategy adaptations to reduce vulnerabilities

17 1 Carefully define your metrics of success

18 2 Think about possibilities

19 3 Don t wait for new information Learning should be part of the plan

20 4 Favor flexible solutions that can be adjusted

21 In all steps, Engage with stakeholders

22 DMU is used to improve decision-making in various WB sectors water management flood risk management energy resource management Lima (Peru) Ho Chi Minh City, Colombo Turkey, Nepal 22

23 The Decision Tree Framework Identifies Climate Vulnerabilities and Provides Process for Addressing Them The process for adding resilience to design begins with identifying what causes system to fail Next, alternatives that reduce vulnerabilities need to be identified and evaluated The Decision Tree Framework provides a process for identifying the need for and value added of resilience measures and a process for selecting best course of action Based on principles of Decision Making Under Uncertainty Work done by the World Bank and University of Massachusetts 23

24 Work done by the World Bank and University of Massachusetts

25 Climate Stress Results for Original Design System Very Fragile! System Fails for these climate changes Threshold for satisfactory performance Work done by the World Bank and University of Massachusetts System Satisfactory for current climate

26 Climate Stress Results for Adapted Design System Resilient! New Threshold of Satisfactory Performance Additional Resilience Gained Original Threshold Work done by the World Bank and University of Massachusetts

27 Resilience Cost ($M) Resilience cost curve for Hydropower $30.00 Resilience Cost Curve - Upper Trishuli 1 $25.00 $20.00 $15.00 $10.00 $5.00 $- Real time sediment monitoring Hydraulic Stress Testing Desanding Basins Enlarge Diversion Enlarge Spillway Increasing Risk Reduction Work done by the World Bank and University of Massachusetts (Need to quantify via Expected Value of Risk Reduction)

28 Lima faces major waterrelated challenges 6mm rainfall annually Depends on water from three river basins Andean glaciers nearly gone Andean rainfall is vulnerable to climate change

29 The future is deeply uncertain Rapid population growth may or may not continue 2040? Work done by the World Bank and Evolving Logics

30 The future is deeply uncertain Climate projections disagree Droughts may become more common Much less precipitation Much more precipitation -15% +23% Work done by the World Bank and Evolving Logics

31 An Iterative, Participatory Process Can Help Design Robust Investments Scope Problem Analyze Tradeoffs Develop Model Run Simulations Robust Projects Analyze Vulnerabilities Work done by the World Bank and Evolving Logics

32 How Can We Help Lima s Water Utility Plan For An Uncertain Future? Scope Problem What are the vulnerabilities of the current water supply system? How can we make sure the water supply system will perform well in the future, i.e. - Ensures water reliability - Is cost-effective Work done by the World Bank and Evolving Logics

33 Step 1: A decision matrix can help us structure the problem and think of possible solutions Uncertainties Uncertain factors out of our control Options Decisions and actions that we can choose from Performance Metrics How do we evaluate the performance of our system? Models And Data We use these to evaluate our options performance, according to the chosen metrics, under uncertainty Work done by the World Bank and Evolving Logics

34 Step 1: A decision matrix can help us structure the problem and think of possible solutions Uncertainties Uncertain factors out of our control Options Decisions and actions that we can choose from Performance Metrics How do we evaluate the performance of our system? Models And Data We use these to evaluate our options performance, according to the chosen metrics, under uncertainty Work done by the World Bank and Evolving Logics

35 Step 1: A decision matrix can help us structure the problem and think of possible solutions Uncertainties Uncertain factors out of our control Options Decisions and actions that we can choose from Performance Metrics How do we evaluate the performance of our system? Models And Data We use these to evaluate our options performance, according to the chosen metrics, under uncertainty Work done by the World Bank and Evolving Logics

36 Step 1: A decision matrix can help us structure the problem and think of possible solutions Uncertainties Uncertain factors out of our control Options Decisions and actions that we can choose from Performance Metrics How do we evaluate the performance of our options? Models And Data We use these to evaluate our options performance, according to the chosen metrics, under uncertainty Work done by the World Bank and Evolving Logics

37 Step 1: A decision matrix can help us structure the problem and think of possible solutions Uncertainties Demand Streamflow Options Master Plan (a combination of 14 projects for increasing water supply) Performance Metrics Water reliability (90% of simulated months with at least 90% met demand) Cost of projects Models And Data WEAP model Work done by the World Bank and Evolving Logics

38 Step 2: Case Generation Scope Problem Develop Model Run Simulations A model of the system helps us simulate its performance after many plausible futures Work done by the World Bank and Evolving Logics

39 Step 2: 300 futures that are each a combination of demand and change in streamflow No climate change Work done by the World Bank and Evolving Logics Demand Projection 1120 Mm3 39

40 Step 2: 300 futures that are each a combination of demand and change in streamflow Work done by the World Bank and Evolving Logics 40

41 Step 3: Vulnerabilities Scope Problem Develop Model Run Simulations Analyze Vulnerabilities Work done by the World Bank and Evolving Logics Under which cases does the system fail?

42 Step 3. Vulnerability Analysis, Current System Work done by the World Bank and Evolving Logics 42

43 Step 3. Vulnerability Analysis, With Master Plan Work done by the World Bank and Evolving Logics 43

44 How Can We Help Lima s Water Utility Plan For An Uncertain Future? Scope Problem Analyze Tradeoffs Develop Model Run Simulations Work done by the World Bank and Evolving Logics Robust, Flexible, No-Regret Projects Analyze Vulnerabilities

45 Step4: Trade-offs and adaptive strategies Work done by the World Bank and Evolving Logics 45

46 Thank you!