REPORTS ASSESSMENT REPORTS

Working Group III: Mitigation


Other reports in this collection

10.1.3 Tools of Analysis and their Summary in the Second Assessment Report

10.1.3.1 Tools of Analysis

A wide variety of tools have been applied to the climate problem. These are enumerated and briefly described in Table 10.1. In general, these tools help decision makers in several ways–choose a policy strategy, understand the implications of alternative policy strategies, understand the joint interactions of multiple, individual policy strategies. The tool can be employed by either a single decision maker or by stakeholder groups. Their quantitative nature and their ability to incorporate the global, long-term diversity of relevant human activities, the uncertainty, and the irreversibility characteristics of the problem mean that decision frameworks have been broadly applied to the climate problem. This approach has several special cases, which have themselves received broad attention, including cost–benefit analysis and cost-effectiveness analysis. We review progress in these areas later in this section, after the SAR and the “tolerable window and/or safe landing” (TWSL) work.

Other tools have also been employed or have the potential to be employed to help illuminate decision making. These include game theory, portfolio theory, public finance, culture theory, and simulation exercises, and are discussed in the body of the chapter.

Table 10.1: Decision-making frameworks: compatibility with decision-making principles, and applicability at geopolitical levels and in climate policy domains
Decision analysis frameworks Description of the tool Applicability to problem characteristics Comment
Decision analysis Decision analysis is a formal quantitative technique for identifying “best” choices from a range of alternatives. Decision analysis requires the development of explicit influence structures that specify a complete set of decision choices, possible outcomes, and outcome values. Uncertainty is incorporated directly in the analysis by assigning probabilities to individual outcomes. G, L, H, U, IR

Virtues include quantification of results, reproducibility of analysis, ability to incorporate the full dimensionality of the climate problem explicitly.
Limitations include the assumptions of:

  1. A single decision- maker, with well- ordered preferences, who is expected to be present throughout the period of analysis.
  2. The number of alternatives is finite and therefore limited in practice.
  3. Outcomes must be comparable – implying the need for aggregation to a single set of common units, e. g. US$, lives, utility.
  4. Rationality.
  5. Uncertainties are quantifiable.
Cost– benefit analysis Estimates of the costs and benefits for selected decision variables are derived. The “best” outcome is the one with the highest net benefits. G, L, H, U, IR
  1. This is a special case of general decision analysis.
  2. Requires an explicit mechanism for valuing costs and benefits across time.
Cost- effectiveness analysis Accepts specific performance goals as given exogenously, then minimizes the cost to achieve the desired performance. G, L, H, U, IR
  1. This is a special case of general decision analysis.
  2. Requires an explicit mechanism for valuing costs and benefits across time.
  3. Provides no information about the selection process. For example, analysis might accept a fixed CO2 concentration ceiling as specified exogenously, but cannot comment on the desirability of that choice.
Tolerable windows and/ or Safe landing approach Accepts specific performance goals as inequalities given exogenously, then enumerates paths that are consistent with the goals. G, L, H, U, IR
  1. Provides no information about the selection process. For example,
    analysis might accept a fixed CO2 concentration ceiling as specified
    exogenously, but cannot comment on the desirability of that choice.
  2. The analysis does not provide a “best” path.
Game theory Provides information about the implication of multiple decision- makers’ choices, taking into account expectations that each has of their own actions on others, and others’ actions on them. G, IN Technique is descriptive rather than prescriptive. It offers information about potential outcomes within a specific context.
Portfolio theory Concerned with creating under a budget constraint an optimal composition of assets characterized by different returns and different levels of risks. Decision options (portfolio elements) are represented by a probability distribution of expected returns while risks are estimated on the basis of the variability of expected returns, and only these two factors determine the decision makers’ utility function. The decision rule is to choose the efficient portfolio compared to which no other portfolio offers higher expected return at the same or lower level of risk or lower risk with the same (or higher) expected return. G, L, H, IN Application to climate change problem has been limited.
Public finance theory Encompasses a variety of research techniques including the theory of the second best. IN Examines trade- offs between efficiency and other criteria.
Ethical and cultural prescriptive rules Concerned primarily with the implications of alternative social organizations. Has had limited application to the climate problem. IN
  1. Used to consider explicitly the interactions between policy instrument choice and social structure.
  2. It is non- quantitative.
Policy exercises, focus groups, and simulation gaming Includes a suite of research activities that have been used to assist in the decision- making process. In general, groups examine potential outcomes by playing a role in a simulated decision- making environment. G, IN
  1. Results are generally not reproducible.
  2. Computer models may be used to assist in the exercise.
  3. Much of the value is pedagogical.
Notes: G = global; LT = long- term; H = pervasive human activities; U = uncertainty; IR = irreversible; IN = relevant to institutional framing.


Other reports in this collection

IPCC Homepage