Working Group III: Mitigation

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SAR divided its discussion of DMFs into four sections–an introduction, a discussion of the context of decision making, a discussion of the tools for decision analysis, and concluded by considering the implications for national decision-making in the context of the UNFCCC. The chapter began by discussing the features of climate change that distinguish it from other environmental problems. It then described decision analysis and the present state-of-the-art.

Decision analysis uses quantitative techniques to identify the “best” choice from among a range of alternatives. Model-based decision analysis tools are often used as part of interactive techniques in which stakeholders structure problems and encode judgements explicitly in subjective-preference scales. It makes the major trade-offs explicit. Although decision analysis can generate an explicit value as a basis for choice, it is based on a range of relevant monetary and non-monetary criteria. It is used to explore the decision and to generate improved options that are well balanced in the major objectives and that are robust with respect to different futures. A review of the real world limitations of quantitative decision models and the consistency of their theoretical assumptions with climate change decision-making highlighted the following points:

  • There is no single decision maker in climate change. As a result of differences in values and objectives, parties that participate in a collective decision-making process do not apply the same criteria to the choice of alternatives. Consequently, decision analysis cannot yield a universally preferred solution.
  • Decision analysis requires a consistent utility valuation of decision outcomes. In climate change, many decision outcomes are difficult to value.
  • Decision analysis may help keep the information content of the climate change problem within the cognitive limits of decision makers. Without the structure of decision analysis, climate change information becomes cognitively unmanageable, which limits the ability of decision makers to analyze the outcomes of alternative actions rationally. Quantitative comparisons among decision options (and their attributes) are implied by choices between options (the concept of “revealed preference” in economics). Better decisions are made when these quantitative comparisons are explicit rather than implicit.
  • The treatment of uncertainty in decision analysis is quite powerful, but the probabilities of uncertain decision outcomes must be quantifiable. In climate change, objective probabilities have not been established for many of the outcomes. In real-world applications subjective probabilities are used.
  • The large uncertainties and differences between parties may mean there can be no “globally” optimal climate-change strategy; nevertheless, the factors that affect the optimal strategies for single decision makers still have relevance to individual parties.

The lack of an individual decision maker, utility problems, and incomplete information suggest that decision analysis cannot replace the political process for international climate-change decision-making. Although elements of the technique have considerable value in framing the decision problem and identifying its critical features, decision analysis cannot identify globally optimal choices for climate change abatement. Decision analysis suffers fewer problems when used by individual countries to identify optimal national policies.

The UNFCCC establishes a collective decision-making process within which the parties negotiate future actions. Although some features of the decision-making process are set out in the Convention, many are still undecided. It becomes important, then, to examine negotiation and compromise as the primary basis for climate change decisions under the Convention. Important factors that affect negotiated decisions include the following:

  • Excessive knowledge requirements in negotiated environmental decisions may impede a collective rational choice. This difficulty could be reduced by making the negotiation process itself more manageable through the use of tools like stakeholder analysis or by splitting accords into more easily managed clusters of agreements.
  • In the face of long-term uncertainties, sequential decision-making allows actions to be better matched to outcomes by incorporating additional information over time. Sequential decision-making also minimizes harmful strategic behaviour among multiple decision makers.
  • Improved information about uncertain outcomes may have very high economic value, especially if that information can create future decision options.
  • There are currently no effective mechanisms for sharing the risks related to climate change and their associated economic burdens. International risk sharing could yield substantial benefits for global economic and social welfare.

The Convention is, first and foremost, a framework for collective decision making by sovereign states. Given this collective decision mechanism and the uncertainties inherent in the climate problem, several recommendations emerge:

  • decisions for actions under the UNFCCC are rather being taken sequentially to benefit from the gradual reduction in uncertainties;
  • countries may implement a portfolio of mitigation, adaptation, and research measures;
  • they may adjust this portfolio continuously in response to new knowledge (the value of better information is potentially very large); and
  • efficient distribution of the risks of losses related to climate change may warrant new insurance mechanisms.

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