Building resilience into World Bank operations
Julie Rozenberg
London
November 13th 2015
1
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 MakingUnder Deep Uncertainty, World Bank
“Prediction is very difficult, especially about the future” (N. Bohr)
Year 2000, seen from 1900…(From Hildebrands)
What will people want/like in 2050?
What technologies will we have?
What climate will we have?
Climate models try to guess that…
The Meteo-France model, from IPCC
But they disagree with each other
The Meteo-France and the Australian model, from IPCC
… and we have a lot of models…
… and future climates depend on future climate policies…
KOSHI BASIN, NEPAL
Is it hopeless?
No, but we need to change the way we make decisions
Traditional Planning
Asks “What Will The Future Bring?”
What will thefuture be?
What is the best near-term decision?
How sensitive is our decision to our
prediction?
“Traditional Planning”
• Conditions are stable or easy to predict
• There is consensus among stakeholders
Works well when:
“What if I’m wrong?”
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)
2.2
2.0
1.8
1.6
1.4
1.2
1.0
.8
.6
.4
.2
0180
Energy use (1015 Btu per year)
0
Historical trend
continued1970
19201929
19401950
1960
1910
1973
1973
19001890
20 40 60 80 100 120 140 160
1975 Scenarios
Gross national product (trillions of 1958 dollars)
2.2
2.0
1.8
1.6
1.4
1.2
1.0
.8
.6
.4
.2
0180
Energy use (1015 Btu per year)
0
Historical trend
continued1970
19201929
19401950
1960
1910
1973
1973
19001890
20 40 60 80 100 120 140 160
2000 Actual
1990
19801977
1975 Scenarios2000 Actual
1990
19801977
• In the early 1970s forecasters made projections of U.S energy use based on a century of data
…they were all wrong
Using Historical data with unpredictable variables can lead to bad decisions
What will the future be?
What is the best near-term decision?
How sensitive is our decision to our
predictions?
“Predict Then Act”
Decision Making Under Uncertainty Runs the Analysis Backwards
Develop strategy adaptations to
reduce vulnerabilities
Identify vulnerabilities of these strategies
What are the available
strategies?
Decision Making Under Uncertainty (DMU)
Decision Making Under Uncertainty Runs the Analysis Backwards
Develop strategy adaptations to
reduce vulnerabilities
Identify vulnerabilities of these strategies
What are the available
strategies?
Decision Making Under Uncertainty (DMU)
• Robust decision making
• Decision scaling
• Robust optimization
• Adaptation pathways
• …
1Carefully define your metrics of success
2Think about possibilities
3Don’t “wait” for new information
Learning should be part of the plan
4Favor flexible solutions that can be
adjusted
In all steps,Engage with stakeholders
DMU is used to improve decision-making in various WB sectors
water management
energy resource management
flood risk management
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Lima (Peru) Ho Chi Minh City, Colombo Turkey, Nepal
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
Work done by the World Bank and University of Massachusetts
Climate Stress Results for Original Design – System Very
Fragile!
System Fails for these climate changes
System Satisfactory
for current climate
Threshold for
satisfactory
performance
Work done by the World Bank and University of Massachusetts
Climate Stress Results for Adapted Design – System
Resilient!
Additional Resilience
Gained
Original Threshold
New Threshold of
Satisfactory Performance
Work done by the World Bank and University of Massachusetts
Resilience cost curve for Hydropower
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
Real time sedimentmonitoring
Hydraulic StressTesting
Desanding Basins Enlarge Diversion Enlarge Spillway
Resilie
nce C
ost
($M
)
Increasing Risk Reduction
Resilience Cost Curve - Upper Trishuli 1
(Need to quantify via
Expected Value of Risk
Reduction)Work done by the World Bank and University of Massachusetts
• 6mm rainfall annually
• Depends on water from three river basins
– Andean glaciers nearly gone
– Andean rainfall is vulnerable to climate change
Lima faces major water-
related challenges
The future is deeply uncertain
• Rapid population growth may or may not continue
…2040
?
Work done by the World Bank and Evolving Logics
The future is deeply uncertain
• Climate projections
disagree
• Droughts may become
more common
+23%-15%
Much more
precipitation
Much less
precipitation
Work done by the World Bank and Evolving Logics
Scope Problem
Develop Model
Run Simulations
Analyze
Vulnerabilities
Analyze
Tradeoffs
An Iterative, Participatory Process Can Help
Design Robust Investments
Robust Projects
Work done by the World Bank and Evolving Logics
Scope Problem
How Can We Help Lima’s Water Utility Plan
For An Uncertain Future?
How can we make sure the water supply
system will perform well in the future, i.e.
- Ensures water reliability
- Is cost-effective
What are the vulnerabilities of the current
water supply system?
Work done by the World Bank and Evolving Logics
Step 1: A decision matrix can help us structure the problem and think of
possible solutions
Uncertainties Options
Uncertain factors out of our control Decisions and actions that we can
choose from
Performance Metrics Models And Data
How do we evaluate the performance of
our system?
We use these to evaluate our options’
performance, according to the chosen
metrics, under uncertainty
Work done by the World Bank and Evolving Logics
Step 1: A decision matrix can help us structure the problem and think of
possible solutions
Uncertainties Options
Uncertain factors out of our control Decisions and actions that we can
choose from
Performance Metrics Models And Data
How do we evaluate the performance of
our system?
We use these to evaluate our options’
performance, according to the chosen
metrics, under uncertainty
Work done by the World Bank and Evolving Logics
Step 1: A decision matrix can help us structure the problem and think of
possible solutions
Uncertainties Options
Uncertain factors out of our control Decisions and actions that we can
choose from
Performance Metrics Models And Data
How do we evaluate the performance of
our system?
We use these to evaluate our options’
performance, according to the chosen
metrics, under uncertainty
Work done by the World Bank and Evolving Logics
Step 1: A decision matrix can help us structure the problem and think of
possible solutions
Uncertainties Options
Uncertain factors out of our control Decisions and actions that we can
choose from
Performance Metrics Models And Data
How do we evaluate the performance of
our options?
We use these to evaluate our options’
performance, according to the chosen
metrics, under uncertainty
Work done by the World Bank and Evolving Logics
Uncertainties Options
Demand
Streamflow
Master Plan (a combination of 14
projects for increasing water supply)
Performance Metrics Models And Data
Water reliability (90% of simulated
months with at least 90% met demand)
Cost of projects
WEAP model
Step 1: A decision matrix can help us structure the
problem and think of possible solutions
Work done by the World Bank and Evolving Logics
Scope Problem
Develop Model
Run Simulations
Step 2: Case Generation
A model of the system helps us simulate its
performance after many plausible futures
Work done by the World Bank and Evolving Logics
Step 2: 300 futures that are each a combination of
demand and change in streamflow
39
Demand Projection
1120 Mm3
No climate change
Work done by the
World Bank and
Evolving Logics
Step 2: 300 futures that are each a combination of
demand and change in streamflow
40
Work done by the
World Bank and
Evolving Logics
Scope Problem
Develop Model
Run Simulations
Analyze
Vulnerabilities
Step 3: Vulnerabilities
Under which cases does the system fail?Work done by the
World Bank and
Evolving Logics
Step 3. Vulnerability Analysis, Current
System
42
Work done by the
World Bank and
Evolving Logics
Step 3. Vulnerability Analysis, With
Master Plan
43
Work done by the
World Bank and
Evolving Logics
Scope Problem
Develop Model
Run Simulations
Analyze
Vulnerabilities
Analyze
Tradeoffs
How Can We Help Lima’s Water Utility Plan
For An Uncertain Future?
Robust, Flexible,
No-Regret
ProjectsWork done by the
World Bank and
Evolving Logics
Step4: Trade-offs and adaptive strategies
45
Work done by the
World Bank and
Evolving Logics
Thank [email protected]