Scenarios as Structured Thinking about the Future CSIN Learning Event #25 20 June 2007 Dale S. Rothman International Institute for Sustainable Development This is going to be less a presentation about a specific scenario exercise than some thoughts on how to approach undertaking a scenario exercise. This stems from a concern on my part that too many people are jumping into doing scenarios without necessarily thinking through why they are doing them and how they should be used. Along the way I will refer to a few exercises I have been involved in.

Three Questions Why do we want to think about the future in a structured fashion? What does it mean to think about the future in a structured fashion? What are some difficulties in thinking about the future in a structured fashion and how might we address them? I will focus this presentation around three basic questions related to thinking about the future. These are shown in the slide. Before jumping into these, however, I want to talk about thinking about the future in general and scenarios in particular.

Some Quick Thoughts on the Future If a man takes no thought about what is distant, he will find sorrow near at hand. Confucius, Chinese philosopher & reformer (551 BC - 479 BC) Prediction is very difficult, especially about the future. Niels Bohr, Danish physicist (1885 - 1962) The best way to predict the future is to invent it. Alan Kay, American computer scientist (1940- ) “…is any purpose served by attempting long-term perspectives for a region? Yes!!! I say this not because the forecasts will necessarily be right, but because they may stimulate helpful actions – actions that may, in fact, even render the forecasts wrong.” Ramgopal Agarwala, Indian economist (?) Thinking about the future is something we do every day, albeit generally without much thought. The quotes presented in the slide give some indication about why it might be important to think about the future.

Some Practical Reasons for Thinking about the Future to illuminate potential problems to share understanding and concerns to uncover assumptions and rigorously test them to exploring alternatives in the face of uncertainty to help identify choices and make decisions This slide presents similar ideas, albeit somewhat more prosaically/mundanely. Given the discussions about climate change, we might be concerned that a warmer climate is a potential/worsening problem, why are we concerned about a warmer climate?, what will a warmer climate mean for farmers in Manitoba?, what will happen if I change my cropping patterns under different assumptions about a warmer climate?, what can I do now to prepare for a warmer climate?

Why Do We Want to Think about the Future in a Structured Fashion? Relevance of exercise to goals Clarity of communication what the images of the future are how these were developed how insights/lessons derived Defensibility of insights e.g. robustness of actions, relative ‘desirability’ of outcomes So why do we want to do this in a structured fashion?

What Does it Mean to Think about the Future in a Structured Fashion? Be explicit about your purpose Be explicit about your object of study (system) Strive for coherence and consistency And what do I mean by a structured fashion? Link to factors, actors, and sectors concept. Consistent means no obvious errors of logic. Coherent means fits together as an organic whole.

What is a Scenario? Scenarios have been defined in various ways. For the purposes here a scenario is a coherent and plausible story, told in words and/or numbers, about a possible future for a specified socio-ecological system. A scenario will generally include: a definition of the system and problem boundaries; a characterization of current conditions and trends and the processes driving change in the system; an identification of the key driving forces, critical uncertainties, and system relationships; a coherent and internally consistent set of assumptions about driving forces, critical uncertainties, and system relationships; conditional projections of the behaviour of the system based on these assumptions on the rest of the system; and an image of the future. How do scenarios fit in?

What Scenarios are Not “It is now generally accepted that scenarios do not predict. Rather, they paint pictures of possible futures and explore the differing outcomes that might result if basic assumptions are changed.” (UNEP, 2002)

Scenarios from a Policy Perspective (I) Are there existing or proposed policies you wish to explore? Is there a preconceived end vision, or at least some aspects of a vision, i.e., specific targets? Are the effects of a policy of such magnitude that they would fundamentally alter the basic structure of the scenario? Here I would like to expand on what this means when undertaking a scenario analysis from the perspective of thinking about policy. This is very much part of clarifying the purpose of the scenario analysis. Are there existing policies you wish to explore as part of the scenario exercise? A standard use of scenario analysis is to compare the feasibility, effectiveness, and broader impacts of alternative policies (or combinations thereof), e.g., taxes vis-à-vis tradable permits on certain pollutants. This can be done by assessing scenarios that differ only with respect to the absence or inclusion of the policies of interest. Remembering the basic uncertainties that underlie the use of scenarios, the robustness of existing policies can be assessed by exploring their feasibility, effectiveness and broader impacts across a range of scenarios that differ with respect to other significant factors. If there are no relevant, existing policies, then one purpose of the scenario exercise should be the identification of policy options. Even where they do exist, the exercise can, of course, be useful for expanding the set of policy options for consideration. Is there a preconceived end vision, or at least some aspects of a vision, i.e., specific targets? In many cases, a scenario exercise is used to explore the feasibility and broader implications, e.g., tradeoffs, of meeting a specific target, e.g., an 80 per cent reduction in CO2 emissions by 2050. If the vision is used to define the scenarios, i.e., the range of scenarios to be explored is restricted to only those for which the target is achieved, the exercise takes on the character of a standard back cast. At a minimum, the presence of a preconceived end vision implies that there are at least some metrics against which a scenario and its policies can be evaluated as being “successful.” In the absence of any preconceived vision, the question of how to evaluate a scenario and the impacts of policies, in particular any definition of “success,” is less clear. There will almost certainly be metrics that can be used for this purpose. Even where clear targets do exist, these other metrics are important for evaluating the broader implications of achieving the targets. Are the effects of a policy of such magnitude that they would fundamentally alter the basic structure of the scenario? Depending on how the scenario is defined and the perspective of the person using them, policies can be seen as essentially determining the scenario or as merely affecting some aspects of it. For example, if a scenario is defined by the international trade in agricultural commodities, a group like the WTO or some larger countries could conceive of policies that will alter the overall level and terms of this trade. Small countries and individual producers, on the other hand, are more likely to take these as given. In the latter case, the policy question to be asked can be phrased as, “What can we do to cope best with the set of possible situations we might face?” In the former, a more relevant question would be, “What could we do to create a particular situation?”

Preconceived end vision? Policies determine the scenario? Scenarios from a Policy Perspective (II) Case Existing Policies? Preconceived end vision? Policies determine the scenario? Potential Uses A Test ability of policy to create conditions for success. B Test the extent to which the policy can affect change. C Explore role of policy in determining nature of future. D Explore effects of policies under fixed conditions. E Identify policies that can create conditions for success. F Identify policies that can meet specific targets. G Identify policies that may influence the future. H Identify policies and their implications.

Archetypes of Scenario Analysis for Policy Purpose of analysis Question Policy optimization What policy variant is most effective, cost efficient, fast, acceptable, etc.? Advocacy, vision building What are positive futures we want to move toward? What are negative changes we want to stay away from? Strategic orientation For what alternative worlds do we need to prepare ourselves? What if our current assumptions were wrong? What would be robust strategies? From presentation by Jan Bakkes (MNP) at Consultative Scoping Workshop on an Environment Outlook for Canada held on 1-2 March 2007 in Montreal. Here is an effort to distinguish scenarios by their purpose as presented by Jan Bakkes of the Netherlands Environmental Assessment Agency. He goes further to associate these different purposes with different types of scenario analysis.

Be Clear and Be Focused UNEP’s 4th Global Environment Outlook What are the likely future consequences for environment and human well being of existing environment and environmentally relevant policies and actions? What are the likely future consequences for environment and human well being of environment and environmentally relevant policies and choices that may be taken in the future? What are the likely future environmental trends? What are the likely consequences of the various policy options and choices for the environment under various scenarios? What are the likely impacts or effects of promising opportunities for policy innovations on the interaction between environment and society? How would the various policy and technology trade-offs between different environmental challenges affect the interaction between environment and society and what is the role of society and enterprises in helping to shape the environment in the future? Here I want to contrast two cases where more or less good thinking went into the questions underpinning the scenario analysis. Manitoba Hydro Under plausible scenarios of climate change, how might MB Hydro need to adapt its resource planning criteria and operational strategies to continue to meet its corporate goals?

But Don’t Be Narrow Actors Note that being focused does not me taking a narrow view of the issue(s) you wish to address with the scenario analysis. Link to factors, actors, and sectors concept.

What Makes it Difficult to Think about the Future in a Structured Fashion? Ignorance Our understanding is limited Surprise The unexpected and the novel Volition Human choice matters But, of course, the future is highly uncertain. There are three types of uncertainty: Ignorance – our understanding of current conditions and the forces causing change is far from complete. Surprise - the possibility for unexpected events and novel behavior of physical and social systems introduces additional uncertainty. Volition - the future is subject to human choices that have not yet been made, indeed, choices that can be influenced by the very process of studying the future. In looking into the future, Berkhout and Hertin (p.39) [5] argue that it “needs to be thought of as being emergent and only partially knowable.” Our uncertainty in knowing the future in general and, more specifically, the impacts of response options stems from three distinct types of indeterminacy: ignorance, surprise and volition. Ignorance refers to limits of scientific knowledge on current conditions and dynamics and is thus closely related to what have been defined as model, calibration, prediction, and projection uncertainty. It implies that even if socio-ecological systems were deterministic in principle, we could only really know their future behaviour within certain bounds. This is of particular concern for systems exhibiting chaotic behaviour, where even slight changes in initial conditions can lead to dramatically different outcomes. Uncertainty due to Ignorance is further compounded by Surprise, the uncertainty due to the inherent indeterminism of complex systems, which can exhibit emergent phenomena and structural shifts. Finally, Volition refers to the uncertainty that is introduced when human actors are internal to the system under study. Berkhout highlights the fact that because of conscious choice, the assumption of continuity made in the natural sciences is not applicable to social systems, implying that novelty and discontinuity are normal features of these systems. This compounds the types of uncertainty noted above, but is also a key aspect of what was referred to as contextual uncertainty. Moreover, the very process of ruminating on the future can influence these choices. Through this reflexivity, people work either to create the future they desire or to avoid that which they find objectionable. Link to Marjolein’s discussion of uncertainty. “Human beings are rarely passive witnesses of threatening situations. Their responses to threats may be unwise, but they inevitably alter the course of events and make mockery of any attempt to predict the future from extrapolation of existing trends.” René Dubos

Steps in a Scenario Methodology Communication & Outreach Clarifying the Purpose and Structure of the Scenario Exercise Establishing the nature and scope of the scenarios (a) Identifying and Selecting Stakeholders/Participants (b) Identifying themes, targets, indicators, and potential policies (c) Laying the Foundation for the Scenarios Identifying Driving Forces (d) Selecting Critical Uncertainties (e) Creating a Scenario Framework (f) Developing and Testing the Actual Scenarios Undertaking Quantitative Analysis (h) Exploring Policy (i) Elaborating the Scenario Narratives (g)

Tell the Story of the Present (Define driving forces and important themes) How would you describe the region, both its past and present? What are key characteristics of the region – geography, politics, culture, natural environment, institutions? Who are the important actors? What is the relation of the region to the outside world? Note this focuses on a scenario for a region; adjust questions if focus is on sector, etc.

Identify the Issues for the Future (Identify and prioritize critical uncertainties and big questions) What are the most important questions being asked about the region today? What do we know with certainty about the future? What do we not know with certainty about the future? Of those things we do not know, which are the most important?

Goals of Scenario Analysis Process Synthesis of lay and expert input Synthesis of participatory processes and desk studies Synthesis of qualitative narrative and quantitative underpinning Product(s) Consistent Coherent Integrated Thought-provoking Compelling Outcome(s) More flexible mental maps Relevant insights I would like to finish up with some final thoughts on the goals of scenario analysis in general. In particular, it is important to think about the goals for the process, the product(s), and the outcome(s) Consistent means no obvious errors of logic. Coherent means fits together as an organic whole. Come back to in discussing driving forces and representation.

A means for enhancing action-related domains of discourse What Scenarios Can Be A means for enhancing action-related domains of discourse Carlo Jaeger