Uncertainty makes deterministic planning dangerous

As well-intentioned as it might be, deterministic planning in the face of inevitable uncertainty about the detail of climate change poses the risk of serious misallocation of society’s resources. An example of the tension between the lack of knowledge about specific climate-change effects, and the bureaucratic impulse to plan, appears in Voice et al. (2006). It is worth quoting at length:

There have been many evaluations of severe wind risk in the current climate ... There has been less work performed on wind risk in a warmer world ... Little progress has been made since [a cited 2001 study] on improving the climate change scenarios that dictate the precise amount of future vulnerability. (Section 6.3.1: 50)

While specific case studies of the vulnerability of ports to climate change have not been performed, ports have generally used the National Committee on Coastal and Engineering guidelines ... to make allowance for climate change effects. ... Major new port infrastructure is thoroughly assessed for the impacts of climate change in the design phase. ... For example, the proposed new offshore wharf structure and expanded coal terminal in the Port of Abbot Point in Queensland ... studied a number of greenhouse potential impacts. The new facilities were designed for expected water level changes predicted over the next 100 years (conservatively estimated at 0.2 metres to 0.5 metres) ... New port infrastructure therefore is well prepared for the impact of climate change. (Section 6.3.2: 50–1)

The following piece of advice by the federal Department of Climate Change on how to adapt to climate change also illustrates the point well: ‘Early planning for the impacts of climate change is likely to bring considerable advantages. Many decisions made today will have consequences for decades. It is cheaper, for example, to design new housing or infrastructure to cope with a future climate than to retrofit later.’ (http://www.greenhouse.gov.au/impacts/howtoadapt/ indexs.html; viewed 6 July 2008, emphasis added)

One presumes that the Department undertook some careful calculations before proffering this advice. But what do such sums amount to in the face of uncertainty about the extent and timing of specific climate-change effects for each locality in Australia? Is it really cheaper to build a house designed to withstand an absolute worst-case scenario (and which one?), or did the Department mean something less drastic? Indeed, it might in fact be even cheaper to build a flimsy non-climate-proofed house now, and rebuild it, if necessary, once the true extent and timing of any climate change becomes much more certain. And would it not be socially more desirable to keep current expenditure on housing to a minimum, in case cities need to be redesigned to take account of mitigation measures that reduce transport needs and increase housing density?

Clearly, uncertainty about the specific nature and extent of any future climate change militates against apparently straightforward, deterministic policy prescriptions.