Responding To Climate Risks

Based on current scientific understanding of ongoing and projected future changes in climate, and the risks associated with these changes, many decisions makers are now taking or planning actions to limit the magnitude of climate change, to adapt to ongoing and anticipated changes, and to include climate considerations in their decision-making processes. These actions are detailed in the three companion reports to this study (NRC, 2010a-c). For example, in Informing an Effective Response to Climate Change (NRC, 2010b), it is noted that 34 states have created climate change action plans, 20 have established emissions-reduction targets, and 15 have developed adaptation plans. Many U.S. cities and counties have also begun to respond to the challenges of climate change, and there is substantial activity at the federal level as well—for example, at least 10 of the 15 cabinet-level agencies and departments have made climate-related decisions. Many private firms are also taking action. At least 475 major companies have provided information on emissions to the Carbon Disclosure Project, over 60 major companies have set emissions-reduction targets, and climate change concerns are affecting the investment decisions of many. Finally, individuals in the United States and around the world are supporting government actions or taking actions themselves. For example, in 2009 one in three Americans rewarded companies that are taking steps to reduce GHG emissions by buying their products, while more than one in four avoided buying products from companies they perceived to be recalcitrant on the issue (Leiserowitz, 2010).

As these decision makers continue to take actions in response to climate change, many issues emerge that science can address. For example, scientific research can

• Project the beneficial and adverse effects of climate change, and their likelihood;

• Identify and evaluate the likely or possible consequences—including unintended consequences—of different decisions and actions taken (or not taken) to respond to climate change;

• Monitor and evaluate the effectiveness and consequences of actions as they are taken;

• Improve the effectiveness of actions before or while they are taken;

• Expand the portfolio of possible actions that might be taken in the future; and f

BOX 3.1 Adaptive Risk Management: Iterative and Inclusive Management of Climate Risks

Because individuals and groups often have trouble making sound decisions in the face of uncertainty, many tools have been developed to enhance our ability to make decisions in the face of risk (Bernstein, 1998; Jaeger et al., 2001).This suite of tools and the logic of their application are often referred to as adaptive risk management or sometimes iterative risk management or risk governance (Arvai et al., 2006; Renn, 2005, 2008). Components of adaptive (or iterative) risk management are discussed in the following paragraphs and are developed in more detail in the companion report Informing an Effective Response to Climate Change (NRC, 2010b).

Risk identification, assessment, and evaluation. Risks need to be evaluated by a range of affected stakeholders (who typically have different values and preferences) and by considering a range of factors. These include the impacts of allowing risks to go unmitigated, the costs of different risk-management strategies, and public perceptions and acceptability of risks and/or responses to those risks, as well as broader societal values that tend to favor certain general approaches to managing risk over others (e.g., a precautionary approach versus a cost-benefit or risk-benefit approach).

Iterative decision making and deliberate learning. Because many climate-related decisions will have to be made with incomplete information, and new information can be expected to become available over time (including information about the effectiveness of actions taken), decisions should be revisited, reassessed, and improved over time. This will require deliberate planning and processes for "learning by doing," as well as ongoing monitoring and assessment to evaluate both evolving risks and the effectiveness of responses.

Maximizing flexibility.Whenever decisions with long-term implications can be made incrementally (i.e., in small steps rather than all at once), the risk of making the "wrong" decision now can be reduced by keeping as many future options open as possible.

• Develop, through research on human behavior and decision making itself, improved decision-making processes.

The discussion in the preceding section suggests that the climate is not a system that can be turned quickly and that responses to climate change may be necessary even as more information on risks is collected. Fundamentally, dealing with climate change requires making decisions without complete certainty. Under such conditions, adaptive risk management (Box 3.1) is a useful—and advisable—strategy for responding to climate-related risks as conditions change and we learn more about them.

Maximizing robustness. When decisions have to be made all at once (for example, whether to build a piece of infrastructure), the risk of making the "wrong" decision can be reduced by selecting robust options—options that maximize the probability of meeting identified goals and desirable outcomes while minimizing the probability of undesirable outcomes under a wide range of plausible future conditions.

Ensuring durability. Many climate-related policies will need to remain in place, albeit in modified form, for many decades in order to achieve their intended goals. This requires mechanisms that can ensure the long-term durability of policies and provide stability for investors and society, while allowing for adaptive adjustments over time to take advantage of new information—a significant challenge for policy and institutional design.

A portfolio of approaches. In the face of complex problems, where surprises are expected and much is at stake, it would be unwise to rely on only one or a small number of actions to "solve" the problem without major side effects. A more robust approach would be to employ a portfolio of actions to increase the chance that at least one will succeed in reducing risk and to provide more options for future decision makers.

Effective communication. An essential component of effective risk management is the communication of risks, including the risks associated with different responses, to all involved stakeholders, including public-, private-, and civic-sector stakeholders as well as expert and lay individuals familiar with, or potentially affected by, the risks at hand.

Inclusive process. Since climate-related risks affect different regions, communities, and stakeholders in different ways and to different degrees, stakeholders should be included in significant roles throughout the process of identifying risks and response options, determining and evaluating what risks and responses are "acceptable" and "unacceptable," as well as in the communication and management of the risks themselves (NRC, 2008h).

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