A Risk-Informed Decision-Making Framework for Climate Change Adaptation through Robust Land Use and Irrigation Planning

Tatiana Ermolieva, Peter Havlik, Stefan Frank, Taher Kahil, Juraj Balkovic, Rastislav Skalsky, Yuri Ermoliev, Pavel S. Knopov, Olena M. Borodina and Vasyl M. Gorbachuk
Additional contact information
Tatiana Ermolieva: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Stefan Frank: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Taher Kahil: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Juraj Balkovic: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Rastislav Skalsky: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Yuri Ermoliev: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Pavel S. Knopov: Institute of Cybernetics, 03187 Kiev, Ukraine
Olena M. Borodina: Institute of Economics and Forecasting, 01011 Kiev, Ukraine
Vasyl M. Gorbachuk: Institute of Cybernetics, 03187 Kiev, Ukraine

Sustainability, 2022, vol. 14, issue 3, 1-14

Abstract: Uncertainty and variability are key challenges for climate change adaptation planning. In the face of uncertainty, decision-making can be addressed in two interdependent stages: make only partial ex ante anticipative actions to keep options open until new information is revealed, and adapt the first-stage decisions with respect to newly acquired information. This decision-making approach corresponds to the two-stage stochastic optimization (STO) incorporating both anticipative ex ante and adaptive ex post decisions within a single model. This paper develops a two-stage STO model for climate change adaptation through robust land use and irrigation planning under conditions of uncertain water supply. The model identifies the differences between decision-making in the cases of perfect information, full uncertainty, and two-stage STO from the perspective of learning about uncertainty. Two-stage anticipative and adaptive decision-making with safety constraints provides risk-informed decisions characterized by quantile-based Value-at-Risk and Conditional Value-at-Risk risk measures. The ratio between the ex ante and ex post costs and the shape of uncertainty determine the balance between the anticipative and adaptive decisions. Selected numerical results illustrate that the alteration of the ex ante agricultural production costs can affect crop production, management technologies, and natural resource utilization.

Keywords: climate change; systemic risks; robust land use and irrigation; robust anticipative and adaptive decisions; two-stage STO; safety constraints; VaR and CVaR risk measures (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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