Scenario Analysis

By: Daniel Mason-D’Croz & Shahnila Islam

What are scenarios

• Scenarios are plausible futures• Scenarios are what-if stories used to explore

future uncertainties• Scenarios can be told in narratives, numbers,

and even images• Scenarios are not predictions of the future,

but are instead focused on system dynamics and interactions and are based on knowledge of past and current behavior

Moving from the Past to the Future

Future: broad uncertainty

ForecastingPast

Present perspective

Limitations of Forecasting

Moving from the Past to the Future

Future: broad uncertainty

ScenariosPast

Present perspective

Scenario Example

Who uses scenarios?

• Has a long history of use in the military• Businesses have also used scenarios

extensively• People do basic scenario planning every day

Why use scenarios?

• Scenarios provide concrete ways to deal with future uncertainty

• They allow us to identify current and potential challenges and institutional vulnerabilities

• Allow us to test and develop policies ex-ante based on our current understanding of system behavior

Scenario studies you may be familiar with

• Millennium Ecosystem Assessment• Presidential Elections• WTO Scenarios• WHO Scenarios

Models

• Models are logical constructs that represent dynamic systems

• Models can:– Simplify a complex system– Highlight key behaviors and relationships– Provide insights to the inner workings of a system

• Models cannot and do not explain everything– Everything should be made as simple as possible,

but not simpler

Why use models

• Allow for pseudo-scientific experimentation in an ex-ante environment

• Allow for the combination of diverse assumptions on various key drivers, without also specifying how they will effect each other

• Allow us to isolate parts of a complex system and analyze it

• Because we can’t wait till 2050 to start planning policies

What uncertainties do we test?

• Demographic shifts (population growth, migration, aging, etc.)

• Economic growth and development• Technological Advances• Climate Change• Water Resource Management

Standard IMPACT scenarios

• IMPACT Drivers:– Population– GDP– Climate– Technology Growth Assumptions– Water Resource Management and Infrastructure

• Drivers are combined to create a suite of scenarios to create an envelope of plausible futures (worst-case, best-case, and scenarios in between)

Global Future Scenarios

• Drought Tolerance• Heat Tolerance• Higher Yield Crops• Pest Management Practices• Differing Maturity Crops• C4 Rice

Questions