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3 The Role of Risk Perception in Risk Management

“Intelligence analysts should be self-conscious about their reasoning processes. They should think about how they make judgments and reach conclusions, not just about the judgments and conclusions themselves.”

Richards Heuer, Centre for the Study of Intelligence, Central Intelligence Agency93

Summary

• Managing analytical and perceptual biases is a central and familiar task of intelligence analysis. Effective decision support for climate security must incorporate these insights if the threat is to be faced effectively. A range of misperceptions currently exists which undermines action to manage the risks posed by climate change.

• Uncertainty about climate change science and policy options is often used as an excuse for inaction or ignored to simplify policy debates. Both tendencies undermine effective risk management because inaction cannot reduce risk and ignoring uncertainty conceals risk.

• Several common misconceptions present barriers to accurate risk perception. The presumption that the climate system will only change slowly and gradually belies ample scientific evidence that both global and regional climates tend to change suddenly and at times dramatically when forced. Extreme climate related events of the past decade have overturned the misperception that rich countries will be only lightly affected by climate impacts. The assertion that poor countries’ development needs trump the management of climate risks belies the great likelihood that climate change will undermine efforts to reduce poverty and improve social and economic conditions in the developing world.

• Insufficient integration across disciplines and a philosophical aversion to perceived outlier scenarios can lead to inadvertent expert bias that works against developing an adequate understanding of risk. Moreover, overconfidence or ideology may lead individual experts to intentionally provide an overly narrow view of risk. Decision makers should identify risk management as the operational framework for making decisions about climate change and ensure that experts provide information tailored to that framework while avoiding inadvertent or intentional biases.

• Compared to a decade ago, recent upward adjustments of risk estimates suggest the need for continuous learning and updating our formal perceptions of risk. When

93 Heuer, 1999

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planning against future climate scenarios, decision makers should bear in mind the tendency for experts to underestimate impacts when information is limited.

From Analysis to Decisions

The analytical definition of risk is the probability of an outcome multiplied by the severity of its consequences.94In this formulation, two factors determine whether a risk is high or low:

likelihood and severity. A high probability of an outcome with minor consequences causes only moderate concern. On the other hand, a low probability of an outcome with grave consequences may cause significant concern. At its most basic, risk management endeavors to reduce the probability of an outcome, the potential severity of its consequences, or both, depending on the nature of the problem and the management opportunities it presents.

Nuclear weapons are a familiar case study in security risk management where nations have endeavored to reduce both the probability and the potential severity of a nuclear attack.

Within this framework, the probability of an attack is reduced through the principle of assured mutual destruction as a deterrent, and mechanisms to prevent the proliferation of nuclear weapons to additional actors. In principle, arms reduction agreements should lower the potential consequences of a nuclear war by reducing the maximum potential firepower.

Indeed, the current global arsenal possesses less than one-third of its peak explosive power of past decades.95Unfortunately, even a fraction of the current arsenal may be powerful enough to cause a devastating, decade-long nuclear winter that would collapse agricultural production worldwide and starve most of the human population.96Nonetheless, disarma-ment remains a key component of the risk managedisarma-ment portfolio, with further arms reduction efforts in process.97Even though new risks are emerging (for example, non-treaty states and non-state actors exhibiting nuclear ambitions), the lack of a nuclear attack since the end of World War II suggests that this risk management framework has succeeded, so far.

Climate change presents a similar problem in which both the probability and potential severity of outcomes need to be reduced to manage the associated risks. In 2007, a group of distinguished scientists, including President Obama’s current science advisor, John Holdren, wrote that “confronting climate change [means] avoiding the unmanageable and managing the unavoidable.”98The IPCC’s AR4 articulates the point further:

94 Yohe, 2010 95 Robock et al., 2007 96 Ibid.

97 Kellerhals Jr, 2010 98 Bierbaum et al., 2007

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Responding to climate change involves an iterative risk management process that includes both adaptation and mitigation and takes into account climate change damages, co-benefits, sustainability, equity and attitudes to risk.99

In climate change policy, mitigation refers to steps taken to minimize the extent of climate change – “avoiding the unmanageable” – principally through reductions in greenhouse gas emissions.

Adaptation refers to steps taken to cope with the impacts of climate change that cannot be avoided – “managing the unavoidable.” The last part of the AR4 statement lists factors to consider in determining socially appropriate policy measures. How society and decision makers perceive the risks of climate change, and how much they value reducing uncertainty about future damages (i.e.

risk reduction), is crucial to weighing the costs and benefits of action.

The first step to constructing a risk management system is to understand systematic issues in translating the huge body of primary scientific evidence into meaningful data for decision makers. This process is termed ‘intelligence assessment’ in security policy and is well known to be subject to a range of perceptual, methodological and structural biases.100Intelligence failure is a constant subject of public debate; for example, the flawed assessments of Iraq’s weapons of mass destruction were subject to extensive public – and secret – reviews in the United States and United Kingdom. The translation of climate change science for use in decision-making is highly susceptible to these failures; no matter how complex or inacces-sible the concepts of climate science and the data may be, in the end they must be synthesized by non-specialists and communicated to policy makers.101In the process of assessment and evaluation a range of problems can interfere with effective translation of risk:

Perceptual barriers caused by ‘fuzzy’ consideration of uncertainty, deliberate exagger-ation/understatement of uncertainty, overestimation of stability in the climate system, and overestimation of resilience to climate impacts.

Expert bias in that the way uncertainty is handled inside the scientific community is not appropriate for effective use by decision makers.

Learning barriers in that the information gained on underlying biases in analysis and modeling from improved observation is poorly transmitted to decision makers.

Barriers to Perception

There is an important distinction between nuclear weapons and climate change: public and decision maker perception of the associated risks. From a risk management perspective, the

diffi-99 Yohe, op. cit.

100 US Government, 2009 101 Rogers and Gulledge, 2010

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culty with climate change is that it will not result in instant annihilation. The effects of climate change are more akin to the risk of nuclear winter: potentially an existential threat but not instan-taneous, nor generally understood. Without a basic recognition of the likelihood and potential severity of climate change impacts, it is not possible to manage the associated risks rationally.

Such barriers to accurate perception of the risks of climate change fall into four categories:

uncertainty, the assumption of ample time to act, the assumptions of low risk for the rich and low priority for the poor, and expert bias.

‘Fuzzy’ Uncertainty

There is a common human tendency to dismiss uncertain consequences as not urgent, even if the consequences are potentially severe. In the United States, uncertainty has often been cited as reason to delay national policies to reduce greenhouse gas emissions. Typically, the stated rationale is to allow time for science to reduce uncertainties before sinking financial resources into solutions that may prove unnecessary.102Alternatively, uncertainty around climate science and climate change policy is often ignored or downplayed to avoid ‘compli-cating’ policy debates.103Additionally the media have reported uncertainty in a ‘fuzzy’

manner, implying that all aspects of climate science are highly uncertain, or over-representing eccentric scientific views as part of the mainstream debate in pursuit of journalistic

‘balance’.104It is also well documented that some powerful groups and individuals who are ideologically or economically opposed to action on climate change have intentionally exagger-ated scientific uncertainty to bolster the argument for inaction.105This has made proponents of urgent action less willing to acknowledge uncertainty, which then makes it harder to consider the more extreme risks from climate change and biases risk assessments towards conservative estimates of potential damages.

The prospects for resolving uncertainty vary across different parts of the climate system, but few of the most important questions (such as the true equilibrium climate sensitivity, discussed in the previous chapter) are likely to be resolved within the next decade.106Waiting another 10 years to implement mitigation policies would lock in additional climate security risk through additional greenhouse gas emissions and would eliminate the option of stabilizing the climate at more ambitious levels should it prove necessary or desirable.107While learning will play a key role in iterative decision-making over time, the prospect of learning should not imply that waiting to enact policies to reduce greenhouse gas emissions, or to begin adapting to unavoidable changes is economically efficient.108Formal analyses designed to test the

102 Lomborg, 2007 103 Boykoff et al., 2010.

104 Boykoff, 2010

105 Oreskes and Conway, 2010

106 Webster et al., 2007; Roe and Baker, 2007; Newbold and Daigneault, 2009 107 den Elzen and Höhne, 2008; Mignone et al., 2008

108 Yohe, op. cit.; O’Neill, 2008

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optimal timing of climate policy under uncertainty never find that when future learning is taken into consideration inaction now is still the best response.109

In any case, scientific understanding of climate change has reached a point where it is clear that it is happening, that human activities are very likely causing it, and that if it continues unabated it is likely to have predominantly negative impacts on most people and the natural systems that people depend on for their well-being. Moreover, the real risks and vulnerabil-ities to climate extremes in both developed and developing countries are repeatedly being demonstrated: such as the devastation of New Orleans and Burma/Myanmar by Hurricane Katrina and Cyclone Nargis, respectively; the heat wave that caused 35,000 premature deaths across Europe in 2003; and the devastating floods in Pakistan in 2010.110

Given this scientific foundation, economist Gary Yohe has said:

This knowledge alone is sufficient to establish the serious risks of climate change and the need to respond in the near-term in ways that will reduce future emissions and thereby ameliorate the pace and extent of future change. Indeed, looking at uncer-tainty through a risk management lens makes the case for near-term action through hedging against all sorts of climate risk. It then follows from simple economics that action should begin immediately in order to minimize the expected cost of meeting any long-term objective.111

The Stable-Climate Myth

The widely held idea that society has plenty of time to decide how to respond to climate change before taking meaningful policy actions is a significant barrier to accurate risk percep-tion. Several misconceptions may contribute to this nopercep-tion. One is that the climate system will only change gradually and smoothly, offering ample time for society to develop policy responses as changes develop and new technologies permit. In reality, the climate tends to change in fits and starts, especially when forced to change rapidly:

Abrupt climate changes were especially common when the climate system was being forced to change most rapidly. Thus, greenhouse warming and other human alterations of the earth system may increase the possibility of large, abrupt, and unwelcome regional or global climatic events.112

109 O’Neill, 2009

110 Confalonieri et al. 2007; Smith et al., 2009 111 Yohe, op. cit.

112 National Research Council, 2002

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The misperception of a stable climate conflicts with abundant scientific evidence that the climate has changed abruptly and dramatically during periods of past climate change. About 11,500 years ago, at the end of a period known as the Younger Dryas, the annual average temperature in central Greenland jumped by about 15°C in a decade and average annual snow fall increased dramatically in just a few years (Figure 3.1). The Younger Dryas was global and caused temper-ature and precipitation to change significantly in many places around the world.113This and many similar events in the paleoclimate record send a clear message: abrupt change is a normal feature of the climate system during times of forced climate change. During the Younger Dryas, the forcing on the climate system was natural, but today humans are exerting a very strong forcing on the climate through greenhouse gas emissions to the atmosphere.

Figure 3.1: Abrupt climate change as revealed in a Greenland ice core.

Abrupt climate change in Central Greenland. Isotope data from an ice core reveal changes in the local average annual temperature and snow accumulation rate. Abrupt, large increases in both variables occurred within a decade about 11,500 years ago. Source: National Research Council, 2002.

Abrupt changes are not limited to prehistoric climates: “Severe droughts and other regional climate events during the current warm period have shown similar tendencies of abrupt onset and great persistence, often with adverse effects on societies.”114Throughout the 20th cen-tury there was a persistent trend toward drier conditions globally, but in the early 1980s

113 Ibid.

Figure 1. Climate changes in central Greenland over the last 17,000 years show a large and rapid shi# out of the ice age about 15,000 years ago, an irregular cooling into the Younger Dryas event, and an abupt shi# out of the event (a warming of about 8° C in a decade) toward modern values.

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there was a sudden and sustained uptick in the amount of land worldwide that was in drought conditions (Figure 3.2). The causes of this sudden change are not well understood, but the fact that it occurred tells us that the climate is not a stable, benign system.

Figure 3.2: Global increase in drought severity during the 20th century.

Change in drought severity from 1900 to 2002. The Palmer Drought Severity Index (PDSI) is a measure of relative drought conditions maintained by the U.S. National Climatic Data Center.

The map at the top shows how the PDSI changed geographically from the early 20thcentury to the early 21stcentury. The graph below shows how the PDSI changed over time as a global average.

Source: Trenberth et al., 2007.

Climate change impacts vary over both place and time; they are experienced locally, not globally. On local and regional scales, components of the climate system are more chaotic

PDSI1

1900 1920 1940 1960 1980 2000

3

-4 -2 0 2 4

2

1

0

-1

-2

-3

PDSI 1

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than they appear in global or continental averages; for example, places that experience more droughts may appear to cancel out additional rainfall in places that experience more flooding.

As atmospheric circulation patterns or ocean currents reorganize, regional climates may change suddenly with unpredictable consequences.115Even sea level rise varies regionally.116 Recent studies have found, for example, that the east and west coasts of the United States are likely to experience significantly more sea level rise than the global average as the world continues to warm. Compared to the smooth, gradual, predictable changes that many people expect, the sudden, unpredictable changes that may be a common feature of regional climates will be more difficult to plan and prepare for.117

The misconception of a stable climate may stem in part from computer model-generated projec-tions of future climate change that graphically depict very smooth and gradual changes over the span of the 21st century (Figure 3.3). Such projections average model output over very large areas – often the entire globe – and over long periods of time – typically 5 to 30 years, thus smoothing over temporal and geographical differences and giving the false impression of gradual, predictable change everywhere all the time. While useful to scientists studying the basic physics of the global climate system, this type of projection is of very limited use for informing societal risk.

Figure 3.3: Climate model projections giving a false impression of smooth climate change.

Examples of climate projections. Projected change in global average temperature (left) and sea level rise (right) through the 21st century. The smooth, monotonic rise results from averaging over the entire globe and over many years. Source: (Left) Meehl et al., 2007; (Right) Church et al, 2001.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Global surface warming C) Sea level rise (m)

A2

1990 2010 2030 2050 2070 2090 0

115 Hare & Mantua, 2000; National Research Council, 2002 116 Bindoff et al., 2007

117 Gulledge, 2008a and 2008b

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Another feature of the climate system that narrows the window for action is a 20 to 30 year delay between the time that a quantity of greenhouse gas is emitted to the atmosphere and when its warming effect is realized in the near-surface atmosphere.118This delay means that the opportunity to reduce global warming 20 to 30 years from now has essentially passed.

Another way to think of this phenomenon is that the greenhouse gases already emitted to the atmosphere will drive the warming of the next two to three decades. That warming, expected to be about 0.2-0.3°C per decade, is now unstoppable unless we could immediately stop emitting all greenhouse gases, which is not feasible.119Continued greenhouse gas emissions would lock in further warming with a 20 to 30 year sliding window.120

Low risk for the rich and low priority for the poor

There is a common misconception that the risks of climate change are small for the wealthy (developed countries or rich populations within a country) and that a plethora of other problems are more immediate, dire and important for developing countries. However, recent events demonstrate that wealthy countries and populations are much more vulnerable to climate impacts than previously realized. As for the more demanding problems of the devel-oping world, climate change will interact with many of these, making their solutions even more challenging.

In 2005, Hurricane Katrina killed approximately 1,500 people and caused economic losses equivalent to a third of the gross domestic product of Louisiana and Mississippi combined.121 Although this single event cannot be linked directly to climate change, it starkly illustrates the United States’s vulnerability to climate-related disasters. There is evidence that category 4 and 5 hurricanes have become more frequent already.122More importantly, both theory and climate model projections indicate that category 4 and 5 hurricanes will become more frequent in the future as a result of human-induced global warming, even if there is an overall decrease in the total number of tropical cyclones (i.e. the decrease in frequency may come

In 2005, Hurricane Katrina killed approximately 1,500 people and caused economic losses equivalent to a third of the gross domestic product of Louisiana and Mississippi combined.121 Although this single event cannot be linked directly to climate change, it starkly illustrates the United States’s vulnerability to climate-related disasters. There is evidence that category 4 and 5 hurricanes have become more frequent already.122More importantly, both theory and climate model projections indicate that category 4 and 5 hurricanes will become more frequent in the future as a result of human-induced global warming, even if there is an overall decrease in the total number of tropical cyclones (i.e. the decrease in frequency may come