Monday, July 9, 2007

Forecasting and the Cone of Uncertainty

Paul Saffo, a noted Bay Area futurist, wrote a valuable piece for the Harvard Business Review titled Six Rules for Effective Forecasting. Given that the whole premise of Climate Frog is based on forecasting the impacts of climate change, Saffo's rules help put my writing into proper perspective. Forecasting is not predicting.

The role of the forecaster in the real world is quite different from that of the mythical seer. Prediction is concerned with future certainty; forecasting looks at how hidden currents in the present signal possible changes in direction for companies, societies, or the world at large. Thus, the primary goal of forecasting is to identify the full range of possibilities, not a limited set of illusory certainties. Whether a specific forecast actually turns out to be accurate is only part of the picture—even a broken clock is right twice a day. Above all, the forecaster’s task is to map uncertainty, for in a world where our actions in the present influence the future, uncertainty is opportunity.
The implications of my Climate Frog articles - that humans should be planning their futures based on forecasts of the possible effects of climate change - are certainly not predictive. If it were certain that sea levels would rise in a predictable pattern, we would be seeing a lot more preparation for that in the planning and development of coastal cities and towns. But the element of uncertainty in the forecasts regarding sea level rise makes expensive changes in policy a bit of a gamble in the present, both economically and politically. No one today could secure the legislation and funding to relocate major sea level highways. Even the most pessimistic predictor of sea level rise recognizes the fact that climate change is full of uncertainties today.

Saffo describes change as an "S curve" that begins slowly and hits an inflection point where change accelerates rapidly for a period until it flattens out and recedes.
The art of forecasting is to identify an S-curve pattern as it begins to emerge, well ahead of the inflection point. The tricky part of S curves is that they inevitably invite us to focus on the inflection point, that dramatic moment of takeoff when fortunes are made and revolutions launched. But the wise forecaster will look to the left of the curve in hopes of identifying the inflection point’s inevitable precursors.
Action to mitigate the impacts of climate change are certainly in that slow, beginning stage today. Perhaps - if events in the world become compelling enough and the link to climate change is illustrated more clearly - action will accelerate rapidly at some point in the future. Climate Frog is a risk in terms of the time I invest in it, but I'm attempting to aggregate the forecasts based in today's research and world events in order to provide the most current reports on those actions.

Saffo recommends that we "embrace the things that don't fit" in the precursor stages, as these may actually be indicators of conditions that will be present at the inflection point of the S-curve.
More often than not, indicators look like mere oddball curiosities or, worse, failures, and just as we dislike uncertainty, we shy away from failures and anomalies. But if you want to look for the thing that’s going to come whistling in out of nowhere in the next years and change your business, look for interesting failures—smart ideas that seem to have gone nowhere.
Many climate change skeptics point to conditions that look counter-intuitive to global warming scenarios. Why would it be getting colder than average in some places if it's all about "warming." And wouldn't a warmer climate make some regions more productive and attractive than before? Well, sure, there will be an upside for some people in some places. And maybe those places will serve as refuges for migrating populations. It may all be part of the actual global scenario that unfolds for us.

Saffo's fourth rule is to "hold strong opinions weakly," which means to continually update your forecasts based on changing conditions. My main premise is that we should be making tentative plans to defend ourselves from the impacts of climate change. In making those plans, we should be prepared to implement them rapidly since much of climate change forecasting includes tipping points and feedback loops that are likely to cause rapid changes in sea level and weather-related vulnerabilities. I don't know how climate change will unfold, but I'm convinced that it's unfolding.

The fifth and sixth rules are Look Back Twice as Far As You Look Forward and Know When NOT to Make a Forecast. These are easy for me to follow. Human history is full of stories of whole populations not recognizing risk or impending disaster. We are creatures of habit with short future horizons. We don't easily change our habits unless forced to by Nature. And I know better than to make a specific forecast of what is to come. This blog is more about observation of human behaviors in reaction to whatever indicators of climate change are observable, whether or not they are absolute.

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