Downside versus symmetric measures of uncertainty in natural resource portfolio design to manage climate change uncertainty

Payal Shah, Amy W. Ando

Research output: Contribution to journalArticle

Abstract

Recent work uses Markowitz's meanvariance framework to identify efficient allocations of conservation activity across subregions of a planning landscape to minimize climate change-induced uncertainty in future conservation benefits. We replace variance with a downside measure of uncertainty and compare the resulting portfolios of conservation activity and uncertainty-expected value results against those generated by the mean-variance approach. Results illustrate that conservation agents can manage climate changed-induced uncertainty in future conservation outcomes more efficiently using our framework when they are particularly averse to downside uncertainty and when predicted future conservation outcomes within subregions across their planning horizon exhibit skewed distributions.

Original languageEnglish (US)
Pages (from-to)664-687
Number of pages24
JournalLand Economics
Volume91
Issue number4
DOIs
StatePublished - Jan 1 2015

ASJC Scopus subject areas

  • Environmental Science (miscellaneous)
  • Economics and Econometrics

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