Uncertainty and Risk


Lecture 09

September 13, 2023

Review and Questions

Last Class

  • Simulation involves running a model to evaluate dynamics.
  • Allows us to look at how system behaves under different conditions and/or parameter values.
  • Think of analogy to experimentation.
  • Looked at example of dissolved oxygen.

Simulation Workflow Overview

Simulation Workflow Diagram

Questions?

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Uncertainty and Systems Analysis

Systems and Uncertainty

Deterministic systems models can be subject to uncertainties due to the separation between the “internals” of the system and the “external” environment.

Conceptual Schematic of a Systems Model

Reminder: “All Models Are Wrong, But Some Are Useful”

Every systems model simplifies or neglects certain aspects of the system!

Even if appropriate, this results in uncertainty about how results translate to the real system.

Conceptual Schematic of a Systems Model

What is Uncertainty?

Glib Answer: A lack of certainty!

More Seriously: Uncertainty refers to an inability to exactly describe current or future values or states.

Types of Uncertainty

Two (broad) types of uncertainties:

  • Aleatory uncertainty, or uncertainties resulting from randomness;
  • Epistemic uncertainty, or uncertainties resulting from lack of knowledge.

Probability

We often represent uncertainty using probabilities.

What is probability?

What Is Probability?

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Two Definitions of Probability

  1. Long-run frequency of an event (frequentist)
  2. Degree of belief that a proposition is true (Bayesian)

The frequentist definition concerns what would happen with a large enough number of repeated trials.

The Bayesian definition concerns the odds that you should bet on an outcome.

Probability Distributions

We often represent probability using distributions — more on this next time.

The choice of distributions can often play a large role in outcomes.

Neglecting Correlations

For example, an often key concern is whether uncertainties are correlated: do certain outcomes tend to occur in combination?

If this is the case, it can bias results to assume independence.

Climate Change

Let’s look at how global mean temperatures have changed from 1850–2022 relative to a preindustrial baseline.

Causes of Climate Changes

Climatic changes result from changes to the heat or energy balance of the Earth due to alterations to the chemical composition of the atmosphere, which include:

  • greenhouse gas emissions;
  • aerosol emissions from air pollution or volcanic eruptions;
  • changes to the solar cycle.

Radiative Forcing

The impact of these changes on the energy balance of the planet are referred to as radiative forcing.

A positive radiative forcing means a warming effect (net heat increase) and a negative radiative forcing means a cooling effect (net heat loss).

Projections of Future Radiative Forcing

Let’s look at the projected forcings from one of the official scenarios (actually the most extreme scenario) used to assess future climate change.

What Is Uncertain?

There are many uncertainties in modeling climate changes:

  1. How much CO2 gets absorbed by sinks/emitted by sources?
  2. How strong is the aerosol cooling effect?
  3. How rapidly is heat absorbed by and transported into the deep ocean?
  4. What is the atmospheric temperature response to increases in radiative forcing?

Correlated Climate Uncertainties

  • Equilibrium Climate Sensitivity
  • Ocean Heat Diffusivity
  • Aerosol Cooling Factor
  • Carbon Sink Respiration Sensitivity

Correlated climate parameter estimates

Impact of Neglecting Climate Correlations

Neglecting these correlations can change the distribution of hindcasted and projected temperatures.

Impact of ignoring parameter correlations on modeled temperatures

Risk

Systems and Risk

Designing and managing environmental systems is often about minimizing or managing risk:

  • Maintaining clean air/water;
  • Power grid reliabiliy standards;
  • Flooding/other hazards;
  • Climate change mitigation/adaptation.

What is Risk?

The Society for Risk Analysis definition:

“risk” involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences.

IPCC Definition of Risk

…the potential for consequences where something of value is at stake and where the outcome is uncertain, recognizing the diversity of values. Risk is often represented as probability of occurrence of hazardous events or trends multiplied by the impacts if these events or trends occur.

So What is Risk?

Important: “Risk” is not just another words for probability, but:

  • Involves uncertainty;
  • Undesireable outcomes;
  • Effects matter, not just the events themselves.

Components of Risk

Multiple components which contribute to risk:

  • Probability of a hazard;
  • Exposure to that hazard;
  • Vulnerability to outcomes;
  • Socioeconomic responses.

Overview of the Components of Risk

Risk Management Example: Well Contamination

Consider the potential contamination of well water. How could we mitigate risk by:

  • reducing hazards:
  • reducing exposure:
  • reducing vulnerability:
  • influencing responses:

Systems and Risk Management

Risk management is often a key consideration in systems analysis. For example, consider regulatory standards.

  • Often a tradeoff between strictness of a regulation and costs of compliance.
  • Systems modeling is a key way to understand
    • the impacts of changing a regulation
    • the probability of failure to meet standards.

Key Points

Key Points

  • Uncertainties are a fundamental part of systems modeling and analysis.
  • Need to be thoughtful about the choices that were made in modeling and how they impact outcomes.
  • Probabilities: more on this next class, but be careful about distributions and correlations!
  • Systems analysis also often about understanding/managing risk.

Upcoming Schedule

Next Classes

Friday: Monte Carlo simulation

Monday: Lab on Monte Carlo