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Scenario Analysis. By: Daniel Mason-D’Croz. What are scenarios. Scenarios are a plausible futures Scenarios are what-if stories used to explore future uncertainties Scenarios can be told in narratives, numbers, and even images

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Scenario analysis

Scenario Analysis

By: Daniel Mason-D’Croz


What are scenarios
What are scenarios

  • Scenarios are a 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
Moving from the Past to the Future

Future: broad uncertainty

Past

Forecasting

Present perspective


Moving from the past to the future1
Moving from the Past to the Future

Future: broad uncertainty

Past

Scenarios

Present perspective


Who uses scenarios
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
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


What uncertainties do we test
What uncertainties do we test?

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

  • Economic growth and development

  • Technological Advances

  • Climate Change


Why use models
Why use models

  • Allow us to simplify reality, and test assumptions on behavior.

  • Let us simulate scenarios and quantify the effects of changing assumptions


Standard impact scenarios
Standard IMPACT scenarios

  • IMPACT Drivers:

    • Population

    • GDP

    • Climate

    • Technology Growth Assumptions

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



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