(g)etting to the point: The problem with water risk and uncertainty

Loch, Adam, Adamson, David ORCID: 0000-0003-1616-968X and Auricht, Christopher (2019) (g)etting to the point: The problem with water risk and uncertainty. Water Resources and Economics, 32. p. 100154.

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Official URL: http://dx.doi.org/10.1016/j.wre.2019.100154

Abstract

Where we may be aware that a problem exists, but have only an incomplete description of the drivers and/or possible management solutions, we will be unaware/uncertain about future returns from, and risks to, private and public investments in capital (i.e. social, natural, economic, cultural and political). This paper explores the unawareness/uncertainty problem by coupling Arrow's states of nature approach for dealing with uncertainty with Rothschild and Stiglitz's exploration of inputs and increasing risk. This results in a modified Just-Pope production function equation isolating inputs to i) protect base capital (natural, social or private) and/or ii) generate an output. By exploring water input supply unawareness via alternative states of nature we may identify tipping points where current technology fails, resulting in irreversible losses of private and public capital tied to water inputs. We conclude by discussing the value of quantifying minimum-input requirements and identifying critical tipping-point outcomes in water systems, increased benefits/risks from transformed landscapes chasing higher economic returns, and the need for adaptive public arrangements in response. These insights may help us to understand future risk to natural capital from rising incentives to steal increasingly constrained resources that may trigger revised risk-sharing arrangements, and some limits to analyses relying on perfect foresight requirements by decision-makers.

Item Type:	Article
Uncontrolled Keywords:	Uncertainty, Unawareness, Water, Transaction costs, Tipping points
Divisions:	Faculty of Health and Life Sciences Faculty of Health and Life Sciences > Institute of Infection, Veterinary and Ecological Sciences
Depositing User:	Symplectic Admin
Date Deposited:	13 May 2021 13:43
Last Modified:	18 Jan 2023 23:51
DOI:	10.1016/j.wre.2019.100154
Open Access URL:	https://www.sciencedirect.com/science/article/pii/...
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3088951