Scenarios: tools for coping with complexity and future uncertainty?
Marta Pérez-Soba and Rob Maas
We cannot predict the future with certainty, but we know that it is influenced by our current actions, and that these in turn are influenced by our expectations. This is why future scenarios have existed from the dawn of civilization and have been used for developing military, political and economic strategies. Does the existence of scenarios help to accomplish the desired outcomes? It is fair to say that in most cases the answer to this question is no, simply because history is normally an open, undetermined process, where sudden and unexpected events can play a decisive, disruptive role. Could the French Revolution have been prevented if Louis XVI's counsellors had had the imagination to develop a shock-scenario, foreseeing the impact of the volcanic eruptions in Iceland and Japan, and the consequent crop failures in 1784 and 1785 and food scarcity in France -often cited as a proximate cause of the French Revolution in 1789? This is debatable to say the least.
However, scenarios have become a key tool in the policy formulation process because they help with identifying possible solutions to policy problems or exploring the various options available (Howlett 2011). As former EU Environment Commissioner Janez Potocnik has put it:
We tend not to plan well for the future and lags prevent us from reaching our goals unless we act early. We have path-dependency. For future success in almost any area, we have to incorporate future effects into our current policymaking. (EC 2010)
Regarding definitions, words such as 'futures', 'foresight', 'scenarios' and 'forecasts' are often used interchangeably in policy documents. In this chapter we use 'futures studies' as a broad term that includes different approaches for dealing with complexity and future uncertainty, that is, an interdisciplinary collection of methods, theories and findings described as narratives, images, statistical trends, models and recommendations. 'Foresight' describes the process of envisioning, inventing and constructing scenarios. 'Scenarios' are one such method of exploring the future. They are internally consistent and coherent descriptions of hypothetical futures, often with a time horizon of more than 20 years, and are usually used in futures studies. The futures analysed can be probable, imaginable, surprising, desirable or frightening, but the likelihood of realization remains unknown. In the remainder of this chapter we also use the word 'scenario' to describe a surprise-free forecast or future projection. 'Forecasts' are more focused on an accurate quantitative prediction. They could include a sensitivity analysis to include uncertainty margins. Theoretically, forecasts are more 'certain' than scenarios. However in practice both approaches overlap and, as discussed more fully below, are often used in combination.
What is it that makes scenarios such an important tool in policy formulation? Four reasons can be identified:
1. They seek to avoid risks, preparing decision makers for what might be coming and enabling thinking about possible actions to avoid risks, for example, increasing cereal production when weather forecasts predict poor harvests in other parts of the world;
2. They have potential to enhance policy performance: to know whether the benefits of measures are robust; in other words, whether policy targets can still be met if circumstances change. For example, will an investment in a new airport runway still pay off if economic growth is lower than expected? Will Member States still be able to fulfil EU environmental obligations with higher than expected economic growth?
3. They attempt to expand creativity: they offer a catchy, 'outside the box' image that unites different stakeholders and sets a time path for social and technological innovations. President Kennedy's 'man-on-the-moon' vision provides one example. Imagining possible futures could lead to new breakthroughs that at the time were considered unlikely;
4. They seek to stimulate open discussion and the reaching of consensus via processes of deliberation, thereby allowing participants to compare different perspectives on the future to see whether consensus on certain no-regret actions is possible. For example, what are sensible next steps given the different views on the causes of climate change and the different beliefs in market mechanisms or intergovernmental coordination to bring a solution?
Scenarios seek to support different activities in the policy formulation process. It is particularly in problem definition where they can help answer the question of whether current trends and policies are robust. In addition, they can help to identify policy alternatives that can be an input into the functioning of other tools such as cost-benefit analysis and multi-criteria analysis.
In this chapter we discuss the role of scenarios as tools to deal with complexity and future uncertainty in the policy formulation process. The first part focuses on scenario use in theory, and the second on their use in 'real world' venues of policy action. The first part sets the scene by discussing the specific functions of scenarios when dealing with complexity and uncertainty in the policy formulation process, links this with scenario selection and design considering the standard stages and tasks of policy formulation, and reflects on issues of credibility, legitimacy and salience. It also describes potential links and overlaps with other policy formulation tools. It ends by briefly reviewing the historical development of scenarios. Part two summarizes a selection of cases where scenarios played a decisive role. It identifies the factors that enhanced their use in particular policy venues. It investigates why a foresight process was undertaken and in which context. It explores what knowledge sources underpinned the scenarios and how they were deployed in policy formulation activities. This chapter concludes with a reflection on the importance of acknowledging the particular needs of policymakers in policy formulation processes when dealing with complexity and uncertainty.