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Downside versus Symmetric Measures of Uncertainty in Natural Resource Portfolio Design to Manage Climate Change Uncertainty

Downside versus Symmetric Measures of Uncertainty in Natural Resource Portfolio Design to Manage... ABSTRACT: Recent work uses Markowitz’s mean-variance 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Land Economics University of Wisconsin Press

Downside versus Symmetric Measures of Uncertainty in Natural Resource Portfolio Design to Manage Climate Change Uncertainty

Land Economics , Volume 91 (4) – Oct 16, 2015

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Publisher
University of Wisconsin Press
Copyright
Copyright by the Board of Regents of the University of Wisconsin System.
ISSN
1543-8325
Publisher site
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Abstract

ABSTRACT: Recent work uses Markowitz’s mean-variance 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.

Journal

Land EconomicsUniversity of Wisconsin Press

Published: Oct 16, 2015

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