Stochastic optimisation, risk and uncertainty; what is the problem?

1. Hugh Possingham FAA ARC Federation Fellow and ARC Centre of Excellence Director (as of Jan 2011) Professor of Mathematics and Professor of Ecology (50/50) The University of Queensland Read – www.aeda.edu.au/news Stochastic optimisation, risk and uncertainty; what is the problem? the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

2. University of Queensland Spatial Ecology Lab

3. What are the environmental assets and which ones are the highest priority – we could use classical conservation planning approaches to identify the highest priority wetlands and send the water there. A but ignores cost B include? but how? What is the problem? cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

4. 700 wetlands? 18 major assets? • Prioritisation • Scores • use Marxan • or C-plan? 20 33 18

5. R(t) Y(t) x(t) v1(t) Z1(t) Markov Decision Process, MDP Z2(t) v2(t) v3(t) w2(t) w1(t) Z3(t) O(t)

6. Ensure environmental assets meet predetermined stochastic targets – e.g. management will deliver a flood event to as much red gum as we can with 90% probability every ten years and 98% every 15 years. Condition as a state variable – highly adaptive Optimise using SDP (Grafton. Kompas et al) for min lost short term opportunity cost What is the problem – dynamic and stochastic? cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

7. Include system dynamics (ground and surface)? What is an acceptable level of risk for an environmental asset? State-dependent stochastic optimisation – how bad is it to ignore stochasticity? Do we have the skill set to do this? Problem statement issues cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

8. Minimise opportunity cost of environmental outcomes with a particular certainty vs Maximise environmental outcomes for a fixed cost Maximise a weighted sum of outcomes Risk aversion/variability/preferences? Setting objectives/single player cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

9. Choose the strategy that delivers an acceptable outcome at least 95% of the time • Info-gap – choose the strategy that delivers a base level outcome for the greatest amount of unfavourable uncertainty (precautionary) – we have two water allocation info-gap papers in preparation Uncertainty cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

10. Adaptive management and learning Are we doing active or passive adaptive management? Do we even know what that means? Do we have a learning plan that maximises learning within socio-economic constraints – or is there no broad-scale experimentation. Is there are partial-observability problem? (POMDP) cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

11. One player strategy assuming the water users behaviour is known or partially controlled • Buy and sell water assuming the system is a game • Create multiple environmental managers all with different environmental objectives and all with the power to buy and sell water (easements, diversions, entitlements, short or long terms etc.) Ignore command and control cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

12. A Individual wetland managers • B Individual biological assets – eg treat river red gums like a crop, or opening the mouth like a crop, or spoonbill breeding like a crop • “I am the environmental water holder for royal spoonbills” • Determine rules and test using experimental economics Or treat env assets like businesses – harness power of human brain cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au

13. Is more and more data collection an excuse for not defining the problem? cost the ecology centre university of queensland australia www.uq.edu.au/spatialecology h.possingham@uq.edu.au