Opinion: Forecasting and decision- making
Some years ago I read Robert Rubin’s book, “In An
Uncertain World.” Rubin focused on the process of decision-making when the
results of that decision are anything but guaranteed. Many times we have to
make choices based on very uncertain forecasts; the key is to do the analysis
in the proper context, to give it the appropriate “frame.”
Last Thursday evening, the Boulder City Council was
discussing the planning process for the Civic Center area that runs along
Boulder Creek in downtown. The council is faced with some real issues here —
many of the city’s buildings are already in the flood prone area, and climate
change will almost certainly increase the frequency and severity of flood
events. But how much more is not predictable with any level of certainty, at
least not yet. So what is the council to do?
The council needs to take the perspective of looking
back from 25 or 50 years in the future. Just as some are already asking about
past decisions, we do not want our successors to ask why we didn’t consider more
seriously the potential impacts of climate changes before we allowed or
promoted building in an area of such high flood risk. Although the science may
not be perfect, we can still ask “what if” questions: For example, what if the
storms double in intensity and frequency? What if what are now very severe
“500-year” storms (probability of 1/500 in a given year) occur much more
frequently, like with 1/100 probability?
The decisions to build our current civic offices and
other buildings in this area were made many decades ago. We now have the
benefit of far better analytic tools and can create very accurate scenarios of
what the future might bring. So let’s do our planning based on what we can
reasonably expect from climate change, so that those who are around in the
future won’t regret our decisions.
One
other point — a few decades ago, when a lot of the flood regulations were being
put into place, the city made the decision to not “channelize” our flood-prone
creeks, and to leave them in their natural state insofar as possible. It would
be unfortunate to have to reverse that decision in order to protect investments
we make now without considering the effects of climate change. So it’s good
news is that the city is now shifting toward making flood issues and the
structural adequacy of city buildings the critical piece in the Civic Center
planning process.
The council also discussed an example where forecasting
went awry — the financial and attendance picture for the Pro Cycling Challenge
race that took place in August. According to the City Council agenda item in
June prior to the race, the expected direct sales tax benefit ranged from a low
of $117,000 to a high of $470,000. But the actual result was only about $48,000
(as determined by a CU survey), a fraction of the minimum forecasted, and
nowhere near the city’s direct costs of around $283,000. The attendance on
Flagstaff, which was expected to be 30,000 or more, was actually only about
8-10,000, again a fraction of what was forecasted. A critical evaluation of the
forecasting models seems to be needed.
The good news about the race was that it came off pretty
much without a hitch, and there was no fire and no lightning storm to disrupt
the final leg up Flagstaff. So city workers and the race organizers deserve
plaudits. But the council needs to acknowledge, which they couldn’t seem to
bring themselves to do last Thursday, that both attendance and financial
returns were very far below expectations.
There needs to be a context shift about the opportunity
cost of spending almost a quarter of a million dollars net on some professional
entertainment, which for most spectators only lasted a few minutes, when other
events are asked to pay their own way (the Bolder Boulder) or raise money for
charity (the Bailey Hundo race.) There are alternative ways to spend the
citizens’ money and staff’s time that have no Charter issues and more value.
Just because something is scarce is not a reason to do whatever it takes to get
it — that’s department store “sale” mentality, not a way to make decisions in
the public sector.