Reading the Entrails (2)

May 29th, 2008

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Posted by ChrisG at 9:41 am

It’s something of a paradox that the technocratic fantasy of long-term structural planning, which drew on a confluence of social practices, ideologies and conceptual resources during the Cold War to reach its apogee, has undergone a resurgence in recent years against the backdrop of the rise of complexity thinking. Some of the problems noted in the previous post are arguably a direct result of this fantasy.

The Government’s employment of cost-benefit analysis based econometric tools for predicting the need for new nuclear infrastructure, runways, and gas pipelines has been a subject of interest here at SW (see here for analysis), mainly for the ways in which their use as management tools is based on ideological presuppositions, and how these presuppositions encourage ridiculously unrealistic approaches to modelling, together with misleading pronouncements as to the validity of the models themselves (for an analysis of the inaccuracies which appear to be a systematic feature of cost-benefit modelling on large infrastructure projects, this paper [PDF] is a good reference point).

The selection of variables to study is obviously a key element of econometric analyses of this kind, and part of this selection is assigning values to these variables as the basis for constructing different future scenarios as an aid to decision making. Let’s take an example of how each of these elements can go badly wrong, based on unacknowledged presuppositions and how they operate to exclude the interdependence of key variables.

With respect to nuclear energy, the problem of hidden and (let’s be charitable…) unforeseen costs is perhaps one of the two really big elephants in the room (next to the pachyderm with “HLW” stamped on his flank, who must wonder if anyone’s ever going to really take notice of him…). But other hidden dependencies will affect the adequacy of forecasts about the relative costs of a new nuclear programme. GEC has just confirmed that it is thinking seriously about a resource problem which will have serious repercussions for the nuclear industry:

The next scourge to afflict the global economy after soaring oil and food prices will be a surge in the cost of water brought on by growing scarcity, one of the world’s biggest companies warned yesterday.

So GEC is waking up to the multiple resource dependencies on which global society rests. But the UK Government certainly isn’t. If it were to do so, it might consider what effect restricted water supplies might have on a dozen new nuclear power stations.

As for the assigning of values to variables, the recent surge in the price of oil has, as been noted here by Rob Hopkins, made a mockery of the Government’s scenarios in this year’s Energy White Paper [PDF] for oil costs in the years 2010-2020. A high price scenario of $80 a barrel formed the upper limit of the projections. These projected costs formed part of the pricing scenarios that were used in the Government’s case for the third runway at Heathrow, which rested on previous studies that explicitly ruled out the possibility of unusual events, including oil price shocks, as influences on the projected costs of an expansion of air travel. With $200 a barrel becoming a real possibility in the short term (and with growing tacit acceptance in business and government circles of peak oil), the need for immediate revision of these cost estimates, and honest acknowledgement of the degree of uncertainty involved in making such predictions, are necessities.

Telling the future is making narratives, exploring possibilities by extending oneself beyond what is known into a story constructed from imaginative variations on familiar themes, open hopefully to the surprises which others’ perspectives can introduce into the more or less ossified body of one’s expectations. Formalised econometric methods for telling the future are not, in themselves, terribly different, except that they make assumptions about the factors affecting emergent futures which tend to radically simplify both the set of possibilities, and the values of each of the possible outcomes. Not only this, but the assurances they implicitly carry with them also tend to obscure the fact that they operate in this way, and so the possibility of surprise in a future which is woven out of the futures of an uncountable number of influences risks being discounted.

Against a backdrop of extreme uncertainty, in which a recognition of the interdependencies on which human survival and flourishing rest is vital, better narratives are needed in order to judge the value of the futures we foresee, and to determine the value of what we do in the present as means of producing them.