SWRC Scenario Planning: An Introduction

Scenario Planning
An Approach to Managing Resource Uncertainty
Ralph P. Marra, Senior Principal
Southwest Water Resources Consulting, LLC
April 2018
rmarra@swrcscenarios.com
Copyright © 2018 Southwest Water Resources Consulting, LLC

Scenario Planning
Where it Applies & What it Can Do
 Applies to dynamic planning environments where
uncertainty is high
 Provides a structured process to address critical
planning issues
 Identifies & prioritizes key planning uncertainties
 Serves as a vehicle to have a deliberative
“conversation” among diverse stakeholders
 Enhances flexibility, resilience, and strategic
preparedness for whatever happens

Scenarios & Water-Resource Uncertainty
A Range of Applications
More
Decision
Based
More
Exploratory
Oriented
Aligning
Internal/External
Stakeholders
Strategic
Decision
Making
Increasing
Risk
Awareness
General
System
Learning

Traditional Predictive Planning
The Past is the Key to the Future
Now
+X%-X%
MOST LIKELY
or
DESIRABLE
Extrapolates the
Future…
Planning Horizon
…From What We
Currently Know
Source: Modified from GBN

Scenario Planning
Explores a Broader Range of Future Possibility
NowEnvisions Multiple
Possible Futures…
UNCERTAIN OUTCOMES
Can Be Game Changers
…From What We
Don’t Know
Source: Modified from GBN

Contrasting the Methods
C
A
B
C
D
Traditional Predictive
Approach
Scenario Planning
Most Likely or
Preferred Outcome
2040
A
B
C
D
Multiple Possible
Outcomes
Actions
Common to A-B
Actions
Common to A-D
Actions
Common to A-C
Source: Modified from Tucson Water
NOW
NOW

C
A
B
D
Defining the Range of Future Possibility
Developing the End-Member Futures
NOW
Source: Modified from Denver Water/Tucson Water
2040

C
A
B
D
Identifying Possible Decision Points and Actions
NOW
Source: Modified from Denver Water/Tucson Water
Future
Tipping Points
Longer-Term
Contingent/Adaptive
Actions
Near-Term
Robust/
Low-Regret
Actions
2040

Scenario Planning is NOT about
ENVISIONING WHAT WE WANT TO
HAPPEN in the Future
And it’s NOT about
PREDICTING WHAT WILL LIKELY
HAPPEN in the Future

Scenario Planning is about
BEING PREPARED
for whatever happens
in the Future

Some Important Informational Sources

A Structured Deliberative Process
A Program in Steps and Phases
Identify the
driving forces
2
Frame the
Question, Set the
Schedule, &
Conduct Interviews
1
Rank the
driving forces
3
Create a path
of actions that
addresses the
emerging needs
of each future
8
Develop the
scenario
narratives
6 Create the
scenario / future
matrix
Identify the
most critical
uncertainties
45
Explore the
implications of
each future
7
Identify actions
common to
multiple futures
9

Southwest Colorado’s Situation in 2014
The isolated 5-County Region economically depends on agriculture,
natural gas extraction, and winter-summer tourism.
SWC is in its 15th year of extended drought and is experiencing
reduced winter snowpack & river flows and more frequent wildfires.
Family farming is in long-term decline and natural gas production,
which subsidizes local governmental services, may be as well.
The large infusion of second-home owners have increased real estate
values forcing many locals to find housing far from where they work.
Entrepreneurs who rely on eco-recreational tourism are concerned
that the drought and wildfires could threaten their businesses.
REGION IS UNCERTAIN ABOUT HOW TO PREPARE FOR
THE ECONOMIC IMPACTS OF A LONGER DROUGHT

Southwest Colorado’s
Scenario Focal Question (2014)
“Given the possibility of extended long-term
drought and its potential environmental
impacts, how could the 5-County Region
develop a more adaptable economy?”

Denver Water’s Situation in 2016
Denver Water experienced its worst annual drought of record in 2002.
This drought was coupled with a very large wildfire in its watershed.
The severe drought and wildfire threatened the reliability
and quality of Denver Water’s water supply.
Major conservation measures were implemented by the Utility
to reduce per capita demand and hence its vulnerability.
Another big drought occurred in 2012. There is concern that big
droughts & wildfires could be harbingers of climate change.
More frequent coupled events like these could impact the Utility’s
access to its water resources and degrade source-water quality.
UTILITY WAS UNCERTAIN ABOUT HOW TO PREPARE
FOR CLIMATE & GROWTH IMPACTS IN LONGER TERM

Denver Water’s
Scenario Planning Issue (2016)
“How can we best prepare our water system
and enhance our resources to meet our
customers’ water needs as future
challenges & opportunities arise?”

Tucson Water’s Situation in 2004
Tucson Water had system corrosion problems when shifting
from groundwater to Colorado River Water in the early 1990s
CRW’s high salinity & the City’s New Water Treatment Plant
were blamed for the widely-reported “red water” issues
Customers came to distrust CRW, the New Plant, &
the UTILITY—Deliveries of CRW were suspended for 7 Years
Tucson came to use 40% of its CRW by blending it with
groundwater via recharge & recovery. What about the rest?
Community came to accept CRW recharge but not necessarily
higher salinity & direct “chemical” water treatment
UTILITY WAS UNCERTAIN ABOUT HOW TO PROCEED

Tucson Water’s
Two Scenario Focal Questions
(2004 & 2010)
“How should the Utility bring into full use its
renewable Colorado River supply?”
“How can Tucson Water fully utilize the
City’s effluent entitlement and maximize the
wet-water benefits for its customers?”

Understanding the Planning Environment
What are the most important drivers?
Regulation
Politics
Economy
Growth
Pre$$ure
Climate
Variability
Financing
Drought
Emerging
Contaminants
Environmental
Needs
Conservation
Public
Perception
New
$upply
$ources
System
Security
Water
Quality
Technology
Energy
Aging
Infra$tructure
Media
Coverage
Water
Rate$

8
The Planning Environment as a System

Tucson Water’s Shortlist of Driving Forces
1) Public or Political Resistance/Support for “Direct
Use” of “New” $100 million Water Treatment Plant
2) Public or Political Resistance/Support for “Indirect
Use” of “New” $100 million Water Treatment Plant
« » « » « » « » « » « »
13) Public’s Willingness to Pay Extra for “Aesthetic”
Improvements to Water Quality
14) Tolerance of Local Residents to New Facilities
15) Environmental/Endangered Species Act issues
may determine “what” can occur “where” and
“when”

Rank the Driving Forces
Identifying the Scenario Building Blocks
Increasing Importance
IncreasingUncertainty
MOST IMPORTANT
& CERTAIN
MOST IMPORTANT
& UNCERTAIN

Ranking Tucson Water’s Driving Forces
13
14 15
12
11
14
3
2 510
6 8
9
7

Identifying the Most Critical Uncertainties
High-Impact Drivers that Can “Tip the Future”
(13) Is Tucson’s public willing to pay extra for
discretionary water-quality improvements to
the Colorado River Water/groundwater blend?
(1) Will the public accept the use of the
City’s “New” Water Treatment Plant for the
direct delivery of Colorado River Water?

Tucson Water’s Critical Uncertainty #1
X-Axis on Matrix
NO YES
Public Is Only
Willing to Pay
the Minimum to
Meet EPA
Standards
(-X)
Public Is Willing
to Pay Extra for
“Enhanced”
Water Quality
(+X)
Willingness to Pay
Is Tucson’s public willing to pay extra for
discretionary water-quality improvements
to Colorado River Water?

Tucson Water’s Critical Uncertainty #2
Y-Axis on Matrix
NO YES
All Colorado
River Water Must
Be Recharged
Before Treatment
and Delivery
(-Y)
Public Will
Accept Use of
Treatment Plant
for Direct
Delivery
(+Y)
Accept Use of Plant
Will the public accept use of Tucson Water’s
treatment plant for direct delivery
of Colorado River water?

Tucson Water’s 2-Axes End-Member Futures in 2030
Public Willing
to Pay Extra for
“Enhanced”
Water Quality
Scenario A
(+X,+Y)
Scenario D
(+X,-Y)
Scenario C
(-X,-Y)
Scenario B
(-X,+Y)Public Only
Willing to Pay
Minimum to Meet
EPA Standards
Some “Direct”
Treatment of CAP
Water is Acceptable
All CAP Water Must
Be Recharged
Before Treatment
+Y
+X
YESNO
YES
NO
-X
-Y

The Dynamic Planning Environment
Certainties Imbedded within an Ever Changing Milieu

Scenario B Scenario A
Scenario C Scenario D
Simplifying the Planning Environment
Developing Focused Narratives about
Possible Futures
= “Certain” Outcomes = “Possible” Outcomes

Credible Challenging Divergent

The Evocative Power of the Narrative

 Scenario Narratives are STORIES WITH A PURPOSE
 They are TOOLS to explore something “NEW” by
asking “What if?” & “What would you do about it?”
 They PROVOKE INSIGHT by tapping into both mental
& emotional intuitions
 WE ALL tell “stories” to ourselves and each other to
justify WHO WE ARE and WHAT WE (WANT TO) DO
 Organizations & Nations also tell stories—possibly
about a MYTHIC PAST or an “OFFICIAL” FUTURE
 Narratives are designed to CHALLENGE our accepted
VIEWS and PERCEPTIONS about what may lie ahead

“Better or
Worse?”
“Blue
Skies”
“Soup
Kitchen”
“Hard
Labor”
A Common “Meta” Scenario Matrix Theme

Tucson Water’s 2-Axis End-Member Futures in 2030
Public Willing
to Pay Extra for
“Enhanced”
Water Quality
Public Only
Willing to Pay
Minimum to Meet
EPA Standards
Some “Direct”
Treatment of CAP
Water is Acceptable
All CAP Water Must
Be Recharged
Before Treatment
YESNO
YES
NO
Scenario A
“Surface
Enhancement”
Scenario B
“Industry
Standard”
Scenario C
“Recharge
Only”
Scenario D
“Enhanced
Recharge”
(+X)(-X)
(+Y)
(-Y)

Identifying the Functional Implications
What does each scenario mean to you?
 WHAT are its emerging challenges and risks?
WHAT vulnerbilities would be exposed?
 HOW is each scenario constrained? WHO “wins” &
“loses” given these “limits” and WHY?
 HOW is each scenario freer and more open? WHAT
are the emerging capabilities & opportunities?
 WHO benefits from these opportunities and WHY?
 WHAT happens to those who don’t benefit? What
might they do?

Implications Summary
Blue Skies
(Scenario A)
Hard Labor
(Scenario B)
Soup Kitchen
(Scenario C)
Better or Worse?
(Scenario D)
Multi-National
&
National
• Implication A
• Implication B
• Implication AA
Multi-State
&
State
• Implication C
• Implication D
• Implication E
County/
Municipal/
Local
• Implication F
• Implication G
Organizational
(Internal)
• Implication H
• Implication I
• Implication J
• Implication K

Implications Summary
Blue Skies
(Scenario A)
Hard Labor
(Scenario B)
Soup Kitchen
(Scenario C)
Better or Worse?
(Scenario D)
Multi-National
&
National
• Implication A
• Implication B
• Implication AA
• Implication B
• Implication L
• Implication M
• Implication B
• Implication L
• Implication T
• Implication A
• Implication B
• Implication L
• Implication AA
Multi-State
&
State
• Implication C
• Implication D
• Implication E
• Implication D
• Implication E
• Implication N
• Implication D
• Implication N
• Implication U
• Implication V
• Implication C
• Implication D
• Implication V
• Implication BB
County/
Municipal/
Local
• Implication F
• Implication G
• Implication G
• Implication O
• Implication P
• Implication G
• Implication O
• Implication W
• Implication X
• Implication F
• Implication G
• Implication W
• Implication CC
Organizational
(Internal)
• Implication H
• Implication I
• Implication J
• Implication K
• Implication H
• Implication I
• Implication Q
• Implication R
• Implication S
• Implication H
• Implication Q
• Implication R
• Implication Y
• Implication Z
• Implication H
• Implication I
• Implication R
• Implication Z
• Implication DD

Identifying Potential Adaptive Actions
What can you do to prepare for those implications?
 How can the EMERGING VULNERABILITIES and
RISKS be addressed?
 How can constraints and deficiencies be
REMEDIED or MITIGATED or CIRCUMVENTED?
 What strategies & actions would be the most
EFFECTIVE given the envisioned conditions?
 What initiatives would enhance PREPAREDNESS
by increasing future capability?
 What (in)actions would JEOPARDIZE future
viability?

Potential Action Summary
Blue Skies
(Scenario A)
Hard Labor
(Scenario B)
Soup Kitchen
(Scenario C)
Better or Worse?
(Scenario D)
Multi-National
&
National
• Action A
• Action B
Multi-State
&
State
• Action C
• Action D
• Action E
County/
Municipal/
Local
• Action F
• Action G
• Action H
• Action I
Organizational
(Internal)
• Action J
• Action K
• Action L
• Action M

Potential Action Summary
Blue Skies
(Scenario A)
Hard Labor
(Scenario B)
Soup Kitchen
(Scenario C)
Better or Worse?
(Scenario D)
Multi-National
&
National
• Action A
• Action B
• Action A
• Action N
• Action O
• Action P
• Action A
• Action N
• Action O
• Action P
• Action A
• Action B
• Action N
• Action AA
Multi-State
&
State
• Action C
• Action D
• Action E
• Action C
• Action E
• Action Q
• Action R
• Action C
• Action E
• Action Q
• Action R
• Action W
• Action C
• Action E
• Action Q
• Action R
• Action BB
County/
Municipal/
Local
• Action F
• Action G
• Action H
• Action I
• Action F
• Action H
• Action S
• Action T
• Action F
• Action H
• Action T
• Action X
• Action Y
• Action F
• Action H
• Action T
• Action Y
• Action CC
Organizational
(Internal)
• Action J
• Action K
• Action L
• Action M
• Action J
• Action L
• Action M
• Action U
• Action V
• Action J
• Action L
• Action U
• Action V
• Action Z
• Action J
• Action L
• Action U
• Action Z
• Action DD

Identifying Robust & Prudent Actions
All
Potential
Actions
Scenario A
“Blue
Skies”
A , B, C, D, E
F, G, H, I, J, K
L, M, BB, DD
Scenario B
“Hard
Labor”
A, C, E, F, H,
J, L, M, N, O
P, Q, R, S, T,
U, V, W, Y
Scenario C
“Soup
Kitchen”
A, C, E, F, H
J, L, N, O, P, Q
R, T, U, V, W
X, Y, Z
Scenario D
“Better or
Worse?”
A, B, C, E, F
H, J, L, N, Q
R, T, U, Y, Z
AA, BB, CC, DD Copyright © 2018 Southwest Water Resources Consulting, LLC

All
Potential
Actions
Scenario A
“Blue
Skies”
A , B, C, D, E
F, G, H, I, J, K
L, M, BB, DD
Scenario B
“Hard
Labor”
A, C, E, F, H,
J, L, M, N, O
P, Q, R, S, T,
U, V, W, Y
Scenario C
“Soup
Kitchen”
A, C, E, F, H
J, L, N, O, P, Q
R, T, U, V, W
X, Y, Z
Scenario D
“Better or
Worse?”
A, B, C, E, F
H, J, L, N, Q
R, T, U, Y, Z
AA, BB, CC, DD
Potential
Robust
Actions
A, C, E, F, H
J, L, N, Q, R
T, U, V, Y
THESE ARE
“LOW-
REGRET”
ACTIONS
COMMON
TO
MULTIPLE
FUTURES

All
Potential
Actions
Scenario A
“Blue
Skies”
A , B, C, D, E
F, G, H, I, J, K
L, M, BB, DD
Scenario B
“Hard
Labor”
A, C, E, F, H,
J, L, M, N, O
P, Q, R, S, T,
U, V, W, Y
Scenario C
“Soup
Kitchen”
A, C, E, F, H
J, L, N, O, P, Q
R, T, U, V, W
X, Y, Z
Scenario D
“Better or
Worse?”
A, B, C, E, F
H, J, L, N, Q
R, T, U, Y, Z
AA, BB, CC, DD
Potential
Robust
Actions
A, C, E, F, H
J, L, N, Q, R
T, U, V, Y
Potential
Prudent
Actions
O, P, W, Z
BB, DD
THESE
ACTIONS
DEPEND ON
PERCEIVED
RISKS &
WHAT WE
MIGHT DO
TO
CONTAIN
THEM

All
Potential
Actions
Scenario A
“Blue
Skies”
A , B, C, D, E
F, G, H, I, J, K
L, M, BB, DD
Scenario B
“Hard
Labor”
A, C, E, F, H,
J, L, M, N, O
P, Q, R, S, T,
U, V, W, Y
Scenario C
“Soup
Kitchen”
A, C, E, F, H
J, L, N, O, P, Q
R, T, U, V, W
X, Y, Z
Scenario D
“Better or
Worse?”
A, B, C, E, F
H, J, L, N, Q
R, T, U, Y, Z
AA, BB, CC, DD
Potential
Robust
Actions
A, C, E, F, H
J, L, N, Q, R
T, U, V, Y
Potential
Prudent
Actions
O, P, W, Z
BB, DD
Preliminary
Recommended
Actions
C, H, J, L, N,
O, P, R, T, Y
W, DD
FINAL
SELECTION
WILL DEPEND
ON
ADDITIONAL
ANALYSIS,
ONE’S
RISK
TOLERANCE
&
STRATEGY

Refining the Preliminary Recommendations
Conducting Quantified Analyses of Implications
& Possible Actions/Options
 Scenarios can establish the Conceptual Envelope
within which to conduct Quantified Analyses.
A
2040
2016
B
C
D
Planning Horizon
Longer Term
Contingent/Adaptive
Options
Near Term
Robust/
Low-Regret
Options
2030
2020
2025

A
2040
2016
B
C
D
Planning Horizon
Longer Term
Contingent/Adaptive
Options
Near Term
Robust/
Low-Regret
Options
2030
2020
2025
E
G
F

 Many Types of Quantitative Tools can be used to
analytically assess the recommendations: Sensitivity
Analyses, Comparative Analyses, Financial Modeling,
Optimizations, Cost-Benefit Analyses, and others.
MODFLOW WEAP-LEAP UrbanSim Climate Models

Developing an Effective Strategic Plan
Some Things to Consider
 Which “LOW-REGRET” strategies & actions are
common to MOST FUTURES?
 Which apply only to one or two but could be prudent
hedges to off-set BIG POTENTIAL RISKS?
 Which actions would increase planning FLEXIBILITY
and ADAPTIVE CAPACITY?
 How could an evolving scenario be influenced so
that it “MUST BE” ACHIEVED or AVOIDED?
 What actions could increase the potential for “HIGH
REGRET” outcomes?

Tucson Water’s
Scenario Focal Question
(2004)
“How should the Utility bring into full use its
renewable Colorado River supply?”

Developing the Strategic Plan
For the Near, Mid, & Longer Terms
B
Industry
Standard
C
Recharge
Only
D
Enhanced
Recharge
2004
SOME DIRECT
TREATMENT
ALL
RECHARGE
A
Surface
Enhancement
(+Y
)
(-Y)
(+X
)
(+X
)
(-X)
(-X)
MAX
WQ
MAX
WQ
MIN
WQ
MIN
WQ
2030

Implementation in the Near Term
Highly Robust/Low-Regret Actions
B
Industry
Standard
C
Recharge
Only
D
Enhanced
Recharge
2004
Low-Regret/Robust
Action Set
CAVSARP Expansion
CAP Delivery Flexibility
Rch vs Dir. Treat Study
Disinfection Evaluation
WQ/TDS Assessment
Public Preferences
SAVSARP Feasibility
Pipe Routing Studies
SOME DIRECT
TREATMENT
ALL
RECHARGE
A
Surface
Enhancement
(+Y
)
(-Y)
(+X
)
(+X
)
(-X)
(-X)
MAX
WQ
MAX
WQ
MIN
WQ
MIN
WQ
2030

A
Surface
Enhancement
B
Industry
Standard
C
Recharge
Only
D
Enhanced
Recharge
X
X
GO
2004
Low-Regret/Robust
Action Set
CAVSARP Expansion
WQ/TDS Assessment
Public Preferences
SAVSARP Feasibility
2006
SOME DIRECT
TREATMENT
X
ALL
RECHARGE
At First Junction
A Decision that “Tipped” Tucson’s Future
(-Y)
MIN
WQ
MAX
WQ
(-X)
(+X
)
2030
(+X
)
(-X)
MAX
WQ
MIN
WQ
X

C
Recharge
Only
D
Enhanced
Recharge
?GO
2004
Low-Regret/Robust
Action Set
CAVSARP Expansion
WQ/TDS Assessment
Public Preferences
SAVSARP Feasibility
Action Set #2
SAVSARP Construction
CAVSARP Expansion
WQ/TDS Assessment
Triple-Bottom-Line Eval
2006
ALL
RECHARGE
Implementing Contingent Actions
And New Ones Emerge
(+X
)
(-X) MIN
WQ
MAX
WQ
2030
(-Y)
A New
Emerging
Scenario B
A New
Emerging
Scenario A

A Generic 6-Month Scenario Schedule
Step 1/Weeks 1 –8: Frame question & horizon, conduct interviews and compile
results; and prepare for Workshop #1.
Steps 2 – 6/Weeks 5-9: Conduct 1-Day or 2-Day Workshop #1 to identify drivers &
uncertainties, establish scenario matrix, and develop plot lines for narratives.
Step 6/Weeks 9-16: Conduct research as may be needed; develop, review, and
finalize the narratives; and prepare for Workshop #2.
Steps 7 – 9/Weeks 13-17: Conduct 1-Day or 2-Day Workshop #2 to identify
implications & potential actionable options to address emerging scenarios.
Step 9 & Report/Weeks 17-25: Identify options common to multiple scenarios &
tipping point precursors; and document process in a draft report for client review.

Final Messages
 The Planning Environment is a System of Drivers
 Uncertainties Can Be Prominent or May Even
Dominate the Planning Environment
 Future Change may not be Predictable or Desirable
 “The Future” should be viewed as many different
possible futures each having unique implications
 Some Key Decisions Cannot Wait for Certainty
 Policies & Investments that are Robust under a Wide
Range of Possible Futures are Flexible & Adaptable
 Effective Planning is about Being Prepared for
Whatever Happens—It’s about Readiness

Thank You
rmarra@swrcscenarios.com

SWRC Scenario Planning: An Introduction

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