Addressing Uncertainty

Assessment of uncertainty in model outputs is central to the proper use of model results for decision making. There are a number of uncertainties that arise in the calculation of damages from energy use. The committee elected to confront uncertainty using approaches recommended by the NRC’s Committee on Regulatory Environmental Models (NRC 2007a). This committee considered the use of probabilistic (Monte Carlo) approaches to quantify all uncertainties to be problematic in many situations, especially when uncertainty analysis is used to reduce large-scale analyses of complex environmental and human health effects to a single probability distribution or when uncertainty is dominated by decision variables, as is the case for this current study. In this study, uncertainty is dominated by such factors as the selected value of a statistical life, which cannot easily be captured in a probability distribution. In situations where detailed probabilistic modeling is not appropriate, the models committee (NRC 2007a) recommended the use of scenario assessment and sensitivity analysis. The current committee chose to use this approach, and where feasible, it has used alternative scenarios and sensitivity analysis to characterize uncertainties.


The discussion in Chapter 2 focuses on the external effects and their valuations, resulting from electricity generation. Chapter 3 addresses externalities related to the production and use of transportation fuels. Chapter 4 discusses energy used to supply heat for industrial processes and to heat indoor spaces. Chapter 5 addresses effects attributable to climate change and their valuations. Chapter 6 discusses effects and valuations related to infrastructure and security. Chapter 7 presents overall conclusions from the committee’s evaluations, including a comparison of climate and nonclimate damage estimates, and discusses factors to keep in mind when interpreting the results of the evaluations. Chapter 7 also recommends research to inform future consideration of various issues in this report.

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