Not all sources of uncertainty are worth resolving: A value of information approach for uncertainty reduction in flood risk management

Abstract

AbstractFlood risk management faces challenging decisions to balance between reducing disastrous flood consequences and different societal goals such as development. The inherent complexity and limited data often lead to significant uncertainties in decision‐making, potentially resulting in suboptimal resource allocation. Consequently, there may be value in aiming to reduce uncertainty, minimizing the possibility of selecting deemed efficient decisions because of deficiencies in the current knowledge. To address this, a novel methodology is proposed, integrating Bayesian uncertainty with value of information concepts, commonly employed in healthcare economics. This methodology assesses the implications of current uncertainty and identifies worthwhile sources for resolution prior making decisions. Validation in a synthetic case study and application in a real case (Zapayan wetland in the Magdalena River, Colombia) demonstrate the method's efficacy. Results show that the proposed method can help apprising if the available information is enough to make a decision, or if more information should be obtained. For example, for the synthetic case, resolving the sources of uncertainty with extra information does not significantly improve the expected utility, so a decision could be made based on existing information. For the real case, reducing the uncertainty related to the exposed assets should be targeted first, by an information gathering activity, before deciding.