Methods for economic decision making under uncertainty (MEDU)

The Methods for Economic Decision making under Uncertainty (MEDU) group aims to develop and improve a wide spectrum of modeling methodologies, with an emphasis on economic incentives and mechanisms for mitigation and adaptation, including market solutions for implementing REDD-based measures and a special focus on decision making under uncertainty.

Trees in fog © tepic | iStock

Trees in fog

Economic incentives play a major role in determining future development pathways. Uncertainty pervades the management of natural resources and public goods, and the challenges of addressing climate change while ensuring food and energy security for a growing population. Moreover, uncertainty is frequently difficult to characterize.

In 2013 MEDU used a number of methodological tools, including stochastic optimization and simulation, dynamic and static portfolio selection, and real options theory. MEDU also undertook model inter-comparison exercises, particularly with respect to the integrated assessment of climate change impacts.

In addition, stylized economic modeling for understanding underlying dynamics and system effects and modeling of risk preferences were applied.

New studies map future climate impacts across sectors

The Methods for Economic Decision making under Uncertainty (MEDU) group contributed to the first results of the Inter-Sectoral Impact Model Intercomparison Project (ISI-MIP), a pioneering collaboration within the international scientific community. More

Innovation and risk-averse firms: Options on carbon allowances as a hedging tool

This project in 2013 built on previous collaboration concerning real options modeling and applications to energy investments and the implementation of REDD (Reducing Emissions from Deforestation and forest Degradation). More

Forest fires and adaptation options in Europe

Research addressed the assessment of adaptation options to forest fires in Europe under projected climate change - a pioneering attempt to quantify impacts of reactive and preventive adaptation strategies within one modeling framework at a regional scale. More

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Last edited: 22 May 2014


Nikolay Khabarov

Research Scholar

Ecosystems Services and Management

T +43(0) 2236 807 346

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International Institute for Applied Systems Analysis (IIASA)
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