Spatial Conservation and Investment Portfolios to Manage Climate-Related Risk

This GSS/DRMS project investigates how the theory of efficient financial portfolios can be modified, enriched, and harnessed to manage the nature-conservation risk that climate uncertainty creates. Agencies and conservation groups cannot know exactly which areas will prove to be the best conservation sites in a future warmer climate; this creates the risk that land areas protected today for conservation purposes might not end up being good habitat or hot spots of biodiversity in the future. Scholars of finance have long used portfolio theory to manage financial risk faced by an investor through diversification. Recent research has shown that financial tools could be adapted to the problem of allocating conservation investments between different parts of a conservation planning area to reduce future conservation risk from climate change by spreading conservation lands strategically between multiple areas. However, adapting the science of portfolio theory from finance to conservation is a non-trivial endeavor. To advance that science, this project will develop new spatial conservation-outcome forecasts for the Prairie Pothole Region and construct spatial data sets suitable for spatial portfolio analysis for two other previously studied conservation problems (Eastern birds, Appalachian salamanders). Using the data on those three diverse conservation problems, the researchers will: identify the kinds of problems for which this spatial conservation portfolio diversification is most useful; figure out how to develop a spatial conservation portfolio when information regarding conservation outcomes is only available for a small number of climate scenarios; develop a method of portfolio analysis to guide division of investment between land purchases and management activities that buffer protected areas against warming; and explore whether portfolio analysis can be used by a decision maker who is concerned with several different conservation goals.

This research will yield valuable guidance to government agencies and private conservation groups regarding spatial conservation strategies in the Prairie Pothole Region - sometimes referred to as 'the Duck Factory' - that reduce the risk climate change poses to future waterfowl conservation success. More importantly, this research will develop conservation tools that decision makers wrestling with a wide range of conservation problems can use themselves with climate and ecological forecast data they deem to be sufficiently accurate and that measure the conservation outcomes with which they are most concerned; the tools will help them to allocate conservation investments across space in ways that minimize uncertainty in the outcomes of those investments, increasing the social well-being produced by their expenditures. The grant will train two graduate students at the University of Illinois in spatial analysis and the application of portfolio theory to conservation, and support four female faculty researchers in fields where women are under-represented (two early in their academic careers.) The project will engage and train a diverse group of undergraduate students that represent academic backgrounds across economics, ecology, and geography in a meaningful multidisciplinary research experience. The results will be distributed through journal articles and conference presentations; in addition, the researchers will communicate the results to stakeholders directly through professional contacts in federal agencies and at major land conservation groups such as The Nature Conservancy, Conservation International, and the Environmental Defense Fund.