In urban planning, plans increasingly contain exploratory scenarios describing urban futures and uncertainty. However, when it comes time to decide what infrastructure is built, too often all the nuance is thrown out for narrow-minded cost benefit analysis and simplistic and politicized all-or-nothing decisions. I think we can do better!
In 2021-2022 I hosted Thomas Machiels as a visiting PhD student from the University of Antwerp, who was studying how real options theory could be applied to improve decision-making in complex urban projects. We developed a case study demonstrating how the method could be used to link exploratory scenarios to project planning decisions, using Plan Bay Area 2050 and the Link21 projects, which resulted in a paper which was just published in the journal of Planning Theory & Practice: “Creating Flexible Plans for an Uncertain Future: From Exploratory Scenarios to Adaptive Plans with Real Options.”
The article is a chapter in his full dissertation, Real Options for Real Urban Projects: Uncertainty and Adaptive Planning in Complex Spatial Projects, which contains other cases including a quantitative real options analysis. Thomas convinced me of the usefulness of real options theory for creating more flexible plans appropriate to our turbulent, uncertain times, and I think it has many applications in the planning field.