Environmental decision-making under uncertainty

Extreme weather events like hurricanes occur rarely, but when they occur, they cause immense damage. How should decision-makers, both public and private, make decisions about such events? Such decisions face significant and often poorly understood uncertainty. We rework the so-called “confidence approach” to tackle decision-making under severe uncertainty with multiple models, and we illustrate the approach with the case study of insurance pricing using hurricane models. The confidence approach has important consequences for this case and offers a powerful framework for a wide class of problems.