Reducing risk in reserve selection using Modern Portfolio Theory: Coastal planning under sea-level rise

1. Climate change is expected to impact many species and ecosystem services, although it is difficult to predict when and how these impacts may arise. Due to this uncertainty, it is difficult to plan management actions, such as designating protected areas, intended to adapt to climate change impacts. The danger of ignoring uncertainty is that resulting plans may fail to achieve conservation objectives, yet this is not usually incorporated in conservation planning. 2. Recent studies have accounted for uncertainty by applying Modern Portfolio Theory-an approach for risk-sensitive resource allocation used in the finance sector-to conservation planning. However, these approaches are not directly applicable to many conservation planning problems that typically include discrete site selection, multiple conservation objectives and a consideration of connectivity. 3. We extend previous applications of Modern Portfolio Theory by incorporating these additional conservation planning requirements in the context of designing a reserve system and apply it to conserving coastal wetlands and associated ecosystem services under uncertain rates of sea-level rise. This allows us to identify an optimal set of properties to preserve, while maintaining connectivity for landward migration of wetlands and accounting for risk. We compare spatial plans that resulted from our risk-sensitive approach to reserve selection that ignored risk to determine whether, and how, explicitly accounting for risk alters planning outcomes. 4. We demonstrate that incorporating sea-level rise, but ignoring uncertainty, is a high-risk strategy, even when planning for the worst-case sea-level rise scenario. In contrast, diversifying site selection through Modern Portfolio Theory can ensure the supply of ecosystem services by reducing the risk of failure across all sea-level rise scenarios.