NOTES AgriculTurAl & rurAl DEvElOpmENT 41895 Scenario planning to guide long-term investments in Agricultural Science and Technology: Theory and practice from iSSuE 28 a case Study on india NOvEmBEr 2007 BY: riiKKA rAJAlAHTi, WillEm JANSSEN AND EiJA pEHu The objective of this note is to summarize the process ScENAriO plANNiNg AND and key findings from a scenario analysis applied to DEvElOpmENT prOcESS guide India's agricultural technology system and, in par- ticular, planning of the National Agricultural Innovation Traditional planning and forecasting practices on their Project in India. This note is based on the paper `Scenario own are not enough to serve our needs in getting Planning to Guide Long-Term Investments in Agricultural the insights and answers needed. For example, trend Science and Technology: Theory and Practice from a analysis is based on the assumption that the factors Case Study on India (Rajalahti, et al. 2006).' that drove change in the past will continue to drive it in the future. Scenario planning is a structured process A number of global changes are taking place with impli- of thinking about and anticipating the future--aimed cations for the rural and agricultural sector. Population at helping break out of the mindset that the future will growth, improved incomes, market development, cli- be a continuation of the past (van der Heijden 1996). It mate change, dissemination of contagious diseases, entails the development of a set of scenarios that are and shifting dietary patterns continue to increase in narratives of alternative environments and show how importance and diversify the demand for food and different interpretations of the driving forces can lead other agricultural products (Rajalahti, et al. 2005; World to different plausible futures (Ogilvy and Schwartz 2004; Bank 2006). While it is clear that agricultural research van der Heijden 1996). systems need to reform, the investments in agricultural science and technology tend to pay off in the long run Scenarios are an important and useful tool in provid- more than in the short term. Nevertheless, the decisions ing a neutral space for discussion and in helping to build on the investments in, and reforms of, the science and consensus among various stakeholders. The objective is to technology systems for tomorrow need to be made examine possible future developments that could impact today. This necessity requires that the decisions should individuals, organizations, or societies to find directions for be based on an informed assessment of what the future decisions that would most benefit any future environment. will hold (Rajalahti, et al. 2006). Besides being useful in strategy formulation, scenarios can be used in policy development, conflict resolution, group learning, and rehearsing management decisions (Strategy Survival Guide; van der Heijden 2005). Scenario development process. Although the process is usually customized to the needs of the client--often an organization or a company--it often includes ele- ments related to scanning (broadening the perspec- tives, gathering unbiased information and knowledge), design (mapping general development trends to form a base for the scenario framework), story outlining (the scenarios are developed with substance and body), and discussions on implications (looking at today's strategic agenda and alternatives in light of the alter- native scenarios). Other important elements include elicitation, such as interviews or strengths, weaknesses, opportunities, threats (SWOT) analysis; research to build robust comprehensive scenarios; consultation to verify the relevance of the scenarios; strategic conversations; and out-of-the box thinking. The main steps in a sce- nario development process can be organized around a series of workshops and knowledge gathering activities (Scenarios Network, van der Heijden 1996, 2005). THE WOrlD BANK Figure 1. principles of Adaptive Scenario-Based pants to develop a shared perspective on a future that is not necessarily a Development process continuation of the past. The scenario analysis was done in paral- lel with the design of NAIP. For the suc- cess of the project, the participation of B high-level officials, farm leaders, senior leaders from the public and the private Structure sectors, nongovernmental organiza- tion leaders, donor representatives, experts on agricultural development, and some `remarkable people'(known Uncertainties Fit as lateral thinkers)2 was required. The project was jointly managed by the Ideas and Insights Scenarios Review regional and central Agriculture and Source: van der Heijden 1996. Rural Development Departments of the World Bank. An Indian co-leader was invited and attended, and experi- Figure 1 illustrates the key steps in an adaptive scenario enced scenario experts facilitated the process. development process in which scenarios can be seen The basic process included the following steps: as testing conditions for the client's survival strategy. Scenarios are used as a means to think through future 1. Identifying driving forces. Taking into consideration policies and decisions. By using more than one scenario, political conditions, economic developments, social robustness of the client's strategy is tested (and adapted as developments, environmental trends, and technologi- needed) in different conditions (van der Heijden 1996). cal changes, the driving forces for change in the future are identified. ScENAriOS FOr THE 2. Identifying predetermined factors. Which future devel- opments will take place in any scenario? NATiONAl AgriculTurAl 3. Identifying critical uncertainties. The critical areas in iNNOvATiON prOJEcT which the future is uncertain are identified. To address the challenges facing agriculture in India and 4. Developing scenario plots. A scenario is defined by a to consolidate the gains under the completed National combination of two critical uncertainties, drawn out Agricultural Technology Project, the Government of India and shown as axes on which the scenarios are plotted. and the World Bank agreed to undertake a new National A comprehensive description of how the future would Agricultural Innovation Project (NAIP).1 In project prepara- look under this scenario is then developed. These futures must be plausible. tion, it became clear that many uncertainties face agricul- 5. Consultation. Scenarios are presented to a large num- ture and agricultural science and technology in India: how ber of people who have relevant expertise. Their com- will global warming affect the production characteristics ments are collected and incorporated in the scenarios. of Indian agriculture? How will the technology system Consultation helps to identify knowledge gaps and embrace the growing importance of the private sector? guides decisions on additional knowledge gathering. Will Indian agriculture remain competitive in the global 6. Assessing the implications of different scenarios. An marketplace? What is the fate of the small-scale farmer? assessment is made of the best possible responses of A scenario analysis was done to explore these uncertain- the client organizations to each of the plausible future ties, and to identify the key decisions that need to be scenarios. taken to ensure that India's agricultural technology system 7. Comparing possible responses to the different sce- is prepared for the future. The assessment enabled partici- narios. Two elements in the comparison require special Box 1. Key issues raised by the `remarkable people', i.e., opinion leaders and policy makers in india. The key question posed to the interviewees was:When thinking of the future of Indian agriculture, what keeps you awake at night? Four main themes emerged from these interviews: 1. Will there be enough water for future generations? How can water be managed sustainably? 2. What will drive Indian agriculture in the future: the government or the market? What is the right balance? 3. How will rural communities change? How fast will rural urban migration proceed, and what is the future of small-scale farming? 4. How can rural stakeholders voice their views­­women, farmers, private sector? Source: Rajalahti, et al. 2006. 2 Box 2. Synopsis of initial four scenario storylines Four storylines were developed in the scenario building workshop.The scenario titles reflect the historical development of economic management, which could be strongly market based and liberalized or more government controlled and centrally led; and of the social fabric of the countryside and the country, which could be strong, with rural people well organized in villages that are able to take care of their problems, or which could be weak, in which case the marginalization of the poor would be higher. 1. The scenario In the Valley starts from a strong desire for cohesion and equity in the economy that results in a societal preparedness to accept a significant degree of governmental control to achieve this.The price paid is a modest level of growth (around 3 percent per annum) in which most people share to some degree. Productivity develops slowly. Global warming hits hard. 2. The scenario Along the Edge assumes that economic development becomes the number one priority, and significant inequity is allowed to exist as a powerful incentive to increase productivity.The scenario explores how far such a view could be taken before inequity becomes so intolerable that the "collective" must step in to moderate the worst manifestations of market power.This is a story of societal limits to development and growth. 3. In the scenario Over the Mountains, a "free for all" society runs into serious problems to such an extent that people call for a return to strong governmental control.The potential positive effects of such a strong government are explored.After a period of very serious difficulties, the center takes hold of the situation and turns things around. 4. In the scenario Through the Hills, concerns for cohesion and equity also are strong, but they are balanced by the desire to create incentives for productivity improvement through market forces.The two objectives often are not in harmony, particularly when the system experiences unexpected external shocks or when choices have to be made. In this scenario, cohesion wins out in such circumstances, but in the long run a powerful base for a successful market economy is created. Source: Rajalahti, et al. 2006. attention. First, there are those actions that can be which could be weak, in which case the marginal- found in all responses and tend to be low risk. Second, ization of the poor would be higher. Using these there are the responses that differ strongly among sce- two dimensions as the axes of a 2 x 2 matrix, four narios. Responses in these fields may require further combinations emerged that can serve as perspectives assessment to understand how the impact of change on the future of Indian development. In one of the on these variables can be managed. combinations, the third dimension of rapid global In the India exercise the main steps included:3 warming was introduced. 1. An initiation workshop at Bank Head Quarters to intro- 5. Finalization and presentation of the scenario storylines, duce the scenario planning concept and process and including development of full scenario stories and their to receive wider buy-in among relevant staff; validation. Box 2 provides a brief description of the 2. Interviews with 'remarkable people' to explore the four scenario plots. issues and concerns for future agricultural develop- 6. Finally, scenario analysis results workshops were orga- ment in India ­ see Box 1; nized to define the way forward relative to NAIP and 3. An introduction workshop in India to launch the pro- the Indian Council of Agricultural Research (ICAR), i.e., cess and obtain inputs from the participants; identifying how the scenarios may help to identify criti- 4. A scenario analysis and design workshop to identify cal decisions that must be made to maximize the future the key scenarios that would be developed-requiring role and impact of the Indian technology system. identification of the critical elements of each scenario: Figure 2. Final Scenario plots Developed During the driving forces, predetermined Scenario Design and consultation processes factors, and main uncertain- ties. See Figure 2 for an illus- The Four Scenarios tration of the final scenario Concern plots developed during the 1. In the Valley for Inclusive 4. Through the Hills process. The scenario plots India goes it alone. Growth Focus on investment climate were developed using two Social progress but economic stagnation Public/private partnership main dimensions: (i) econom- Only limited agricultural reform Enabling of agricultural reform Social ic management, which could Texture be strongly market based and liberalized but also more Interventionist Economic Management Liberalized government controlled and centrally led; and (ii) social fabric of the countryside and the country in general, which 3. Over the Mountains 2. Along the Edge could be strong, with rural Centrally planned economy Free reign of market forces Freedom reigned in Reliance Rich/poor divide people well organized in vil- Agricultural reform by compulsion on Personal Agricultural reform by econ necessity lages that are able to take Incentives care of their problems; or Source: Rajalahti, et al. 2006. 3 LESSONS LEARNED 3. Scenarios were considered to be very useful for visioning Scenarios may help identify critical decisions that must long-term S&T needs. It also became clear that there is a major need to work on institutional arrangements (farmer be made to maximize the future role and impact of the organizations, sector boards, cooperatives) for research technology system. While the process was effective for and development and to fully explore the potential of stimulating and increasing strategic conversation among a non-farm rural employment. wide group of stakeholders, the following lessons learned 4. It helped the project design team define the scope of the and adjustments-limitations should be kept in mind. NAIP project components, particularly the institutional Recommendations derived from the process: development. It also helped to identify the importance of 1. The scenario analysis may best fit to realities with clear enhanced capacity for dialogue and interaction with other boundaries, for example, a Country Assistance Strategy stakeholders. Flexibility, rather than pursuance of one (CAS), sector strategy, project preparation, or regional reform strategy, was considered a key trait for a successful plans. However, applying the analysis on larger, global organization in a rapidly changing world. issues may be far more challenging. 5. The national scenarios are being used by the client orga- 2. Due to significant time requirements, particularly during nizations to strengthen visioning capacity and strategy the consultation process (validation), it is recommended development at the level of specific products (e.g., rice, that the scenario process be implemented ahead of dairy, medicinal plants) or regions. For this purpose, groups project preparation. of stakeholders are asked to elaborate the country-wide 3. It is essential to allocate sufficient time and resources scenarios for the product or region of their interest. for creating client ownership and understanding of SOURCES the process. 4. It is of paramount importance to compose a multidisciplinary Ogilvy, J., and P. Schwartz. 2004. "Plotting Your Scenarios: Global scenario team led by an experienced scenario leader(s). Business Network." In Learning from the Future, ed. L. Fahe y and R. Randall. Chichester, UK: John Wiley & Sons, 1998. 5. The participant group should include people with multi- Rajalahti, R., van der Heijden, K., Janssen, W. and E. Pehu. disciplinary skills and different views, in this case, people 2006. Discussion Paper 29: Scenario Planning to Guide Long- also outside the agricultural sector. It is also very impor- term Investments in Agricultural Science and Technology: Theory tant to include participants of the groups that the process and Practice from a Case Study on India. Agriculture and Rural aims to influence. Development, World Bank, Washington, D.C. 6. The following require attention: the need for a full-time Rajalahti, R., J. Woelcke, and E. Pehu. 2005. Discussion Paper manager for the overall process; availability of research 14: Development of Research Systems to Support the Changing capability with adequate resources; the need to man- Agricultural Sector. Proceedings. Agriculture and Rural Development, World Bank, Washington, D.C. age and guide research work performed by third-party research institutes; and the coordination effort associated Scenarios Nextwork. Scenarios. http://www.nextwork.se/methods/ scenarios/scenario_development_process/ with operating a virtual team over long distances and Strategy Survival Guide (SSG). "Looking Forward: Scenario managing political sensitivities. Development. Strategy Survival Guide." Prime Minister's Unit. UK. http://www.strategy.gov.uk/downloads/survivalguide/skills/eb_sce- Benefits to NAIP and implications for Science and narios.htm Technology (S&T). The scenario analysis contributed to van der Heijden, K. 1996. Scenarios: The Art of Strategic Conversation. the design of the NAIP in the following ways: Chichester, UK: John Wiley & Sons Ltd. 1. The scenario process truly engaged people to think _____. 2005. Scenarios: The Art of Strategic Conversation. 2d ed. Chichester, UK: John Wiley & Sons, Ltd. outside their everyday domains and resulted in four very _____, R. Bradfie ld, G. Burt, G. Cairns, and G. Wright. 2002. The different, but plausible, scenarios. Sixth Sense: Accelerating Organizational Learning with Scenarios. 2. It helped ICAR think about the issues beyond its own tech- Chichester, UK: John Wiley & Sons, Ltd. nical competence and to strengthen the realization that the World Bank. 2006. Enhancing Agricultural Innovation: How to Go world it serves requires new approaches, including incorpo- Beyond Strengthening Research Systems. Economic and Sector Work. ration of social organization and institutional innovation. The World Bank, Washington, D.C. 1 The National Agricultural Innovation Project became effective in June 2006. 2 `Remarkable people' is a term applied in some of the scenario literature. For more information, see van der Heijden, K. 1996. 3 The scenario analysis and development exercise run from September 2004 to June 2006, including the following dates: the initiation workshop September 2004; planning workshop April 2005; scenario analysis and design workshop July 2005; research on validity August 2005; second generation scenarios February 2005; consultation process November 2005; and scenario analysis workshops April and June 2006. For more details on the theory and the process in India, the reader is referred to Rajalahti, et al. 2006. This note was prepared by Riikka Rajalahti, formerly agricultural specialist at ARD, who is currently advisor on agriculture and rural development at the ministry of foreign affairs in Finland (riikka.rajalahti@formin.fi); Willem Janssen, formerly senior agriculture specialist in SAR in the WB, who is now lead specilaist in LCR (wjanssen@worldbank.org); and Eija Pehu is science and technology advisor at ARD (epehu@worldbank.org). THE WORLD BANK 1818 H Street.NW Washington, DC 20433 www.worldbank.org/rural