The ‘Wild Cards’ of European futures: Planning for discontinuities?

Futures 42 (2010) 846–855

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The ‘Wild Cards’ of European futures: Planning for discontinuities? Christopher J. Smith *, Alexandre Dubois Nordregio, P.O. Box 1658, 111 86 Stockholm, Sweden

A R T I C L E I N F O

A B S T R A C T

Article history:

The use of Wild Cards has been extensively developed in the corporate world, particularly by companies dealing with strategic commodities in global markets, i.e., the nexus between warfare, oil, and energy use. One of the purposes of Wild Cards is to test the ability of a system – usually a large organisation – to react to unforeseen but high-impact events. The work presented in this article was undertaken in the context of the project on ‘Spatial Scenarios’ for the European Spatial Planning Observation Network (ESPON) Programme. In this project, four Wild Cards were introduced: ‘‘an era of energy scarcity’’, ‘‘the demise of Europe’s social security system’’, ‘‘the gulf stream stops’’, and ‘‘the dollar goes down the drain’’. These Wild Cards were introduced to investigate how external events may have asymmetric impacts across the European territory, to include some reflections on themes that were not included in the integrated scenarios, and to raise awareness of the fact that today’s policy choices have to be evaluated not only in the light of current policy goals but also in the light of possible, sometimes dramatic, future events. In this way the Wild Cards helped to highlight the potential impact of external events on the territorial development of Europe and their particular impact on the internal disparities between the regions. ß 2010 Elsevier Ltd. All rights reserved.

Available online 21 April 2010

1. Setting the scene: Wild Cards and the impossibility of scientific ‘prediction’ Wild Cards exist rather awkwardly in the space between the present and the future never really inhabiting either realm comfortably. They present ‘stories about the future’ based on current trends but as Popper famously noted, ‘‘there can be no prediction of the course of human history by scientific or any other rational methods’’ [1]. Indeed, he makes an even stronger claim arguing that the course of human history is strongly influenced by the growth of human knowledge noting that we cannot predict, by rational or scientific methods, the future growth of our scientific knowledge. It is self-contradictory to think that we can anticipate today what we shall know tomorrow. Thus to predict future knowledge is absurd, because at the moment of prediction it would already be present knowledge. We cannot, therefore, predict the future course of human history, because we cannot know now what will be known (discovered, invented) in the future. At best what we can discern about the future are historical trends, but crucially, ‘‘a statement asserting the existence of a trend at a certain time and place would be a singular historical statement, not a universal law’’ [1] and trends cannot support predictions. So, Wild Cards cannot make strong claims about the future of human history, perhaps in this sense then ex British Prime Minister Harold Macmillan was right when, on being asked by a young journalist what was it that made his job so difficult, replied in his own inimitable fashion. . ..’’Events, my dear boy, events!’’ Only weak claims can be made then regarding the ability of Wild Cards’ to foresee possible futures. They can however be used to tell interesting stories about ‘potential futures’ though the danger here is that in the world of ‘policy analysis’ this

* Corresponding author. Tel.: +46 8 463 54 00. E-mail address: [email protected] (C.J. Smith). 0016-3287/$ – see front matter ß 2010 Elsevier Ltd. All rights reserved. doi:10.1016/j.futures.2010.04.016

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vital claim is either lost or conveniently ignored. When a theory, bordering on a prophesy, based on weak predictive claims hits a raw nerve in policy circles or, better still, chimes with current ‘political’ reasoning – the coming welfare/demographic ‘time bomb’ being a prime example here – science is the loser. As this article however primarily concerns itself with the methodological rather than the epistemological or ontological level in respect of Wild Cards we shall not dwell further on these issues, though it is important to bear them in mind in respect of the concluding section of the paper.

2. A brief introduction to Wild Card usage and analysis Since the turn of the millennium, a number of authors have undertaken the task of Wild Card definition [2–5]. With small variations around the same melody, a Wild Card can usually be understood as, ‘‘a future development or event with a relatively low probably of occurrence but a likely high impact on the conduct of business’’ [6]. The use of Wild Cards has been extensively practiced in the corporate business world since the 1970s, particularly by companies such as Royal Dutch Shell, dealing, primarily, with strategic commodities in global markets (i.e. the nexus between warfare, oil and energy). This specific exercise was traditionally used in foresight processes as a complement to more linear, trend analysis-based scenario development. Indeed, while the objective of scenario development is to imagine and sketch futures that are grounded in past actions or policy choices, the purpose of Wild Cards is, on the contrary, to test the reactiveness of a given system – usually a large organisation – and its constituent parts to unforeseen but high-impact events. Such an approach is often seen as being especially useful to organisations involved in ‘‘turbulent and unforgiving environments’’ [5]. In the words of Steinmu¨ller [2], the added-value of Wild Card analysis lies in its capacity to introduce new elements into the otherwise closed circuit processes of scenario building, usually based on expert-driven, ‘compartmentalised’ environment analyses of a distinct organisation. Consequently, Wild Card analysis intends to open up debate and make decision-makers think outside their ‘‘usual frame of reference’’ [2]. As it tests the reaction capacity of a given organisation or system, the impact of the Wild Card in question, even if it is very high, must not however be totally destructive, otherwise there would not be anything to ‘fix’ or to ‘adapt to’. Wild Card analysis is thus generally seen as a means to ‘ignite a strategic conversation’ in the context of a given organisation [5]. The analysis of Wild Cards is intimately linked to the ability to foresee potential futures. Indeed, by looking back at developments that have occurred in recent decades it becomes obvious that the key moments impacting the development of Western societies could often be retroactively traced as Wild Cards. In such cases, the Wild Cards that were developed in the circle of ‘think tanks’ became real events: the terrorist attacks of the 11th of September, the break-up of the Soviet Empire, the Asian tsunami etc. Consequently, we advocate that a Wild Card need not be a Wild Card experienced universally as Petersen [4] seems to suggest1. Indeed, one has to bear in mind the fact that Wild Card analysis is confined to a delimited system or organisation, that is to say with its own decision-making processes and views of the world: Wild Card blindness [7] is then often the consequence of a lack of awareness and a disregard for ‘weak signals’, rather than a product of total surprise. As such, one may acknowledge that if the Wild Card itself cannot be avoided, the organisation bears a certain responsibility for how the Wild Card will impact it: anticipation, preparedness and adaptability may enable organisations to mitigate the effects of this sudden discontinuity. Indeed, if the probability of a given Wild Card occurring is rather small, the probability that a Wild Card, whatever it is, will have an impact on the future is more than probable. Consequently, Wild Card analysis enhances the capacity of an organisation or system to anticipate future shocks and thus adapt to this ‘New Deal’ better than other organisations. The array of Wild Cards can be as broad as the human imagination itself, though their main characteristics are that they are improbable (but not entirely impossible) and with potentially wide-ranging impacts. As such, ‘‘Wild Cards change our frame of reference, our mental map of the world’’ [2]. The Wild Card literature provides an abundant sample of potential Wild Cards with many of the best examples being gathered together in the work of Hiltunen [7]. This plethora of Wild Cards shows that the exercise is strongly grounded in an imaginative process. Yet, the authors advocate that approaching the exercise as both systemic i.e. specific to a system, and systematic, i.e. result of a rationally constructed process, exponentially increases their explanatory power. As a matter of consequence, how the Wild Cards are designed and how they highlight a broad range of possible discontinuities need to be constructed in relation to the observed system, thus framing the creative process. In this regard, the work of Mendonca et al. [5] and Steinmu¨ller [2] has produced a body of systemic thinking which enables us to identify and construct the main characteristics and dimensions of Wild Cards: the nature of the process, degree of plausibility, topic or subject, type of discontinuity introduced, time elapsed and scope of impact. These dimensions are synthesised in Fig. 1. It is understood that Wild Card analysis should not focus on one single item, but on the contrary, should investigate the impact of a range of complementary and differentiated Wild Cards in order to test the system along various cordes sensibles. Constructing Wild Cards based on variations of the characteristics outlined in Fig. 1 enhances their utility.

1

‘‘Wild cards generally surprise everyone, in part because they materialise so quickly’’.

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Fig. 1. Dimensions of Wild Cards (adapted from Mendonca et al. [5] and Steinmu¨ller [2]).

Wild Card analysis should thus be seen as an organisational learning tool, as it aims to sharpen the capacity of organisations to plan for the unexpected, i.e. to develop a capacity to anticipate and adapt to rapidly changing contexts. In what follows, we hope to demonstrate how such a process can provide organisational added-value when used in the framework of the territorial development planning processes of the European Union. 3. Wild Cards for European territorial development scenarios As noted by Bo¨hme and Waterhout [8], since the adoption of the European Spatial Development Perspective (ESDP) in 1999, European Spatial Planning has been mainly driven by the concern to create strategies and policies for the development of the European territory. Not being a formal Community competence, European Spatial Planning has taken the path of attempting to ground its legitimacy, its raison d’eˆtre, as a policy object in the search for new evidence thus making its existence indispensable. As such, territorial research and analysis was required: the setting-up of the ESPON in 2004 provided a framework for European researchers to work collegiately and to create, in a collaborative manner, data to fuel the debates on the future of European Spatial Planning Policies. The work of ESPON was then used as a policy input to Community policy documents such as the Territorial Agenda, the Territorial State and Perspectives of the Union and the European Commission Cohesion reports. Most ESPON projects were built on the central concept that the analysis of the state of the European territory, in the light of a given topic (Urban development, rural development etc.) or policy field (Energy, Environment etc.) and of the recent trends, provides an enhanced understanding of the impact that policies may have on the European territory. Hence, these projects retrospectively construct the role played by policies in shaping the European territory as it is revealed and displayed to us. The Spatial Scenarios project of the ESPON Programme, the object of this special issue of Futures, was conceived in a different manner. Indeed, the project developed strategic prospective scenarios for the future development of the European territory, especially in the light of the ESDP and European Union (EU) cohesion policy, at the horizon of 2030. The empirical work undertaken by the projects’ transnational research team, more thoroughly explained in the article by Lennert and Robert in this special issue, was structured around three main stages: first, the elaboration of thematic scenarios based on the analysis of past trends and recent spatial policy choices in the respective domains; second, the elaboration of three prospective territorial scenarios highlighting three possible futures for Europe resulting from three different policy philosophies (business as usual, competitiveness and cohesion); and finally, the elaboration of roll-back scenarios developing a policy path towards a chosen, desirable future. The thematic and territorial analyses provided by the ESPON 3.2 ‘Spatial Scenarios’ project provided a pertinent base for elaborating a range of possible territorial futures of Europe, exemplified by the three scenarios entitled ‘‘Trend scenario’’, ‘‘Competitiveness scenario’’ and ‘‘Cohesion scenario’’. The main difference between this project and other ESPON projects was that empirical evidence was not used to reflect upon the impact of past policies, but to imagine how spatial policies will impact on the future shape of the European territory, thus ‘rewinding forward’ the evidence. In practical terms, the way these scenarios were constructed can be deemed to be both compartmentalised, i.e. originating from scientific expertise gathered for a limited range of themes (demography, transport, energy, economy, governance, enlargement, rural development and climate change/environment) and for a defined territory (Europe and its regions), as well as linear, as the future is imagined as a causal following of past trends and recent policy choices (e.g. cohesion policy,

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Common Agricultural Policy, energy policy). Overall, the range of themes investigated and the geographical focus can be deemed to be at the centre of those issues driving European Spatial Planning. This approach is however rather deterministic as it presupposes that the ‘‘territorial future’’ of Europe and its regions is the sole consequence of territorial development policies, as if it was functioning in a closed circuit impermeable to external (thematically and geographically defined) factors. Yet, in their comprehensive account of the making and achievement of the Spatial Scenarios, Lennert and Robert [9] state that ‘‘numerous external factors relating to the geopolitical context are gaining in importance, factors that will have a substantial impact on the European territory’’. Indeed, Europe’s development is increasingly dependent on what is going on outside its boundaries and thus beyond its control: economic globalisation (the emergence of China and India as economic powerhouses), demographic challenges (illegal immigration to Europe) or Energy (dependency on Russia for fossil fuels) are the most emblematic examples here. In this light, the use of Wild Card analysis as a necessary complement to spatial scenarios made sense as they enabled us to introduce new elements that challenged the ide´es rec¸ues of the scenarios. True to the words of Steinmu¨ller [2], ‘‘a complementary Wild Card analysis can be helpful in testing the stability of scenarios or their susceptibility to interference by external influences or internal disruptive factors which had been neglected or disregarded’’. Consequently, the added-value of Wild Card analysis for this particular project can be deemed as dual in nature. Firstly, it enabled the research team to perform a reflexive and even introspective exercise on the evidence-based scenarios developed. Confined within a certain framework of reference, both thematically and geographically, the experts needed to ask themselves if the constructed scenarios were integrated and systematic enough to resist a ‘futurequake’, in the terms posed by Steinmu¨ller [2]. Hence, Wild Cards would serve, for the researchers themselves, as a sounding board for the developed spatial scenarios. As the individual impacts are however difficult to gauge, and because it is often difficult to perceive the scenarios as a whole and not as the sum of their thematic parts, the assessment of the response of the scenarios to the selected Wild Cards can improve the understanding of how their individual parts interact with one another. The aim then is to test, qualitatively, the reaction of each scenario to a sample of unexpected and potentially high-impact future developments. Secondly, the Wild Card analysis provides European spatial development policymakers with an enhanced level of awareness of the environment they have to deal with. As for decision-makers, the extent to which the territorial image of Europe in 2030 is more likely to be the result of a Wild Card (whatever it appears to be) than of the well-crafted policies developed during the same period is interesting to reflect upon. Furthermore, the disruption caused by a Wild Card may have long-term and indeed deeper consequences on the environment in which cohesion policymaking is undertaken. Wild Card analysis may thus help policymakers, both at the European and national levels, to design policy responses and instruments which are better able to adjust to external factors. One such example from the recent past is the demise of the Soviet Union and the fall of the Berlin Wall: despite being external to the EU regional policy system, they have had significant consequences for EU cohesion policy. The first and evident consequence of this real life ‘Wild Card’ was that it catalysed processes of democratisation in the Central and Eastern European states. Furthermore, at a second level, it catalysed the accession (as of 2009) of 12 new Member States to the EU: the poor state of the national economies of these new members subsequently forced a shift in the whole philosophy of regional and cohesion policy from helping restructuring and territorially challenged regions to supporting the ‘catching up’ of lagging economies. Yet, this fundamental shift was not perceived in the same manner in all parts of the then EU152: for some states (Germany, the Nordic Countries etc.), it was seen within the context of the potential to expand their market areas; on the contrary, for the EU15 cohesion countries such as Portugal, Greece or Spain, it was perceived as a major blow to the goal of EU15 cohesion as a huge slice of the EU’s Structural Funds was redirected from the Mediterranean countries to the new Member States in Central and Eastern Europe. Imagining the improbable would have led, for instance, to Greek or Portuguese policymakers targeting the received support in a more optimal manner. This example highlights two fundamental dimensions of the potential impacts of Wild Cards for European cohesion policy: firstly, it shows that Wild Cards may have a substantial impact on how cohesion policy is conceived and designed and, in turn, how they may have long-term impacts on its operationalisation via its main instrument, the Structural Funds; and secondly, the perception of the impacts of the Wild Card may not be uniform within the system as some may perceive them as positive while others see them as negative, as the example above highlights. In the framework of our spatial scenarios it is precisely this potential territorial differentiation that is interesting: the patterns of winners and losers caused by the Wild Cards will provoke a necessary level of adaptation and a possible ‘new deal’ in the making of cohesion policy. The present chapter aimed to highlight the potential for using Wild Card analysis as a complement to scenario development in the framework of European Spatial Planning and Cohesion policies. A retrospective overview of major changes in the recent past shows us the substantial impacts that major unexpected events, our Wild Cards, may have on European spatial development and cohesion policies. For EU cohesion policy, the most pertinent lessons relate to the analysis of their potential territorial impacts, highlighting their influence in accentuating certain territorial dichotomies within Europe such as metropolises–peripheries, urban–rural, EU15–NMS123 etc. The following section will explain more thoroughly how this way of proceeding was operationalised in the framework of the ESPON Spatial Scenarios.

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EU15 refers to the 15 Member States of the European Union before the enlargements of 2004 and 2007. NMS12 refers to the 12 Member States that have joined the EU in the enlargements of 2004 and 2007.

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4. Wild Cards and European territorial futures The task of designing and elaborating the Wild Cards for the ESPON Spatial Scenarios project was both interesting and challenging. From the outset it was clear that the added-value of using the Wild Cards would be greater if the process leading to their creation was both collaborative and systematic. The collaborative aspect demanded the involvement and input of the entire research team: the aim here was to challenge the group’s collective limitations not only those of the authors. Consequently, the process leading to the design and drafting of the 4 Wild Cards was undertaken in a transparent manner, fully visible to the rest of the team. As noted previously, the characteristics of the Wild Cards need to be thought through thoroughly in order that they successfully enhance the explanatory power of the whole exercise. This systematic aspect was secured by using a clear framework. The process of the Wild Card analysis was undertaken in three successive phases: (1) Identification of the system to be tested. (2) Identification of the Wild Cards as (real) events and elaboration of their stories. (3) Application of the Wild Cards to the four scenarios. (1) The Wild Cards were designed to highlight the consequences for the developed scenarios of external events and to investigate the asymmetric nature of the territorial impacts across Europe. Indeed, the scenarios developed not only describe the future territorial development of the European Union, but more particularly the policy measures and choices that are to be taken in order to achieve the overarching goals, such as Competitiveness and Cohesion. (2) The second identified step in the Wild Card analysis process is the creation and description of the Wild Cards themselves. The intention here was to try to create the Wild Cards in a systematic manner, in order to increase their explanatory and pedagogic value. The project team suggested that a limited, for practical reasons, set of 3–5 Wild Cards should be chosen. The set should deal with a wide variety of issues and topics (technological, political, environmental etc.) or type of impact. It was also seen to be important that the topics of the Wild Cards should not directly reflect the themes used in constructing the scenarios (governance, transport, enlargement etc.). The reason for this was that the thematic scenarios developed in the first half of 2005 were only an initial step towards the integration of the larger integrated scenarios, and that pursuing this thematic decomposition of the scenarios could, in the end, jeopardise their coherence. The research team thus decided to use the PESTE framework as a way of determining the thematic content of the various Wild Cards. Five distinct topic areas are generally cited in the literature on Wild Cards [5,2], namely, military/political, economic, socio-cultural, technological and environmental/biological (hence PESTE) and this framework generated the basic categories in which research was then undertaken to actually generate the Wild Card topics. These topic areas cover a wide array of potential Wild Card situations, the common denominator here being that these subjects are deemed the most likely to have a significant impact on the overall future development of our societies. Furthermore, it was also seen as being important to create Wild Cards that were tailor-made for our particular exercise and for the system of reference, the policy-related developments in Europe and their territorial impacts. Indeed, the most difficult task was not to come up with Wild Cards per se, as there are plenty of publications already dedicated to providing and assessing them, but to come up with Wild Cards which were likely to be significant in the context of the ESPON Spatial Scenarios project. In order to clarify then, let us take a more concrete example. Though the collision of the earth with an asteroid is often cited as the ‘classical’ Wild Card, how, we may ask, will such an event impact the transport policies of the EU, or rural development policies? What we mean here is that for a Wild Card to be used effectively in the analysis it has to impact the system under scrutiny directly. In that sense a Wild Card dealing with the doubling – within a decade – of life expectancy would raise more interesting issues (demography, retirement age etc.) than the ‘classic’ system breaking asteroid Wild Card, within the framework of this particular project. (3) The final step in the Wild Card analysis process was the application of the chosen Wild Cards to the four scenarios developed in the framework of the ESPON 3.2 project. In order to create a comparative matrix and to assess the differences in response, particularly in terms of the scenarios, each Wild Card was applied to all four scenarios, though in the context of this paper, and primarily for reasons of brevity, we only deal with the two main scenarios concerning competitiveness and cohesion. The application resulted in a qualitative assessment of the policy-related and territorial impacts that the Wild Card had on the scenario. The intention of this exercise was to emphasise the potential strengths and weaknesses of each scenario in light of a particular event. The Wild Card analysis enabled us to define new ‘final images’ in the scenarios which were not the result of policy development alone but also factored in the scenario’s reactivity to unforeseen or unexpected events. As our scenarios are mainly based on policy changes the analysis of the scenario’s response to the Wild Cards enables us also to generate feedback on how robust these policies are in the face of external stimuli. Some further questions also emerge. How would the potential Wild Card impact on the achievement of the given objectives (Competitiveness, Cohesion, or both)? Is it possible to simply adapt the policies to the new preconditions given by

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the Wild Card, and therefore keep the final objectives intact? Or is it necessary to define new objectives? An attempt to illustrate those possibilities is given here below. This section provides a brief introduction to the Wild Cards that made the ‘cut’ in the final ESPON 3.2 Report, highlighting their main characteristics, their assumed territorial impacts and their consequences in each of the scenarios developed. In what follows below the main components of the Wild Cards and their likely territorial impacts are briefly itemised. This will enable us to discuss in more detail the expected differences in outcomes – in respect of these territorial impacts – between the Competitiveness and the Cohesion scenarios. 5. An era of energy scarcity: conflicts, peaks and alternatives 5.1. Plot of the Wild Card While Iraq is finally plunged into civil war destabilising surrounding countries such as Kuwait and Saudi Arabia, the worsening political situation between Iran and the Western powers further exacerbates market concerns over energy prices. In response to US-led sanctions on Iran in 2017, oil deliveries to the West are blocked or redirected to China, while Venezuela continues its policy of preferential access to its oil for poorer nations. At the same time, many of the major oil fields show signs of oil ‘peaking’, while general production goes down. Europe has thus to face a general scarcity of oil while it struggles to find a replacement quickly. 5.2. Competitiveness scenario The major territorial impacts of this Wild Card are displayed in terms of car use, urban development and industrial restructuring. While the competitiveness scenario saw increased car use up to the 2017 breakpoint – even in the context of rising oil prices – the massive reduction in access to oil after 2017 means that traditional fuel costs now become prohibitive. The competitiveness policy ‘endowment’ up to 2017 saw increased Europe-wide car use, more effective and efficient heating for buildings and stable industrial use, thus producing a continuing increase in the energy percentage ratio used for motor vehicles. Similarly, the development pressure seen in terms of urban environments in the pre-2017 period is exacerbated thereafter as people are still moving, but now in the opposite direction – back into the heart of the city, where the cost of transport is less of a factor as efficiency gains are still possible in moving large numbers of people. Finally, industrial restructuring continues apace, and higher energy costs simply add to the problems faced by declining, often ‘energy-thirsty’ manufacturing industries. This problem is further exacerbated by such industries’ often peripheral localisation, with higher fuel costs in terms of goods transportation simply making matters worse. Conversely, the newer less-energy intensive hightech and service industries are not so affected, while the better territorial integration endowment construction before 2017 in the Pentagon4 and in other major metropolitan areas is not lost thereafter. In general terms then while there can be no immediate ‘winners’ from such a disastrous Wild Card we could surmise that it will precipitate a major change in the everyday life experiences of people due to the forced limitation in access to cheap transport. Rural and peripheral areas are particularly badly impacted as tourism, recreation and the setting up of new businesses is affected. In terms of East–West dichotomies, the process of Eastern ‘catch-up’ is slowed as the manufacturing economies of the East suffer similar problems to those undergoing industrial restructuring in the West. As such then, while the environment is perhaps the only real winner as energy consumption falls, this Wild Card, generally speaking, simply reinforces the basic trends already witnessed in the pre-2017 period. 5.3. Cohesion scenario In this scenario by 2017 Europe is a very different place from that of the competitiveness scenario above. The Cohesion policy ‘endowment’ up to 2017 saw rural areas in the core areas of Europe (the Pentagon) undergo a sustained period of economic development due to the cultivation of energy bio-crops while those in the peripheral and outlying areas have also benefited from a sustained period of economic diversification. Transport policies focused primarily on the question of accessibility issues in remote areas instead of developing further linkages between major metropolitan areas. Economic development, in general, and production systems, in particular, are less ‘global’ in nature, and more focused on regional and local markets. As significant Structural Funds have been invested in rural areas, these areas are in a better position to confront this Wild Card, especially those in the southern parts of Europe who, given their high import needs and low self-sufficiency levels, would otherwise have been most badly affected. The move back to more compact cities that occurred before 2017, moreover made the switch from hydrocarbons to bio-fuel somewhat smoother. Consequently, small cities in rural areas are not as disadvantaged as in the competitiveness scenario, which saw a much broader divide between the metropolises and SMESTOs.5 Shrinking metropolises do however affect the overall territorial balance of the European territory.

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The Pentagon is the name given to the highly populated European territory stretching between the cities of London, Paris, Milan, Munich and Hamburg. Small and medium-sized towns.

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In general terms, at the European scale, the worse hit areas continue to be the former Socialist countries of East-Central Europe as energy increases have a magnifying effect in terms of regional development with lagging regions hit hardest. By 2017, ‘catch-up’ has not occurred to any great extent though medium-sized cities in East-Central Europe are better prepared than in the competitiveness scenario. Eastern rural areas remain unprepared and unable to benefit from the bio-fuel revolution in agriculture. As such then, quality of life continues to be the main winner here, as high energy costs reinforce the original trend for localisation and a decline in the movement of goods and people.

6. The day after tomorrow (revisited) – the global conveyor belt (Gulf Stream) ‘stops’ 6.1. Plot of the Wild Card Most studies on potential climate change have focused on the build up of industrial greenhouse gases and thus on a gradual increase in global temperatures. Recent evidence however suggests that the Earth’s climate has repeatedly altered rather more dramatically than such traditional models would suggest. Indeed, change has often occurred in time spans as short as that of a decade. As such, abrupt climate change may be more likely in the future. Moreover, such climate shifts may not necessarily have universal effect. They can instead generate counterintuitive patterns, where, even as the world in general continues to warm, some regions may experience a precipitous and disruptive shift into colder climates. In a European context this is thought most likely to occur if changes develop in the Global Ocean Conveyor – of which the ‘Gulf Stream’ is a part. The ‘Gulf Stream’ increases the northward transportation of warmer water by about 50%. At cooler latitudes, as in N–W Europe, the ocean releases this heat into the atmosphere – especially in winter when the atmosphere is colder than the surrounding ocean. In this way, the ‘Gulf Stream’ warms these Atlantic regions by as much as 5 8C, specifically tempering average winter temperatures. Research shows that the Global Ocean Conveyor system has shut down several times, suggesting that it is the ‘Achilles heel’ of our climate system. What then would happen if such a shutdown occurred again, where average temperatures in N–W Europe cooled by 5 8C? 6.2. Competitiveness scenario In this scenario the competitiveness policy ‘endowment’ has seen the rapid liberalisation and ‘industrialisation’ of agriculture in particular and rural life in general, with a distinct difference between well and poorly performing rural regions emerging. Rural development has not been prioritised while the CAP and other capital transfers from the EU budget have either been abolished or declined significantly. The transport infrastructure in rural regions has not been prioritised while public spending and equalisation measures have declined over time. Europe as a whole has seen energy usage levels increase as more private motor vehicles are purchased as the standard of living increases in Eastern Europe, although in this northwest area of Europe energy usage has remained more or less constant. In terms of the environment and the issue of natural hazards/disasters in particular, adaptation measures have been undertaken only where cost-effective, while mitigation measures have generally been driven by technological developments in the private sector. This however leaves the north-west Europe area in a difficult position after 2019. In the drive for competitiveness at the global level rural areas not able to fend for themselves have been left behind in many respects with the priority given to metropolitan areas. As such many areas of the rugged Atlantic coastline find themselves unable to cope with this significant development in respect of climate change with the fall in agricultural production and the rise in heating and transport costs all having a significantly negative impact. In terms of the areas preparedness for natural disasters this also proves to be insufficient. Areas such as river valleys and populated flood plains (particularly in the East of England) are significantly affected as the pressure for ‘affordable housing’ created by the booming economy of the south-east of England has seen much over-development of the housing stock in both eastern England and in northern France – without a proportionate investment in local services/facilities. 6.3. Cohesion scenario The cohesion policy ‘endowment’ has seen a much less fundamental change away from the baseline scenario. The EU budget has been maintained with funds still being channelled to the weakest regions (although very little of this SF money will now find its way to north-western Europe) while only minor changes to the Common Agricultural Policy (CAP) have occurred and an active policy of rural diversification has been put in place. In transport terms priority support has been given to rural and less developed regions while in energy terms decentralised energy has been promoted. Perhaps most importantly however, strict mitigation measures have been put in place to deal with the effects of climate change while a large range of adaptation measures have also been set up, and paid for directly from the EU purse. While the problems faced in terms of climate change remain the same in this scenario the ability to deal with them effectively is much increased as the rural areas themselves are not in such a poor position to begin with. In addition, the safety net of public funds and adaptation measures still mitigate, at least to some extent, the basic effects of the Wild Card. The fact that many of these rural areas are however still functioning economically at all in this scenario is perhaps what gives them the biggest advantage over the competitiveness scenario.

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7. Without the net – the sad demise of Europe’s social security systems 7.1. Plot of the Wild Card Economic growth has continued to slow across Europe while ageing increases and job creation stagnates. In this context, as citizens blame ‘globalisation’ for society’s ills, trade unions in the EU15 are successfully able to impose a high level of social security provision on all Member States with a view to the avoidance of competition through ‘social dumping’. As the new Member States are not yet able to effectively contribute in financial terms to this new Europe-wide solidarity system, the fiscal burden thus falls predominantly on the old Member States. This however results in increasing levels of public debt in defiance of the Maastricht criteria, leading to high inflation, unemployment and recession. Confronted by this vicious cycle, mixing the effects of weak demographic development, political manoeuvring, fiscal crisis and economic recession, by 2022, European leaders declare the European social model ‘bankrupt’, halting almost all but the most basic social redistributions. 7.2. Competitiveness scenario In this scenario the competitiveness policy ‘endowment’ (pre-2022) of reduced public expenditures, more privatisation, increased labour market flexibility, CAP liberalisation, and reductions in rural support combined with a policy stand that favours concentration on the endogenous potentials of individual regions rather than specifically targeted support for failing regions, in effect, sees the logical conclusion of the policies adopted in the preceding period. The outcome of the Wild Card in this scenario would see the richest, most successful regions moving forward and benefiting from the advantages globalisation has to offer, while the less successful regions would (initially at least) find it increasingly difficult to survive in the harsh economic climate that emerges. In specific terms, rural and peripheral regions in Central and Eastern Europe would suffer, as they fall ever further being the Pentagon, while areas with a declining industrial and manufacturing profile or those with only light industries of a low to medium technology level (most susceptible to out-sourcing/off shoring etc.) in the EU15 as well as in the new Member States would also suffer. The transport and energy policies followed up to 2022 would simply magnify the effect produced by the Wild Card. As such then, disparities increase across the board and at all levels from the Europe-wide level down to the city level where winners and losers would be clearly differentiated. With the ‘institutional glue’ of the CAP and the Structural Funds removed and disparity levels increasing both within and between societies, regions and cities, basic governance questions arise with the likely emergence of a few favoured ‘global’ cities racing ahead and perhaps eventually challenging both the national and the supra-national levels for dominance. 7.3. Cohesion scenario The cohesion policy ‘endowment’ of a menu of traditional equalisation policies at both the national and the EU levels including the maintenance of the EU budget priorities, with the Structural Funds aimed at helping lagging regions, as well as a move towards EU-level tax harmonisation, is fundamentally impacted by the demise of the entire philosophical edifice upon which this approach is based. Unlike the competitiveness scenario, this Wild Card sees the pre-2022 trend turned on its head, though its actual outcome, in terms of territorial impacts, would likely be rather similar, with the only major variable being the impact that 17 years of ‘cohesion’ had had on the areas most significantly affected. In this sense then the impact of the Wild Card would be somewhat reduced as significant investments in, for example, transport would have already been made in the rural and peripheral areas, while energy production would have advanced some way towards localisation and diversified rural development would have had a significant impact on (most probably) the rural areas of the EU 15 countries. It is however unlikely that the countries of Central and Eastern Europe would have ‘caught up’ by 2022 (perhaps with the exception of a few capital regions and high-tech enclaves), while the sudden withdrawal of the fiscal and institutional ‘safety blanket’ from many traditional lagging regions may actually see them suffer even more egregiously than would have been the case if a managed process had been acted upon sooner. The likely outcome of this Wild Card then is the simple magnification of existing tendencies towards competitiveness, increasing disparities across the board and the abandonment of any notion of territorial cohesion. This would happen rather quickly in the competitiveness scenario and a little more slowly in the cohesive scenario, though the end point would ultimately be the same. This would put significant pressure on both the state and the supra-national levels with global city networks (of successful cities) potentially reaping the rewards, while rural and peripheral areas and non-specialised medium-sized cities being fundamentally impacted. 8. As the bubble bursts, the dollar goes down the drain 8.1. Plot of the Wild Card With USA (inc) still politically and militarily mired in a global conflict with Islamic Fundamentalism across an ‘arc of crisis’ from North Africa to Central Asia, pressure on the US economy grows as US indebtedness increases to unmanageable proportions, with the dollar in particular bearing the brunt of the ongoing global realignment of economic and financial power which sees East Asian Central Banks finally shift from buying dollars to buying Euros. This process is reinforced by a reduction in

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the consumption power of US consumers whose real wages have declined significantly. The dollar thus loses its status as the reserve currency and the rest of the world invests in the Euro, which thus becomes the de facto reserve currency by 2020. 8.2. Competitiveness scenario In this scenario the competitiveness policy ‘endowment’ pre-2020 has seen public spending and taxes reduced while labour markets have been deregulated and the EU budgetary priorities refocused towards Research and Development (R&D), education, and Information and Communication Technologies (ICT). In territorial terms, the core areas have been advantaged over the peripheries and the Pentagon over small and medium-sized cities and rural areas. Europe’s major metropolitan areas are geared up to fully exploit the potentials inherent in globalisation. In this context the major initial impacts of Europe’s new fiscal role would likely be that oil – as it would now be paid for in euros rather than dollars – would be relatively cheaper than was previously the case due to the saving in transaction costs and because foreign Central Banks would be forced to buy euros to protect their own currencies. In addition, a second benefit accruing to Europe would be the likely boost in terms of international trade. As Europe, unlike the USA, does not run a substantial deficit, interest rate and price stability advantages would also accrue to the Euro zone. Similarly, as foreign banks build up increasingly large euro reserves, more goods and services would be purchased from the Euro zone. This would see a major boost to Europe’s economic position, and while the economic effects would accrue in the main to the globally competitive zones, price stability and trade benefits would filter downwards. This would undoubtedly however simply reinforce the already existing trend in territorial development pre-dating 2020 with metropolitan areas advantaged until externalities such as environmental and/or housing costs intervened. It is unlikely moreover that the situation pertaining in peripheral rural areas would be reversed, though East–West ‘catch-up’ (at least in a select number of metropolitan areas in, or abutting, the extended Pentagon) would be accelerated. 8.3. Cohesion scenario In this scenario the cohesion policy ‘endowment’ pre-2020 saw a much less fundamental change away from the baseline (pre-2005) period. EU funds continue to be channelled to the weakest regions (now predominantly in the new Member States of East-Central Europe) while minimal changes to the CAP and major policies of rural diversification and the prioritisation, in construction terms, of rural area transport links at the expense of those between major metropolitan areas, see such areas decline in importance vis-a`-vis their North American and East Asian competitors. The European economy suffers less for the wide disparities of the competitiveness scenario but is, on the other hand, less able to quickly take advantage of the opportunities offered (to the most competitive regions) by globalisation. Notwithstanding this however the benefits of the euro’s new found position would likely still accrue in a similar manner in this scenario to that of the above. The benefits of cheaper oil would occur as before, though with better transport networks beyond the Pentagon and more manufacturing industry (as opposed to simply high-tech and services) still in existence, the immediate benefits from trade would likely accrue to a wider area. Medium-sized cities outside the Pentagon, for instance, would likely do better in this context than in the competitiveness scenario. As this is such a positive outcome for the European-wide economy, in the short to medium term there would be few, if any, losers, with perhaps even agriculturally based peripheral rural areas doing better in this scenario than in the competitiveness one. In the longer term however a Europe still wedded to a subsidy-based ‘equalisation’ culture and strict territorial cohesion could see costs rise appreciably while ‘reserve currency status’ may be jeopardised if price stability, interest rates and balance of payments issues are not constantly re-evaluated. 9. Assessment As we can see, using Wild Cards is a task that demands finesse and judgement. As a device they are designed to ‘test’ a system not to ‘break’ it because a catastrophic system break actually delivers a relatively meagre haul of information in respect of when exactly did the system collapse and why. On the other hand, system ‘testing’ produces results which are much less dramatic, indeed, often quite mundane, particularly at this scale. Moreover, because of the rather diffuse nature of the ‘system’ being tested here and the difficulty in simply reducing it to easily quantifiable input and output factors, the results are necessarily opaque. In this sense then the exercise was limited in value as a traditional exercise in Wild Card usage per se. The ‘system’ to be tested was perhaps too diffuse and the timeframe too long (the mathematical models used in the ESPON 3.2 project such as MAAST claimed predictive power to only a 10 year horizon) and the factors affecting change too numerous to, in reality, characterise the final product as utilising a rigorous Wild Card methodology. The Wild Cards were tested qualitatively, and their characteristics were not used as quantitative inputs in the quantitative models developed throughout the project. 10. Anticipation, adaptation and mitigation: adapting to the unknown craves flexible territorial governance The added-value of Wild Card analysis in scenario development is about anticipating unexpected but probable major changes. The unknown is not about whether or not a particular Wild Card will occur, but rather which ones will occur and

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when. In the case of our spatial scenarios for Europe, the use of Wild Cards has revealed that the European territory is vulnerable to such events. It has been emphasised that, depending on the nature of the event itself, some types of territories will be more seriously impacted than others, thus accentuating Europe’s domestic territorial disparities, and similarly, some types of territories are likely to benefit more from those positive developments that do occur. As a direct consequence, the way in which cohesion policy is currently conceived and operationalised in Europe would need to be significantly altered. The territorially differentiated impact of the Wild Cards stems from the territorial diversity of Europe: territories have different socio-economic and environmental preconditions that make them more sensitive to one Wild Card or the other. Yet, the territorial impact of a Wild Card is not only down to the Wild Card itself, i.e. as we have seen in the previous section, but is also based on the capacity of the units at that territorial scale, whether it be Europe 27, individual nation-states or regions, to react appropriately to this sudden challenge and possibly mitigate its effects. Consequently, it becomes obvious that Wild Cards are a means to challenge the assumptions upon which such territories are governed. In our spatial scenarios, where the focus was predominantly on the regional scale, the conclusions that can be drawn relate to the necessity for European spatial planning and cohesion policies to ensure flexibility in territorial governance which enables regions to anticipate, adapt to and mitigate the effects of the Wild Cards and their impacts in an optimal manner, avoiding rigid decision-making processes: as Barber [3] states, the more the system’s parts are dependent on one single entity, the more the system is vulnerable. In our case, the greater the over-reliance on top-down sectoral approaches to policymaking the less likely it will be that Europe’s regions are provided with the appropriate tools to cope with their future development. The role of the European Union, between that of a regulator and enabler, and the emergence of Interreg co-operation, as a new organisational capacity [8], are key aspects for shaping a new deal in European territorial governance. Flexible territorial governance would enable the promotion of the integration of sectoral concerns into a coherent policy package to be designed and operationalised by regional authorities while also facilitating the mechanisms of solidarity between regions and improving the synergies between regional challenges and European objectives. An important parameter enhancing the capacity for anticipation and adaptation is grounded in the access to sound scientific analysis enabling the key stakeholders to detect changes in development paths, i.e. the ability to identify the ‘weak signals’ of territorial development. Indeed, in the words of Petersen [10], ‘‘accessing and understanding information is key’’ when approaching Wild Cards in a systematic way. In this respect then, the continuation of the ESPON programme sets out the necessary basis for the construction of a long-term monitoring system able to provide stakeholders with relevant and updated scientific information which can serve in the further elaboration of policy at various authority levels. NB: The authors caution readers to note that this article was written during the period between mid-2006 and early 2007, and thus before the emergence of the full reality of the subsequent global economic crisis which only became apparent at the end of 2007. As such, the scenario entitled ‘‘As the bubble bursts, the dollar goes down the drain’’ should in no way be seen as being based on actual events, though the issues it raises are much discussed in the general literature. References [1] K. Popper, The Poverty of Historicism, Harper and Row, New York, 1964 [1957]. [2] K. Steinmu¨ller, The future as Wild Card – a short introduction to a new concept, Spatial Development Trends – Nordic countries in a European context, Nordregio R2004:6, Stockholm, 2004. [3] M. Barber, Wild cards–signals from a future near you, Journal of Futures Studies 11 (1) (2006) 75–94. [4] J.L. Petersen, Out of the Blue, Wild Cards and Other Big Surprises, 2nd edition, Madison Books, The Arlington Institute, Lanham, 1999. [5] S. Mendonca, M.P. Cunha, J. Kaivo-Oja, F. Ruff, Wild Cards, weak signals and organizational improvisation, Futures 36 (2) (2003) 201–218. [6] BIPE Conseil Institute for Future Studies & Institute for the Future, Wild Cards: A Multinational Perspective, Institute for the Future, Palo Alto, CA, 1992. [7] E. Hiltunen, Was it a wild card or just our blindness to gradual change? Journal of Futures Studies 11 (2) (2006) 61–74. [8] K. Bo¨hme, B. Waterhout, The Europeanisation of planning, in: A. Faludi (Ed.), European Spatial Research and Planning, Lincoln Institute of Land Policy, Cambridge, MA, 2007. [9] M. Lennert, J. Robert, Figuring out the shape of Europe: spatial scenarios, in: A. Faludi (Ed.), European Spatial Research and Planning, Lincoln Institute of Land Policy, Cambridge, MA, 2007. [10] J.L. Petersen, Anticipating surprises in the behaviour of complex systems, Presentation at the University of Lecce, Italy, July 2005. http://archive.arlingtoninstitute.org/library/SurpriseAnticipation.ppt.