Accounting & Integrity
Parameter uncertainty
The uncertainty attached to an individual input value, such as a growth rate or emission factor.
Every parameter in an estimate has a range around its adopted value. Parameter uncertainty records that range and its source, whether measurement, literature or expert judgement.
Because parameters multiply and add through the calculation, their individual uncertainties combine into the overall figure. Documenting them individually is what makes the aggregate defensible.
Frequently asked questions
Is a conservative value better than a central one?
Conservative values reduce overstatement risk but must still be justified; arbitrary haircuts are not analysis.
How is it expressed?
Usually as a distribution or a range with a stated confidence level.