Trade-off Analysis

Basic questions
Are the solutions that are being suggested as
good as possible, i.e., are they on the frontier?
How much must I give up to get a little more
of what I want most?
Pareto Optimality

Pareto
Dominated Alternatives
Attribute 1

Pareto Superior Alternatives

Attribute 2

Trade-off Analysis: Attributes

Quantifiable characteristics of the problem
How could / would we define a bad / worse;
good / better outcome?

Reduced cost of service

Improved reliability in delivery
Reduced air emission
Less use of land
No use of Chlorine in the production process

Trade-off Analysis: Uncertainties

Events over which the analyst has no
control
it might but then again

International economic conditions

International oil prices
Regulatory change
Resource ($; land; human skills ) Availability

Trade-off Analysis: Options

Actions that could / can be taken
We can build / buy / legislate / regulate
Build a new power plant
Invest in energy conservation / demand side
management
Purchase scrubbers for old power plants
Close the power plants and build new clean plants
Move all power generation off shore

Trade-off Analysis: Scenarios

Combining the options into a set of rational
plans that can be analyzed
What could / can actually be done given
reality and resource constraints?
Give growth in demand (and uncertainty)
Close the dirtiest power plant, added one new, clean unit
and invest $100 million in demand side management.
Invest in scrubbers for all old plants and build one new,
high efficiency, clean power plant (no DSM)

Trade-Off Analysis: Example

$500 million
for DSM

Build 2 new nuclear

plants

$300 million
for DSM and
1 new power plant
Cost
$/ kWh

Scrubbers on all
old units
$100 million
for DSM close 1
plant, Scrubbers on
all others

Tonnes of Sox Emissions

No DSM Close 2;
Build 1; Scrubbers on
units operating > 35%
of the time.

Trade-Off Analysis: Example 2

$500 million
for DSM
Scrubbers on all
old units
Build 2 new nuclear
plants
Cost
$/ kWh

$300 million
for DSM and
1 new power plant

$100 million
for DSM close 1
plant, Scrubbers on
all others

Tonnes of Nox Emissions

No DSM Close 2;
Build 1; Scrubbers on
units operating > 35%
of the time.

Trade-Off Analysis:
Example of Uncertainty
Increased International
Oil Prices
Cost
$/ kWh

Tonnes of Sox Emissions

The Policy-Making Process

Policy
Instruments
Analyst's
Frame

Cast of
Characters
Stakeholder
Frames

Historical
Why, How

Analytic
Methods

Decision
Makers

Current
Conditions

Identify the
Options

Influence
Brokers

Definition of
Constituency

Definition of
Strategy

Identification of
Impediments

Tactical Plan

Evaluation of
Impediments

Negotiations
Regulation

Legislation
Enforcement

Implementation

Definition of
Options &Means

Formulation

Definition of
Needed Change

Analysis

Problem
Definition
Identify
Issues

Policy Analysis: Truths

Question / challenge the assumptions
THE forecast is always wrong
Communication is the key: Make it more
understandable not more complicated
Measure the important variables not the
variables that are easy to measure