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Trade-off Analysis

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.

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Trade-off Analysis

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  1. 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

  2. Pareto Dominated Alternatives Attribute 1 Pareto Superior Alternatives Attribute 2

  3. 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

  4. 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

  5. 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”

  6. 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)

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

  8. 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 No DSM Close 2; Build 1; Scrubbers on units operating > 35% of the time. $100 million for DSM close 1 plant, Scrubbers on all others Tonnes of Nox Emissions

  9. Trade-Off Analysis: Example of Uncertainty Increased International Oil Prices Cost $/ kWh Tonnes of Sox Emissions

  10. The Policy-MakingProcess Policy Cast of Problem Instruments Characters Definition Identify Analyst's Stakeholder Issues Frame Frames Analysis Historical Analytic Decision Why, How Methods Makers Current Identify the Influence Conditions Options Brokers Definition of Definition of Definition of Constituency Options &Means Needed Change Formulation Identificationof Definition of Impediments Strategy Evaluation of Impediments Tactical Plan Implementation Negotiations Regulation Legislation Enforcement

  11. 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

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