Tradeoff Analysis

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 gt 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 gt 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-Making Process
Policy
Cast of
Problem
Instruments
Characters
Definition
Identify
Analyst's
Stakeholder
Issues
Frame
Frames
Analysis
Analytic
Historical
Decision
Methods
Why, How
Makers
Identify the
Current
Influence
Options
Conditions
Brokers
Definition of
Definition of
Definition of
Constituency
Options Means
Needed Change
Formulation
Identification of
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