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 Build 2 new nuclear
for DSM plants

$300 million
for DSM and
1 new power plant

Cost Scrubbers on all

$/ kWh old units

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

Tonnes of Sox Emissions

 Trade-Off Analysis: Example 2
$500 million
for DSM

Scrubbers on all
old units
Build 2 new nuclear
plants
Cost
$300 million
$/ kWh No DSM Close 2;
for DSM and
1 new power plant Build 1; Scrubbers on
$100 million units operating > 35%
for DSM close 1 of the time.
plant, Scrubbers on
all others

Tonnes of Nox Emissions

 Trade-Off Analysis:
Example of Uncertainty
Increased International
Oil Prices

Cost
$/ kWh

Tonnes of Sox Emissions

 The Policy-Making Process
Problem Policy Cast of
Definition Instruments Characters
Identify Analyst's Stakeholder
Issues Frame Frames

Analysis
Historical Analytic Decision
Why, How Methods Makers
Current Identify the Influence
Conditions Options Brokers

Formulation
Definition of Definition of Definition of
Needed Change Options &Means Constituency

Definition of Identification of
Strategy Impediments

Evaluation of
Impediments

Implementation
Tactical Plan

Negotiations
Regulation Legislation
Enforcement
 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