Trade-Off Analysis

Roles of Economists and New Analytical Requirements

Planning in a Collaborative Environment

Enhance collaborative approach to water resources management

– Watershed/system vs. site specific– Multiple purposes / multiple partnerships

Fully utilize flexibility and authority of P&G– Evaluate, display and compare the full range of alternative

plans effects across all 4 P&G accounts.– May select any candidate plan with net beneficial effects

(based on 4 accounts) with ASA exemption.– Must identify NED Plan.

In formulating Collaborative Plans, we face inherent conflicts:

Multiple collaborators with varied interests Need to determine “net beneficial effects”

considering multiple variables for which performance is measured using different metrics (quantity and quality) and which have different degrees of importance for the collaborators/stakeholders/public.

Trade-off analysis required to identify optimum solution.

Combined Plans

Modern day multipurpose planning - strive to achieve environmental sustainability (EOPs)

– “Seek balance and synergy among human development activities and natural systems by designing economic and environmental solutions that support and reinforce one another.”, Environmental Operating Principles, March 2002

Contribute to environmental sustainability as defined in EOP’s by formulating Combined NED/NER plans

Combined NED/NER Plan = Combined Plan

In formulating Combined Plans, we face an inherent conflict:

Most “commercial” (NED) water resource development derives benefit by reducing hydrologic variability

Most ecosystem restoration (NER) derives benefit by restoring hydrologic variability

Trade-off analyses required to identify optimum solution

Trade-off “Balancing Act”

Trade-off

Group Process

Economic Efficiency

Decision Algorithms

 

Trade-off Analysis

Fundamentally a political process It is not science Rarely, if ever, objective

However, it can be approached in a structured and systematic way to improve reliability and validity of the process

Trade-off analysis

The purpose of multicriteria trade-off methods is to improve the quality of decisions by making the decision making process more explicit, rational, and efficient.

Example: Buying a car.

Choosing a car: Organizing the decision

S a fe ty E ff ic ie n cy

P E R F O R M A N C E S T Y L E

In it ia l C o s ts M a in te na n ce

C O S T S

B U Y A C A R

Choosing a car: Choice will differ based on perspective

Buying for your self Buying for your family Someone buying for you as a gift Buying for a rental car firm Buying for GSA

Analogous to different perspectives of various partners in Corps trade-off situations

We make trade-offs in many situations in the Corps

PLANNING– Navigation– Flood damage reduction– Ecosystem restoration– Watershed studies– Project EIS

OPERATIONS– Reservoir reallocation– Major rehabilitation– Changes to operating

plans– Regulatory permit

decisions / EIS

What kinds of things do we trade off?

NED versus NED NED versus RED NED versus EQ EQ versus EQ

Trade-offs require consideration of:

Variables or “indicators” important to the decision

Yardsticks to measure performance against the indicators – quantity AND quality

Relative importance across indicators (preferences, weights)

Combined Plans Evaluation:Example Procedure

Trade-off Analysis:– Identify criteria (variables or indicators)

Total Annual NED Benefits Total Annual Ecosystem Restoration Outputs Total Annual Cost

– Yardsticks NED Benefits - $$$ Ecosystem Restoration Outputs – Hus, acres of wetlands, etc. Cost - $$$

Combined Plans Evaluation (Continued)

– Identify Not-dominated (cost effective plans)

Use multiple criteria:

– Total Annual NED Benefits– Total Annual Ecosystem Restoration Outputs– Total Annual Cost

Not Dominated Plans(Cost Effective)

Plans and Components

TAC

($000)

AAO ER

(HU’s)

AAB FDR

($000) 66. WU30+44+SR+REF10+31+WIF30+35 +R25

1187

497

1600

22. L6+WU30 1006 40 1500 25. SR+SL3 1128 170 900 21. WU30+44+SR+REF10+31+WIF20+35+R10

613

490

700

68. REF10+WIF20+SL4 1280 50 1700 118. SR+R1 1947 170 2100

Does choice of multicriteria trade-off method matter?

Which multicriteria method is adopted can make a significant difference in the decision, in that choice of a method can affect the results as much or more than which person applies the method.

Popular Trade-off Analysis Methods

Weighting Methods– Non-Normalized– Normalized

Effects Matrix Ranking Index

– Commensurable Metric, Ordinal Data, Direct Weights– Ordinal Ranking– Borda’s Simple Method– Unequal Weights– Outranking Methods

Analytical Hierarchy Process

Popular Trade-off Analysis Methods

For more information, go to:

Trade Off Analysis Planning and Procedures Guidebook, IWR Pub 02-R-2, April 2002

Output of Trade-Off Analysis

Ranking of Plans, best to worst, that meets the outcome defined for each criterion considering the preferences (ako, weights) assigned to each criterion by PDT.

Is the highest ranking plan the one to recommend? Maybe.

Combined Plans: Comparison and Selection

Comparison

– Compare highest ranked justified plan to NED or NER Plan.

Consider benefits foregone, benefits gained, differences in cost and other decision criteria.

Document rationale for selecting Combined Plan over NED or NER Plan.

Where are we on development of final Guidance?

Developing multipurpose formulation and evaluation manual to include:

– Fully worked example to illustrate various trade-off approaches (index, distance functions, ect.).

– Revisiting decisions on criteria, justification, incremental analysis

IWR-PLAN updated for trade-off analysis. New OSE/RED Handbooks