Beyond Weights And Discounting: Decision Analysis Tools For Integrated Planning
Free (open access)
L. Holz, G. Kuczera & J. Kalma
An evaluation of management options can be supported with formal decision analysis tools which attempt to integrate objective and subjective information. There seems, however, to be little exploration of decision analysis tools beyond weights and discounting for the formalisation of value judgements. This paper argues that we need to look beyond weights and discounting for tools which may better reflect value judgements about: intergenerational equity and; balancing economic, social and environmental outcomes. The paper presents some alternative tools for articulating value judgements in integrated assessment. Keywords: decision analysis, sustainability, weights, discounting. 1 Introduction Option evaluation, in light of sustainability concerns, often requires stakeholders to weigh up a number of conflicting outcomes. Numerical weights are often assigned to each outcome to formalise this value judgement. If, for example, stakeholders consider ecosystem value to be twice as important as agricultural value, they may assign weights of 0.66 and 0.33 respectively. These weights can be used in various ways to aggregate the estimated agricultural and ecosystem performance data to simplify option evaluation. Option evaluation is further complicated by the need to consider the temporal dimension. The stakeholders, for example, may have to consider the forecasted ecological and agricultural outcomes of a project over a 30-year period. The economics literature supports the use of discount rates to simplify this evaluation problem. A discount rate allows the aggregation of data over the 30 years, albeit with less importance attached to both positive and negative impacts occurring further into the future.
decision analysis, sustainability, weights, discounting.