Ecological Economics Lecture 13 Ricardo da Silva Vieira Researcher/Consultant Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Doctoral Program and Advanced Degree in Sustainable Energy Systems Doctoral Program in Mechanical Engineering Doctoral Program in Environmental Engineering

Knowledge, Ethics, Discounting and Climate Change I “Spash says that the standard economic approach used by Stern shifts attention from ‘value conflicts’ and issues of distribution, uncertainty and ethics, favouring economic modeling as a means to provide a simplified solution to a complex problem.” –Cátia and John Choosing a social discount rate “is inherently an ethical judgment that requires comparing the well- being of different people” –António and Pedro “However, how can we predict what their future preferences might be?” –Cátia and John

Knowledge, Ethics, Discounting and Climate Change II “ (…) the discount rate is (…) the market rate of return on safe investments plus an appropriate risk premium for uncertainty (Howarth and Norgaard) –António and Pedro “ (…) this theoretical framework implies that the risk premium should not be positive for precautionary actions such as buying insurance.” (Howarth and Norgaard) “ (…) we should multiply the cost or benefit of an outcome by the probability of its occurring. Any probability less than 1 is a form of discounting.” Caney (2009) –Carlos e Rebeca

General Comments Very interesting references obtained But inadequate references Lack of connection to the material on Green GDP

Overview I.Sustainability appraisal methods II.MCDAs III.Ethics in sustainability appraisal processes IV.Exercise: Lewis Wind Farm, Scotland V.Discussion

I. Appraisal Methods Methods that allow for comparing a set of alternatives to address a given problem: …

Family of appraisal methods CBA Cost-benefit analysis, cost-effectiveness analysis, financial analysis Env. Assess. Environmental impact assessment, strategic environmental assessment, sustainability appraisal Metabolic Analyses Ecological footprint, material flow analysis, energy/emergy/exergy analyses … LCAs and EMS Life cycle assessment and environmental management systems Risk Assessments Risk assessment, Monte Carlo modelling, aggregative Bayesian methods, statistical errors, levels of proof … I. Appraisal Methods

Dealing with high uncertainty –facts are uncertain, –value judgments are inevitable Values in dispute: –ambiguity (what is affected) –conflicting priorities Problems with current approaches I. Appraisal Methods

When we want to satisfy more than one goal –Goals in different units –Qualitative and quantitative goals Dealing with trade-offs between different goals –Which theories are used? Why? are they relevant? where is objectivity? They do not necessarily help in… –… identifying and resolving potential conflicts –… bringing transparency and accountability to the decision-making process Problems with current approaches I. Appraisal Methods

Establish preferences between options based on a set of objectives and to the extent the options satisfy these objectives Helps with large amounts of complex data Helps to identify a most preferred option, the least preferred option, rank options, short-list a limited number of options, or to distinguish between acceptable from unacceptable possibilities An overview II. MCDA

It is open and explicit: –Objectives and criteria are open to analysis and change, –Same with scores and weights Provides audit trails Advantages II. MCDA

Definition of the object of decision Scoring (impact matrix) A set of Alternatives Definition of a set of Criteria A set of Criteria Aggregation of scores Aggregation procedures Direct analysis of the impact matrix Linear additive models (incl MAUT) - weights Performance of option a Total number of criteria Performance of option a in criteria j Weight of criteria j Steps in the MCDA II. MCDA

Definition of the object of decision Scoring A set of Alternatives Definition of a set of Criteria A set of Criteria Aggregation of scores Aggregation procedures Direct analysis of the impact matrix Linear additive models (incl MAUT) - weights Steps in the MCDA II. MCDA AHP (binary comparison) - weights Outranking methods Qualitative methods Fuzzy sets

Which alternatives? Which scale? Which time-horizon? Which criteria? Which scale? Which time-horizon? Which scores? Average? Marginal? Best-case scenario? Worst-case scenario? How certain are crisp values? What can affect the scores and in how much? According to who’s preferences? General economic or ecological theories? Local or global priorities? Perceptions by decision-makers or representatives of society? An overview III. Ethics in the Decision-making Process Definition of the object of decision Scoring Definition of a set of Criteria Aggregation of scores Scores A set of Alternatives A set of Criteria Aggregation procedures

If the process is being driven by technical and/or specialist knowledge, then alternatives will tend to privilege technology based strategies. Politically contentious options, or options without organised lobby groups, may be neglected. Participants without specialist knowledge will require access to additional information before defining a range of options. Participation Who? How? When? E.g., Three-stage multicriteria evaluation Social multicriteria evaluation Multicriteria mapping Deliberative mapping An overview III. Ethics in the Decision-making Process Transparency

To be located at the Isle of Lewis, Scotalnd, an island with several sites of natural heritage, and special protection areas The Lewis Wind Farm was proposed to be the biggest wind farm in Scotland The scheme was planned to be built on a Special Protection Area The original proposal was for 234 wind turbines with 702 MW installed capacity The revised proposal consisted of 181 wind turbines, with 651 MW installed capacity Lewis Wind Farm IV. Exercise

Define Alternatives Define CriteriaDefine ScoresDefine weightsDetermine Performance IV. Exercise

How different were the results? –Overall performance, criteria used, weights? Are all criteria legitimate? Did you include all? Where you thinking local? Global? How certain are you on the scores? Did you use marginal or average values? What do you think is missing in the appraisal? How do you think this could be dealt with? What advantages/disadvantages MCDAs have? V. Discussion

What do you think is missing in the appraisal? How do you think this could be dealt with? What advantages/disadvantages MCDAs have? V. Discussion