1. Roles of Economists and New Analytical Requirements
Trade-Off Analysis
Roles of Economists and New Analytical Requirements

2. 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.

3. 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.

4. 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
First bullet and sub-bullet pulled directly from Environmental Operating Principles. We’re trying to tie the EOP’s into the Corps’ business processes.
Environmental sustainability is our over-arching goal. We formulate the combined NED/NER plan to contribute to environmental sustainability, not as our only means of achieving it.
Lots of definitions of “sustainability” – and disagreement. We’re using the “official” definition as defined by the Corps in the EOP’s.

5. 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

6. Trade-off “Balancing Act”
Economic Efficiency
Trade-off
Group Process – feel good group decision
Decision Algorithms – math decides
Economic efficiency – select only from the efficient set.
Group Process
Decision Algorithms

7. 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
Not science, but can be done in a structured way to make it more reliable and valid

8. 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.

9. Choosing a car: Organizing the decision
If weights and scores can be defined, spreadsheet or matrix
Also, pair wise comparisons for AHP (?)

10. 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

11. 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

12. What kinds of things do we trade off?
NED versus NED
NED versus RED
NED versus EQ
EQ versus EQ

13. 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)
Variables or indicators must be related to planning objectives.

14. 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 - $$$
Ecosystem Restoration Outputs – Hus, acres of wetlands, etc.
Cost - $$$

15. 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

16. Not Dominated Plans (Cost Effective)
Sample from 149 plans in EP Example of CE plans from example HQ is working on. Plans from IWR-PLAN (The plans were formulated with IWR-PLAN but the CE ones were identified using Dick Males algorythm).
Called “Decision Matrix”.
TAC = total annual cost. AAO ER = avg annual output. AAB FDR = avg annual benefits.
WU = wetlands upstream 30 ac. SR = stream restoration. REF = reforestation. WIF = wetlands in floodplain. R = relocation. L = levee. SL = setback levee.

17. 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.
Lifted from Hobbs et al within Corps
By no means a comprehensive study, but results of things to be cautious about
Bullet 1: more than a few hours needed to develop familiarity and build confidence in worth of the procedures
Bullet 2: “Careful tutoring and close collaboration between analysis and decision makers are more important to an applications success than which method is accepted”
Bullet 3: “Rating weights may have little to do with the trade-offs users are actually willing to make among criteria” Consistency checks are needed to have confidence that the numbers mean anything. (Within method consistency, not across methods).
Bullet 4:

18. 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

19. Popular Trade-off Analysis Methods
For more information, go to:
Trade Off Analysis Planning and Procedures Guidebook, IWR Pub 02-R-2, April 2002

20. 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.

21. Combined Plans: Comparison and Selection
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.
Different from single purpose plan comparison.
The NED or NER plan is the benchmark.
Now we can consider all our other decision criteria – not just NED, NER, & costs.
Document: “build your case” for selecting combined plan over NED or NER plan. Example – we are foregoing these NED benefits by not selecting the NED plan, but we are gaining these significant NER outputs.
cost of ecosystem restoration is within 5% of total project cost or $1 M maximum (why do you have this here? This is not in the guidance anymore, we were zapped by ASA.)

22. 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
IWR PLAN ALREADY EQUIPPED TO DISPLAY OUTPUTS ACROSS MULTIPLE VARIABLES, AND TO ACCEPT WEIGHTS FOR A COMMON UNIT IF DESIRED.