ENERGY EVENTS

Published in Journal of Energy Literature, December 2002

Decision analysis

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Energy Decisions and the Environment: A Guide to the Use of Multicriteria Methods

by Benjamin Hobbs and Peter Meier

analyticalQ book reviews

Energy book review by Anne Ku

HOBBS, Benjamin F., MEIER, Peter; Energy Decisions and the Environment: A Guide to the Use of Multicriteria Methods, Kluwer Academic Publishers, Massachusetts (2000), pp. 257, EURO 113.50 US$ 99.50 GBP 70.00, ISBN 0-7923-7875-X

This densely packed post-graduate-level book could be subtitled "Making tradeoffs among conflicting objectives by multiple stakeholders." Coincidentally, energy decisions that affect the environment also impact different stakeholders. Energy sector problems examined in this book have the following common characteristics: many alternatives to choose from and important tradeoffs among economic, technical, environmental, and social objectives. The introductory chapter gives a flavour for these types of problems.

Multi-criteria decision making (MCDM) methods refer to techniques for solving decision problems that are multi-criteria in nature. MCDM methods also involve quantification of preferences and objectives, such as in rating, ranking, weighting, and scaling.

The authors believe that "a systematic approach to examining tradeoffs and expressing value judgments can yield critical insights, facilitate constructive discussion among conflicting interests, and effectively build consensus." (p. 2) Interestingly, they also observe that "choosing a multi-criteria method is itself a multi-criteria problem."

The book is divided into two parts: the first half explains each step of the analytical process and the issues involved, that is, the theory of MCDM. This can be used on problems other than energy decisions. The second half discusses the applications and MCDM methods used in energy decisions.

Given the technical nature of this book, I would advise first reading the introduction and last chapter (closing remarks) to get a sense of the role and vocabulary of MCDM as well as the reasons for its applicability. A glossary would have been useful here. For example, the keyword criteria is not clearly defined, but is lumped instead with objectives, goals, attributes, and performance indices for judging possible courses of actions (Chapter 1). In the index, for criteria definition, it says to see attribute definition. But there is no entry for attribute definition.

In the field of decision analysis where MCDM has its roots, everyday terms like decisions, objectives, alternatives, uncertainty, and attributes have specific definitions. The authors assume that such jargon is well-understood for they have not been sufficiently defined in the text, e.g., "exclusionary cutoff.". A simple non-energy example would have helped clarify.
Why should we use MCDM? On page 193, it reads "psychologists have long noted that when people make unaided evaluations of alternatives under many criteria, they tend to ignore all but one or two of the most important criteria." The second half of the book highlights the issues and problems with human judgment and assessment in weighting, and tackling such multi-criteria problems even with the aid of MCDM tools.

The book is rich in applications of MCDM to energy decisions. In one case study, different MCDM methods were used to provide a vehicle for stakeholders to form and share their values and perceptions, and ultimately to make a recommendation to BC Gas. This process served to build confidence in the result, focus on important issues, and improve consistency of decisions. In the Seattle City Light case study, it was shown that choice of MCDM method affected resource choices. The authors conclude, "Unhappily no single MCDM method is unambiguously more valid than the others. Each has potential flaws."

Despite the range of real-life applications described here, the usefulness of MCDM methods is not immediate. The authors point out issues to do with different outcomes, human judgment, facilitation process, many tools/methods, and questionable validity. In fact, it's the authors' critique of the different kinds of MCDM methods that I find most useful about the book. This cautions the reader against applying any method blindly. For example, it has been shown that the pair-wise judgments used in Analytic Hierarchy Process are rarely completely consistent in practice. Page 108: "MCDM methods are not a panacea for dealing with conflict among stakeholders. (They) are just one set of tools that can be useful in some circumstances." As with any decision process, it requires confidence, consistency, and commitment.

The authors admit that it is possible to use different MCDM to arrive at different results, in Chapter 5 Resolving Differences. "We know of few, if any applications of MCDM methods that yield completely consistent results. If more than one method has been used in an application, their results generally diverge. Even if the methods are consistent, it is unlikely that all participants will arrive at the same rankings. Indeed, if they do achieve perfect consistency, the group undoubtedly has been poorly selected." However, this is fine as long as users realise MCDM methods aren't used to force agreement but to help understand reasons for disagreement.

The authors have done an excellent job of synthesizing the literature on MCDM methods and presenting applications of MCDM to energy decisions in North America. There is a lot of detail attached to the methodology and case studies. As a result, it is not the kind of book to read in one go. An energy professional looking for quick and easy tools for decision making should treat this as a reference book rather than a textbook. Anyone attempting to read this will quickly realise the complex nature of such problems and equally the many issues surrounding the MCDM methods, and conclude that a wiser thing to do is to hire an MCDM consultant, rather than attempting to do it yourself.