The siting process for LEG terminals in California has provided a g r a p h c description of the conflicts which exist be tween different interested parties, each of whom have their own goals and objectives. The party/concern matrix depicts the different attributes used to defend positions; the MAMP model reveals the dynamics of the decision process and the relevant constraints w h c h determined the outcomes a t the end of each of the different rounds.
LESSONS FROM
THE
MAMP MODELA retrospective view of the situation through the eyes of the MAMP model provides the following insights which may have relevance for prescription.
1. There is little articulation of value judgments by the different parties. Each of the groups has a s e t of objectives and related attributes which they are willing to articulate but there has been no statement by anyone as to the importance weights assigned to the different attributes in the problem. This obser- vation coincides with Ward Edwards experience in attempting to use multi-attribute utility analysis in evaluating alternative school desegregation plans submitted by external groups to the Los Angeles School Board. He has noted t h a t the interested par- ties in a societal decision problem a r e unlikely to reveal their value structure because t h s information would then be public
and they would be accountable for numerical judgments (Edwards 198i). For this reason it will be difficult to utilize this technique as a way of determining preferences between alterna- tive s .
Constraints guiding the decision process are not stable but may change over time as new information is injected into the process by one or more interested parties. A n interesting example is the present concern that seismic risk is a potential problem for siting a facility a t Point Conception, even though t b s risk had not surfaced in earlier discussions of the feasibility of the site.
Another illustration is the ability of the Oxnard citizens group to mfluence new legislation on siting criteria by focusing on the number of deaths from a catastrophic accident rather than on the extremely low probability of such a disaster actually occur- ring. These examples illustrate the point made by Majone (in press) that actual policies a r e determined in the world of insti- tutional choice where each of the interested parties are attempting to modify rules of the game which constrain them from achieving their goals and objectives.
The siting of sophisticated technologies is a process that is not well understood scientifically so that there are no measures of risk which can be pinpointed using statistical analysis. Hence each of the interested parties has an opportunity to focus on dif- ferent measures to support their position. The conflicting risk assessments for evaluating the safety of an LNG terminal in pro- posed sites has been well documented by Mandl and Lathrop
(1981) for the four IIASA case studies. Each of several different interested parties, commissioned a special risk study and used the results for their own purposes.
Given these observations what c a n be done to improve the situation?
One of the most important aspects of the MAMP descriptive model is t h a t it enables the policy analyst to focus on the actual siting process and t o evaluate its success on the basis of several different dimensions. The standard analytic tools such as multi-attribute utility analysis o r cost/benefit analysis have normally focused on outcomes r a t h e r t h a n process. There is no reason why one cannot focus on how well different procedures score with respect to a well-defined set of objectives.
The first step in undertaking this type of analysis would be to specify t h e relative importance of different attributes,one would like a process t o satisfy. One of these attributes might be related to how well the final choice performs with respect to resource allocation, but there is also likely to b e a s e t of attributes which reflect the way different interested parties feel about the process as well as the outcome? For example, did e a c h interested party have a n opportunity to voice its position? Were a wide enough s e t of alternatives considered so that the parties felt t h a t a choice was actually being made? These factors may be important in some type of cultural settings but less relevant in others. The policy analyst can also point out t h a t a more elaborate process takes time, another dimension to be considered in the evaluation procedure. By articulating t h e types of tradeoffs which have to be made in choosing one type of pro- cedure over another, the analyst can provide guidance t o policy makers
as to what the decision process they may want to consider in t h e future.
THE USE OF GERT
The
MAMP
model also may be a useful tool for analyzing how alterna- tive procedures a r e likely t o fare for a given problem context. In reality t h e decisions made in any round a r e probabilistic with t h e chances of dif- ferent outcomes determined by t h e party/concern matrix and the pro- cedures which one employs. One way t o modify the MAMP model to incor- porate these elements of uncertainty is to employ the concepts of another technique--GERT (Graphical Evaluation and Review Technique)--to s t r u c t u r e the process. GERT is a combination of network theory, proba- bility theory a n d simulation and was developed by Alan Pritsker (1966) to analyze t h e terminal countdown on a n Apollo space system. 5The basic features of GERT can be illustrated through a prospective view of the California siting decision. Figure 3 depicts the scenario using t h e symbolic features introduced by Pritsker. The two key concepts for understanding a process a r e activities and nodes. An activlty is a n actual operation or process which takes time and consumes resources. A node is a point in time which either represents the s t a r t or completion of one o r more activities. Activities a r e represented by arrows while nodes a r e represented by either circles or loops.
or
an e x c e l e n t description of t h e modeling feat'xes and capabilities of GE:R'I' ir~ciuding i t s application in r e d world problems s e e Moore and Clayton (1 976).To illustrate this graphical notation consider Figure 3. Nodes 1, 2, and 3 represent t h e s t a r t of the activities in Round A associated with sit- ing a t Point Conception, Oxnard, and Los Angeles. For simplicity each of the questions inside the three nodes is assumed t o have either a "yes" or
"no" answera6 and the respective probabilities of a "yes" answer a r e given by t h e values
Pi
i = 1,2,3. The policy analyst, in consultation with different interested parties, could assign appropriate figures to these probabilities.The two different shapes of t h e nodes reflect the nature of t h e possi- ble outcomes for activities emanating from them. The looped nodes such as 1,2, and 3 signify that the outcome is probabilistic. Node 9 is represented by a circle indicating t h a t the outcome is certain (i.e., there will be a ranking t h e sites given the fact that one or more of t h e m have been found to be acceptable (from Node 8)). The ouLcomes of the process will also be circles as indicated by Nodes 4-6 and Nodes 11 and 12.
The GERT approach is considerably more sophisticated t h a n Figure 3 implies. Estimates c a n be made for the expected completion time of each activity with appropriate probabilities reflecting uncertainty as t o how long a given process may take. In addition one c a n have network looping, whereby if one reaches a c e r t a i n stage of Lhe process one must r e t u r n to a n earlier node.
The use of GERT to stru.cture t h e key questions and activities dep- icted in the MAMP model provides a vehicle for prescriptive analysis. It enables the policy analyst t o develop alternative scenarios a n d likely 'h reality there would undoubtedly be a variety of possible answers t o these questions. For example, a response could have been a "Conditional Yes" subject t o more data on seismic risk. For ease of exposition we are also assurning t h a t t h e decisiorls regarding the three sites are independent of each other when in reality they are llkely t o be interrelated.
outcomes by changing the nature of the decision process. The following types of questions could be directly addressed:
What is the likely impact on the different activities and nodes if some of the existing constraints a r e relaxed? For example, sup- pose t h a t experts were explicitly brought into the process t o a t t e m p t t o arrive a t consensual judgments regarding specific risks and that the interested parties have to abide by their find- ings. What impact would t h s have on the likely outcomes? 7 What would be the impact on the process if certain parties were given power which t h e y currently do not have? For example, suppose t h a t a specific regulatory agency was given full author- ity to r a n k and approve a specific site in California. What differ- ence would t h s m a k e on the scenario and final outcome?
What would happen if there was a change in the way alternative sites were introduced into the picture? For example suppose the gas companies decided to propose only one site a t a time for locating a terminal. How would t h s affect the interaction between different interested parties and the alternative out- comes? In this type of scenario one would first have to deter- mine t h e order of the sites to be introduced and t h e relevant nodes and activities should a particular site by approved o r deemed infeasible?
' 7 ~ discussion of the potential role of experts in the LNG siting decision in California appears in Stoto (in press).
EFFICIENCY AND EQUITY TRADEOFFS
These alternative scenarios provide a menu of options which can be considered by the relevant interested parties. They do not imply that one process is better than another. Thls judgment reflects the tradeoffs between efficiency and equity that have become so prominent in the recent literature on social choice. Schelling (1981) has provided an interesting perspective on this problem by indicating that in theory a pricing system can be combined with appropriate income transfers to achieve efficient outcomes whlch are also equitable to different groups of people. The reality of the situation, as Schelling is quick to point out, is that political constraints may not permit one to use the pricing system.
One may not be able to reallocate funds to a particular group because of budget restrictions. Similarly a specific governmental body may have responsibility for deciding on a particular question and will base its deci- sion so it best satisfies its own goals.
The MAMP model coupled with GERT can provide insight as to when political considerations are likely to foreclose certain outcomes whlch may have desirable economic features. For example, a particular scenario may reveal that a community is likely to be opposed t o a given site and will fight hard to stop its approval because they feel that the increased risks which they must bear are too hlgh. If this project is socially beneficial, then it may be useful to investigate some way to com- pensate the local community who will suffer from the project.
O'Hare (1977) has proposed a particular type of compensation scheme whereby each community proposed as a potential site deter-
mines a minimum level of per capita compensation s u c h that it is willing t o make a legal commitment to have the project in their backyard if the compensation is paid. The applicant would utilize this compensation as p a r t of h s calculations as to the relevant costs associated with locating t h e facilities in community A, B or C. The final decision would t h e n be made by the applicant taking into account the amount of compensation it would have to pay residents in each of these t h r e e localities.
T h s type of system would only be applied to potential sites t h a t had satisfied specific governmental criteria related t o safety and environmen- tal risk. O'Hare recognizes that there will still be some individuals in a given community who will be compensated more t h a n they need to be and others who will not be rewarded enough. He also recognizes t h a t for such a system to be implemented there must be good information on the relevant costs, including a n environmental impact s t a t e m e n t , and t h a t t h e system has to be designed t o overcome the incentive to overbid.
Whether or not some type of compensation scheme is a useful policy prescription depends on the specifics of the situation. In t h s connection, it would be interesting t o ask what type of payments would have been required to appease t h e citizens of Oxnard so t h a t a n LNG terminal could have been located there? What would the Sierra Club require in payments s o t h a t they would support a site which might; have adverse environment effects? These questions c a n only be answered in a real world problem context. They do reflect a n increasing concern of economists an.d lawyers i n dealing with windfalls or wipeouts from specific actions whlch involve t h e public sector. Hagman and Misczynski (1978) in their comprehensive study of the subject believe t h a t windfalls should be partially recaptured
to help compensate for wipeouts. They propose a number of alternative mechanisms for ameliorating this problem ranging from special assess- ments to development permits. These types of policy instruments could also be investigated in the context of specific siting problems.
After all is said and done the final outcome is likely to represent some type of balance between the political constraints and economic cri- teria. As Wildavsky (1981) has pointed out:
The criterion of choice in politics and markets is not being right o r c o r r e c t a s in solving a puzzle, but agreement based on interaction among partially opposed interests ( p . 133)
The
MAMP
model will not tell any politician how one should deal with t h e equity/efficiency dilemma but a t least it uncovers some of the specific causes of these conflicts. How one actually improves the process is a challenge for the future.REFERENCES
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