Decision Support Systems for the Analysis of Regional Water Policies. Final Report of the Collaborative IIASA "Regional Water Policies" Project (1984-1985)

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W O R K I I V G P A P E R

D E C I S I O N S U P P O R T S Y S T E M S F O R

T H E A N A L Y S I S O F REGIONAL WATER P O L I C I E S : F i n a l R e p o r t of t h e C o l l a b o r a t i v e I I A S A

" R e g i o n a l W a t e r P o l i c i e s " P r o j e c t ( 1 9 8 4 - 8 5 )

E d i t o r s : S . O r l o v s k i S . K a d e n

P . van W a l s u m

J u l y 1 9 8 6 W P - 8 6 - 3 3

I n t e r n a t i o n a l I n s t i t u t e for Applied Systems Analysis

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NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

DECISION SUPPORT

SYSTEMS

FOR

THE

ANALYSIS OF REGIONAL

WATER

POLICIES F W REPORT OF THE C O U O R A T ~ I U A

"REGIONAL W A l Z R POLICIB1' PROJECT (3984-85)

Editors:

S. Orlovski S. Kaden P. van Walsum

July

1986 WP-86-33

Working Papers are interim r e p a r t s on work of t h e International Institute f o r Applied Systems Analysis and have received only Limited review. Views or opinions expressed herein do not necessarily r e p r e s e n t those of t h e Institute or of its National Member Organizations.

INTERNATIONAL

INSTITUTE FOR

A PSYSTE;MS ANALYSIS ~

2361

Lax

enburg, Austria

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Contributors Members of t h e IIASA p r o j e c t

(In-house scholars)

S. Orlovski

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P r o j e c t Leader, USSR

S. Kaden

-

^GDR

Y

Nakamori

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Japan

P. v a n Walsum

-

Netherlands

The software development has been supported by:

K. F e d r a

-

Austria E . H e i n r i c h

-

Austria

Institute f o r Land and Water Management Research (ICW), Wageningen, t h e Netherlands:

P. v a n Bake1

J. B e r g h u i j s - v a n Dijk J. Drent

R. Feddes R. Kemmers L. Locht E. Querner J. R e i n d s P. R i j t e m a J. S t e e n v o r d e n J. Vreke

K.

Wit

Institute f o r Water Management, Berlin, GDR:

B. Konig, D. Lauterbach, I. Michels, M. Schramm

K

Tiemer

Dresden University of Technology:

L. Luckner

Institute f o r Lignite Mining, Grossraschen:

J. Hummel D. Peukert

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I n s t i t u t e of Automated Control, Warsaw Technical University, Poland:

T. KregLewski

Technical University of P r a g u e , CSSR J. R r a n e k

Stockholm S c h o o l of Economics, Sweden:

I.-M.

A n d r e a s s o n

Helsinki University of Technology, Finland:

J. K e t t u n e n 0. V a r i s

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CONTENTS

Preface I n t r o d u c t i o n

PART 1. LOGIC AND ASPECTS OF DESIGN 1.1 Introduction

1.2 P o r t r a y i n g t h e Region

1.2.1 Impact diagram (Physical system) 1.2.2 Hierarchy of regional decision makers 1.2.3 Schematic of regional problems

1.3 Scheme of Analysis: Two-Stage Decomposition 1.4 S c e n a r i o Analysis

1 . 4 . 1 Generic integral formulation

1.4.2 Two-level decomposition of s c e n a r i o analysis 1.5 Screening of Planning Decisions

1.5.1 Generic formulation

1.5.2 Uncertain p a r a m e t e r s and deterministic formulation

1.5.3 Multiobjective choice 1.6 Simulation of S c r e e n e d S c e n a r i o s

1.7 Implementational Aspects of S c e n a r i o Analysis 1.8 Development of Simplified Models

1.8.1 Introduction 1.8.2 Conceptual models 1.8.3 Black-box m o d e l s

1.8.4 I n t e r a c t i v e system f o r developing simplified models (IMSS)

References

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PART 2. DECISION SUPPORT SYSTEM FOR REGIONS WITH INTENSE AGRICULTURE

2.1 General Information About t h e Test Region of Southern P e e l in t h e Netherlands

2.2 Schematization of t h e Region and t h e S t r u c t u r e of t h e Decision S u p p o r t System

2.3 Description of t h e Basic (Simulation) Models and Modeling Concepts

2.3.1 Dynamics of groundwater quantity (FEMSATP) 2.3.2 P r o c e s s e s of c r o p growth (SIMCROP)

2.3.3 Quality of groundwater model (ANIMO) 2.3.4 Aspects of modeling n a t u r a l ecosystems 2.4 Aspects of Modeling Agricultural Development

2.5 Description of Simplified Models f o r Screening Analysis (First Level Models)

2.5.1 Introduction 2.5.2 Technologies 2.5.3 Economic a s p e c t s

2.5.4 Water quantity p r o c e s s e s 2.5.5 Nitrogen p r o c e s s e s in t h e soil 2.5.6 Nitrogen p r o c e s s e s in groundwater 2.5.7 Public water supply

2.5.8 Natural ecosystems 2.6 S c e n a r i o Analysis

2.6.1 First level: s c r e e n i n g analysis 2.6.2 Second level: simulation

2.7 Computer Implementation of t h e Decision S u p p o r t System f o r t h e S c e n a r i o Analysis

2.7.1 S c e n a r i o generation system

2.7.2 I n t e r a c t i v e comparative display system 2.7.3 Illustration of a n i n t e r a c t i v e session 2.7.4 Comments on software

2.8 Second Stage: Policy Analysis 2.8.1 Introduction

2.8.2 Outline of policy devices 2.8.3 Comparing policy devices

2.8.4 Decision s u p p o r t f o r policy analysis 2.9 Conclusions

R e f e r e n c e s

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PART

3. DECISION SUPPORT SYSTEM FOR OPEN-PR LIGNITE MINING AREAS

3.0 Introduction

3.1 The Test Region in t h e Lusatian Lignite District, GDR

3.2 Outline of t h e Decision Support System 3.2.1 General s t r u c t u r e

3.2.2 Implementation f o r t h e GDR test a r e a 3.3 Description of t h e Basic Models

3.3.1 Groundwater flow model (HOREGO) 3.3.2 Groundwater-surface water interaction 3.3.3 Water quality

3.4 Screening of Long-Term Policies

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t h e Planning Model 3.4.1 S t r u c t u r e of t h e planning model

3.4.2 Description of submodels

3.4.3 Approach t o multi-criteria analysis 3.4.4 Non-linear problem s o l v e r MSPN 3.4.5 Computational t e s t s

3.5 Simulation of Management S t r a t e g i e s

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t h e Management Model

3.5.1 Stochastic simulation of management s t r a t e g i e s 3.5.2 Deterministic simulation of long-term policies 3.6 Computer Implementation and Model Applications

3.6.1 Computer implementation

3.6.2 Demonstration of a terminal session at t h e computer

3.6.3 P r a c t i c a l analysis of regional water policies 3.7 Conclusions

References

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PREFACE

When a scientist o r a r e s e a r c h team identify t h e i r field as physics, chemistry o r o t h e r n a t u r a l s c i e n c e t h i s i s not only sufficiently well under- stood b u t a l s o suggests a n idea of possible p r o d u c t s of t h e i r work. But iden- tifying one's field as t h e systems analysis frequently causes confusion, because nowadays t h i s t e r m i s often used t o c o v e r many d i v e r s e occupations with t h i s diversity growing. Clearly, i t is hardly possible t o give a p r e c i s e definition t o what systems analysis is, which i s a l s o t r u e f o r many o t h e r disciplines, but c e r t a i n f e a t u r e s which are i n h e r e n t t o t h i s discipline from o u r viewpoint c a n b e drawn. W e c a n r e f e r t o Mathematical Problems of t h e Sys-

tems A n a l y s i s by N.N. Moiseev, "Nauka, Moscow, 1981 (in Russian), where t h e s e f e a t u r e s are drawn with r e m a r k a b l e precision.

Any study in t h e field of t h e systems analysis i s of interdisciplinary c h a r a c t e r in t h a t i t tends t o u s e knowledge and d a t a g e n e r a t e d by various disciplines. I t r e q u i r e s unification and coordination of information gen- e r a t e d by c o n c r e t e studies in, s a y , economics, sociology, a g r i c u l t u r a l sci- e n c e s , hydrology, civil engineering, etc. Success of a systems analytic study r e s t s l a r g e l y on t h e possibilities of information processing and application of mathematical methods t h a t emerged with t h e development of com- p u t e r s and o f f e r e d a language of a high d e g r e e of universality. By using t h i s language as a framework f o r thinking and describing complex real sys- t e m s t h e p r a c t i t i o n e r c a n often analyze difficult problems in a fruitful manner.

T h e r e i s a g r e a t d e a l of similarity between n a t u r a l s c i e n c e s and t h e systems analysis. When physicists u n d e r t a k e a study of a c e r t a i n system o r a phenomenon a g r e a t d e a l of t h e i r time and e f f o r t i s invested into designing sometimes v e r y complex installations f o r performing t h e n e c e s s a r y analyti- c a l experiments. Such a n installation i s always a synthesis of many existing

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devices and recognized principles brought t o g e t h e r t o form a qualitatively new tool serving a given purpose. Clearly, i t i s more t h e c r e a t i v e t a l e n t of t h e physicists t h a n formal p r o c e d u r e s t h a t plays a decisive r o l e in this pro- cess.

The a r s e n a l of devices and principles used by systems analysts includes v a r i e t i e s of formal and informal methods as w e l l as logic of reasoning and d a t a processing based on common sense, on formal mathematical methods, and on t h e use of computers. And in any systems analytic study as in e x p e r i - mental n a t u r a l sciences, i t i s always important to find a good synthesis of t h e s e formal a n d informal tools and to d e s i g n a computerized system as a qualitatively new tool f o r t h e analysis of c o n c r e t e problems p e r t i n e n t t o a c o n c r e t e r e a l system under study. And if such a system i s designed as a tool t o a s s i s t decision making focused at resolving t h e s e problems w e call i t a d e c i s i o n s u p p o r t s y s t e m . To o u r understanding t h i s problem of s y n t h e s i s o r d e s i g n i s t h e focal point of t h e systems analysis.

The p r o c e s s of design c a n n e v e r b e formulated and r e d u c e d t o solving one o r even a sequence of formally s t a t e d mathematical problems. Contrad- i c t o r y requirements, lack of knowledge a n d many u n c e r t a i n t i e s involved in t h i s p r o c e s s always u r g e analysts ( o r r a t h e r designers) t o use informal considerations, h e u r i s t i c p r o c e d u r e s , and a l s o computational experiments. And in e v e r y c o n c r e t e case i t does not suffice t o know existing r e c i p e s . A study of a real system i s always unique and a g r e a t r o l e in i t i s played not only by a c u l t u r a l and scientific background of t h e analysts, b u t a l s o by t h e i r c r e a t i v e talent.

A systems analytic study i s always focused on c o n c r e t e problems. A g r e a t r o l e i s played h e r e by a g e n e r a l mathematical background of t h e analysts. They should b e a b l e not only t o understand c l e a r l y t h e contents of t h e s e problems, b u t a l s o t o formulate them in t h e form t h a t is analyzable using mathematical, computational, and o t h e r means at t h e i r disposal.

Because as h a s been a r g u e d e a r l i e r t h i s p r o c e s s of design necessarily involves informal s t e p s , i t s final p r o d u c t

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^acomputerized decision s u p p o r t system designed as w e l l as r e s u l t s emerging from i t s use c a n n e v e r b e f o r - mally proved t o b e t h e b e s t possible. The major justification f o r t h e i r

"goodness" i s t h e s a t i s f a c t o r y quality and usefulness of information t h e y provide f o r p r a c t i t i o n e r s . T h e r e f o r e , any systems analytic study i s always experimental and i s always applied. (In t h i s r e s p e c t t h e t e r m applied systems analysis i s probably redundant.)

I t i s t h e above understanding of t h e contents and p r o d u c t s of t h e systems analysis t h a t underlined t h e activities of t h e IIASA p r o j e c t "Regional Water Policies". This r e p o r t and t h e two decision s u p p o r t systems i t d e s c r i b e s are p r o d u c t s of t h e collaborative work conducted during t h e 2 y e a r period of 1984/85 by g r o u p s of s c i e n t i s t s at IIASA and from r e s e a r c h institutes in d i f f e r e n t countries. Two regions which provided t h e experimental bases f o r t h i s work influenced a l s o i t s organizational s t r u c t u r e . One of t h e s e regions i s a n a g r i c u l t u r a l region of S o u t h e r n P e e l in t h e Nether- lands, t h e o t h e r i s a n open-pit lignite mining region of Lusatia in t h e German Democratic Republic.

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The r e s e a r c h team of t h e IIASA p r o j e c t "Regional Water Policies" was t h e c o r e of t h i s collaborative work. This team not only coordinated t h i s work but a l s o essentially developed t h e methodological basis, s t r u c t u r a l design of t h e decision s u p p o r t systems, analytical p r o c e d u r e s , and a l s o implemented them on t h e IIASA VAX 11/780 computer.

But t h e successful work of t h i s team would have been impossible without t h e d i r e c t participation in t h i s work of t h e o t h e r two r e s e a r c h g r o u p s in t h e GDR and in t h e Netherlands. The g r o u p in t h e GDR includes:

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D. Lauterbach, K. Tiemer, B. Konig, I. Michels, and M. Schramm from t h e Institute f o r Water Management, Berlin;

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_L.Luckner from Dresden University of Technology;

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D. P e u k e r t and J. Hummel from t h e Institute f o r Lignite Mining, Grossraschen.

The g r o u p in t h e Netherlands includes scientists from t h e Institute f o r Land and Water Management R e s e a r c h in Wageningen: J. Drent, J. van Bakel, E.

Q u e r n e r , P.E. Rijtema, J. Berghuijs-van Dijk, R. Kemmers, L.J. Locht, J.

Vreke, R.A. Feddes, J. Reinds, J. Steenvorden, and K. Wit.

To s a y t h a t t h e s e g r o u p s provided s u p p o r t f o r t h e IIASA p r o j e c t will not fully r e f l e c t t h e i r decisive contributions t o t h e p r o j e c t , which included not only t h e n e c e s s a r y d a t a and t h e basic models f o r t h e r e s p e c t i v e regional studies, but a l s o t h e i r a c t i v e participation in shaping t h e r e s e a r c h s t r a t e g y .

Scientists from o t h e r institutes made important contributions t o o u r work: T. Kreglewski from t h e Institute of Automatic Control of t h e Technical University of Warsaw, J. Kindler and his colleagues from t h e Institute of Environmental Engineering of t h e same University, J. Kacprzyk and A. Ziol- kowski from t h e Institute of Systems R e s e a r c h of t h e Polish Academy of Sci- ences, Warsaw, V.Y. Lebedev and A.N. Lotov from t h e Computing Center of t h e USSR Academy of Sciences, Moscow. A number of p a r t i c i p a n t s of t h e Young Summer Scientists Programme contributed t o o u r r e s e a r c h : J.

Jiranek from t h e Technical University of P r a g u e , J. Kettunen and 0 . Varis from Helsinki University of Technology, and I.-M. Andreasson from Stock- holm School of Economics. Other scientists from d i f f e r e n t c o u n t r i e s w e r e in permanent c o n t a c t with t h e p r o j e c t and contributed useful ideal and c r i t i - cism in p e r s o n a l discussions as well as during a number of f r u i t f u l meetings and workshops held by t h e p r o j e c t .

To a l l t h e s e organisations and people w e e x p r e s s o u r d e e p gratitude.

Finally, w e should remark h e r e t h a t t h i s R e p o r t although finalizing t h e IIASA collaborative p r o j e c t does not end t h e studies t h a t i t d e s c r i b e s . Ini- t i a t e d by t h i s p r o j e c t , f u r t h e r r e s e a r c h in t h i s direction is being continued in t h e r e s p e c t i v e institutes both in t h e GDR and t h e Netherlands t o make t h e decision s u p p o r t systems developed reflecting more closely p r a c t i c a l needs in specific regions.

S.A. OrLouski P r o j e c t Leader

Regional Water Policies

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INTRODUCTION

Intense socio-economic development in many regions of t h e world p u t s increasing p r e s s u r e on t h e environment both by depleting n a t u r a l r e s o u r c e s and by polluting them causing a c t u a l and potential h a z a r d s t o t h e population and t o n a t u r a l ecosystems. In many regions a substantial p a r t of t h e s e impacts t a k e s p l a c e through regional n a t u r a l water systems.

Together with being a r e s o u r c e t h a t i s vital f o r socio-economic development and f o r t h e evolution of n a t u r a l ecosystems, t h e regional water system i s a basic medium through which local human interventions p e n e t r a t e t o and are

"felt" in o t h e r p a r t s of t h e region and a l s o frequently beyond i t s boun- d a r i e s . The r e s e a r c h outlined in t h i s R e p o r t focuses on economically developed regions of t h i s t y p e where both groundwater and s u r f a c e water a r e integrating elements of t h e environment. Figure 1.1 gives a convenient schematic r e p r e s e n t a t i o n of t h e t y p e s of regions considered in t h i s r e p o r t . The a r c s in t h i s diagram indicate t h e links o r interactions t h a t play t h e most important p a r t in t h i s t y p e of regions. In o t h e r words w e consider regions where t h e major impacts o c c u r on and/or through water systems.

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Economic development

Natural ecosystems

Figure 1.1: Schematic r e p r e s e n t a t i o n of t h e region

rn

Two c o n c r e t e r e g i o n s of t h i s t y p e in t h e Netherlands and in t h e German Democratic Republic form a n experimental basis f o r o u r work.

One of t h e s e test r e g i o n s

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t h e S o u t h e r n P e e l region of t h e Nether- lands

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is predominantly a g r i c u l t u r a l . The intense a g r i c u l t u r e in t h i s region creates a l r e a d y existing and anticipated in f u t u r e significant problems with t h e d e t e r i o r a t i n g quantity and quality of groundwater and s u r f a c e water r e s o u r c e s . Some measures should b e introduced in t h i s region to r e d i r e c t may b e t h r o u g h s t r u c t u r a l changes i t s f u t u r e development towards more sustainable coevolution with t h e environment.

In t h e o t h e r test region of Lusatia in t h e GDR t h e major environmental impacts are associated with t h e open-pit lignite mining a c t i v i t i e s t h a t c a u s e major changes in groundwater and s u r f a c e water regimes. But differently t o t h e S o u t h e r n P e e l region t h e development of t h e mines and of t h e accom- panying industry i s predetermined by national political and economic con- c e r n s . T h e r e f o r e , long-term water policies are t o b e considered h e r e which c a n r e d u c e impacts of mine d r a i n a g e on t h e n a t u r a l w a t e r r e s o u r c e s systems as well as on t h e socio-economic development in t h e region. More detailed c h a r a c t e r i z a t i o n s of t h e s e r e g i o n s are p r e s e n t e d r e s p e c t i v e l y in P a r t s 2 and 3 of t h i s R e p o r t .

In t h e two r e g i o n s considered by t h i s study t h e multiplicity and t h e complex n a t u r e of r e l a t i o n s between w a t e r u s e r s and n a t u r a l water systems on t h e o n e hand, and between w a t e r systems and n a t u r a l ecosystems, on t h e o t h e r , pose problems t o a u t h o r i t i e s t h a t are concerned with and are responsible f o r guiding t h e regional development. The complexity of t h e s e

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problems and a l s o v a s t amounts of information t o b e considered and pro- cessed f o r t h e analysis of t h e s e problems motivate t h e development of com- p u t e r based means t h a t c a n b e used f o r t h e analysis of a l t e r n a t i v e p a t h s of regional development.

Examples of various existing and anticipated c o n c e r n s and problems typical t o such regions are frequently quoted in t h e l i t e r a t u r e . Many models of individual p r o c e s s e s like groundwater flow and quality p r o c e s s e s , c r o p growth p r o c e s s e s r e l a t e d t o water and n u t r i e n t s supply, e t c . , are described t o g e t h e r with examples of t h e i r application t o specific problems.

On t h e o t h e r hand, r e p o r t s on studies encompassing t h e multiaspected regional framework and based on t h e use of systems of such models are much l e s s numerous. Of t h o s e w e c a n mention a study of a l t e r n a t i v e s f o r t h e a g r i c u l t u r a l uses of groundwater r e s o u r c e s in t h e San Joaquin Valley in Cal- ifornia, USA, d e s c r i b e d in Hydrologic-Economic Model of t h e S u n J o a q u i n V a l l e y , 1982. W e should, of c o u r s e , mention t h e multivolume r e p o r t on a major study "Policy Analysis f o r t h e Water Management of t h e Netherlands (PAWN) in P o l i c y A n a l y s i s of Water Management f o r t h e N e t h e r l a n d s , Vol.

I-XX, The Rand Corporation, 1983. This study involved 1 2 5 man-years of e f f o r t and considered a l l s e c t o r s of t h e Dutch economy based on t h e utiliza- tion of water r e s o u r c e s .

A detailed analysis of water policies h a s been done f o r t h e Rheinish Lignite Mining District, FRG. I t w a s d i r e c t e d towards t h e development of a conceptual plan f o r water management schemes considering t h e impact of mine dewatering on t h e environment and on water supply, B. Boehm, Concep- tual plan f o r water management schemes in t h e n o r t h e r n p a r t of t h e Rhein- ish Lignite Mining District. In: G r o u n d w a t e r i n Water R e s o u r c e s P l a n - ning, Symposium, Koblenz, August-September 1983, Proceedings Vol. 11, pp. 571-580.

Compared t o t h e PAWN study in p a r t i c u l a r , t h e studies described in this R e p o r t are of much lower s c a l e and e f f o r t . They a l s o d i f f e r from t h e above mentioned studies in t h e i r focus on t h e development of efficient and convenient in t h e i r u s e decision s u p p o r t tools r a t h e r than on t h e elabora- tion of policy recommendations. W e believe in t h e c r u c i a l importance of t h e d i r e c t participation of t h e policy makers in various s t a g e s of analysis

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because each of t h e s e s t a g e s may involve a s p e c t s of subjectivity and uncer- tainty unresolvable on a purely formal basis.

Such a tool in t h e form of a flexible computerized decision s u p p o r t sys- t e m should b e a b l e t o a s s i s t t h e u s e r t o handle various t y p e s of information, obtain answers t o multiple questions p e r t i n e n t t o regional c o n c e r n s and b e convenient in i t s use. Designing two such systems f o r t h e two c o n c r e t e p r o - t o t y p e regions w a s t h e focus of t h e p r o j e c t ' s work, and t h i s r e p o r t d e s c r i b e s t h e underlying logic of t h i s design and a l s o t h e systems designed themselves. I t a l s o provides guidelines f o r using t h e systems developed in t h e context of t h e c o n c r e t e regions considered.

A systems analytic study starts with a necessarily vague description of a real system and t h e s c o p e of problems of concern. I t s final p r o d u c t is a computer implemented decision s u p p o r t system designed (and t e s t e d ) as a tool f o r t h e analysis of a l t e r n a t i v e solutions t o t h o s e problems. T h e r e f o r e , designing such a system should involve translation of t h e initial vague description into a more logically s t r u c t u r e d and mathematically formal one allowing f o r i t s computer implementation. This translation would neces- s a r i l y omit many i r r e l e v a n t (and sometimes r e l e v a n t ) a s p e c t s of t h e r e a l system and problems, but a t t h e s a m e time i t would allow t o more c l e a r l y r e v e a l t h e s t r u c t u r e of t h e major regional issues, and t h e r e f o r e , allow f o r t h e i r more c o n c e n t r a t e d systematic analysis.

This R e p o r t d e s c r i b e s subsequent s t a g e s of t h i s t y p e of a translation p r o c e s s . I t consists of t h r e e major P a r t s . P a r t 1 outlines a g e n e r a l logic used in designing decision s u p p o r t systems f o r t h e test regions. I t d e s c r i b e s g e n e r a l methodological a s p e c t s , s t e p s of t h e design p r o c e s s , and also t h e underlying analytical framework. The p r o c e s s of design is viewed in this P a r t a s based on gradual concretization of t h e initial description of t h e region and problems of c o n c e r n into a compressed formalization implementable in t h e form of computer software. One a s p e c t of t h e methodology i s t h e u s e of auxiliary simplified models of t h e basic n a t u r a l interrelation- s h i p s and p r o c e s s e s involved. Some principles and p r o c e d u r e s f o r t h e development of such models are also indicated in P a r t 1.

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P a r t s 2 and 3 are d i r e c t l y r e l a t e d t o t h e test regions of t h e p r o j e c t : t h e a g r i c u l t u r a l region of S o u t h e r n P e e l in t h e Netherlands, and t h e open- p i t mining region of Lusatia in t h e GDR. These regions and t h e i r problems r e l a t e d t o water r e s o u r c e s a r e r e p r e s e n t e d t h e r e t o more detail. S t r u c - t u r e s of t h e r e s p e c t i v e decision s u p p o r t systems a r e a l s o d e s c r i b e d t h e r e t o g e t h e r with illustrative examples of t h e i r applications.

The R e p o r t i s supplemented with a number of publications giving more detailed c o v e r a g e of important a s p e c t s of both studies. These publications are used as r e f e r e n c e s in t h e Report.

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PART

1

LOGIC O F DESIGN

S. OrLouski, S. Kaden and

P.

v a n WaLsum in collaboration with

I: Nakamori

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PART 1.

LOGIC

AND ASPECTS OF DESIGN

2.1

I n t r o d u c t i o n

3 : s R e p o r t focuses on t h e design of decision s u p p o r t systems as tools f o r t h e analysis of a regional water policies in two c o n c r e t e regions.

A region means a c e r t a i n t e r r i t o r y . And boundaries of a region as an o b j e c t of study can b e chosen using d i f f e r e n t formal and informal principles and considerations. In more physically oriented studies a region as a n o b j e c t of study may b e "cut off" from t h e surrounding t e r r i t o r i e s along some physical boundaries, f o r instance, boundaries of a r i v e r basin catch- ment area, boundaries of a closed aquifer, etc. In studies focused more on policy analysis a s p e c t s , i t i s sometimes more convenient

to

consider c e r t a i n administrative boundaries. A region may a l s o b e defined basing on many informal historical, organisational, political and o t h e r considerations.

Very frequently t h e availability of d a t a plays a significant role.

The available knowledge about any region is v a s t and much of i t lies beyond t h e s c o p e of a c o n c r e t e study. Using t h i s d i v e r s e knowledge quite d i f f e r e n t "portraits" of t h e region c a n b e drawn depending on t h e purpose of t h e study. Figuratively speaking w e c a n look at t h e region at d i f f e r e n t angles and have i t s d i f f e r e n t images. A l l t h e s e images a r e , of c o u r s e , true in t h e i r own s e n s e , b u t what w e need is a "portrait" t h a t i s suitable and convenient f o r o u r c o n c r e t e problem-oriented study, containing at t h e same t i m e as little i r r e l e v a n t details as possible. Having such a "portrait" t h a t may have a form of a v e r b a l description, diagrams, etc., w e can p r o c e e d with formalizing f u r t h e r a s t r u c t u r e of t h e decision s u p p o r t system to b e d e s i g n e ~ .

This s t r u c t u r e and i t s constituent mathematical models and computational p r o c e d u r e s may b e v e r y d i f f e r e n t depending on t h e i r p h m e d utiliza- tion. T h e r e f o r e , besides t h e above-mentioned p o r t r a i t of t h e region w e should have a more o r less clearly pictured logic (concept) of t h e analysis t o b e performed using t h e system designed. This concept of t h e analysis in t u r n , should b e based on t h e s c o p e of problems in t h e real region considered because e v e r y s t e p of such analysis i s in f a c t obtaining answers t o

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questions pertinent t o regional problems.

Such portraying of t h e region together with t h e proposed logic of analysis will form a skeleton, t o be gradually enriched with more "fleshy"

mathematical models and concrete analytical as well as computational pro- cedures.

The following sections illustrate t h e above points using o u r test regions as examples.

1.2 Portraying the Begion

1.2.1

Impact diagram (Physical wan)

Given a c o n c r e t e region of t h e type illustrated in Figure 1.1 and having in mind regional environmental and o t h e r concerns t h e following questions should f i r s t of all b e clarified:

-

what economic s e c t o r s in t h e region make t h e most significant impacts on regional water systems and through them on o t h e r p a r t s of t h e environment,

-

^what^areactivities of these sectors t h a t make t h e g r e a t e s t impacts,

-

how o r r a t h e r through what natural processes do these impacts t a k e piace,

-

what p a r t s of natural systems are affected by t h e s e impacts, and what are negative feedbacks of t h e s e impacts on t h e economic s e c t o r s themselves as w e l l as on t h e quality of life in t h e region.

The answers t o all these questions can conveniently be depicted in t h e form of a n impact d i a g r a m , t h a t is in f a c t t h e f i r s t more o r less formal representation (model) of t h e region under study.

For illustration we briefly outline impact diagrams of t h e two test regions of this study. More detailed descriptions are presented in t h e respective P a r t s 2 and 3 of this Report.

Agricultural region of Southern Peel, Netherlands. The agriculture in this region is considered as t h e dominant economic s e c t o r both in i t s economic value and also in i t s environmental impacts. The impacts of agriculture on t h e natural water system may, of course, vary from region t o region. They depend on t h e climate of t h e region, on i t s hydrogeological

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c h a r a c t e r i s t i c s , on t h e d e g r e e and t h e orientation of i t s agroeconomic development, and many o t h e r f a c t o r s . But t h e following two a s p e c t s of t h e s e impacts pertaining t o t h e Southern P e e l region are virtually common t o most types of a g r i c u l t u r a l regions.

The f i r s t a s p e c t i s t h a t a g r i c u l t u r e uses water as t h e r e s o u r c e needed t o sustain i t s development. This causes depletion of groundwater and s u r - face water r e s o u r c e s and negatively affects t h e availability and quality of water f o r n a t u r a l ecosystems as well as f o r o t h e r regional economic activities.

The second a s p e c t of a g r i c u l t u r a l impacts on t h e regional environment is t h a t a g r i c u l t u r e is a major s o u r c e of contamination of s u r f a c e water and/or groundwater systems owing t o t h e application of animal wastes, a r t i f - icial f e r t i l i z e r s , pesticides and insecticides. Fractions of t h e s e substances are e i t h e r washed o u t into r i v e r s , lakes and o t h e r r e s e r v o i r s , a n d / o r are leached into groundwater. Through t h e s e systems contaminants r e a c h o t h e r sometimes distant p a r t s of t h e region, where they can negatively a f f e c t t h e quality of water used f o r drinking and f o r o t h e r purposes and also harm n a t u r a l ecosystems. These impacts are of major c o n c e r n in t h e Southern P e e l region.

Apparently, t h e n a t u r a l p r o c e s s e s responsible f o r t h e " t r a n s f e r " of t h e a g r i c u l t u r a l impacts throughout t h e region depend t o a g r e a t e x t e n t on t h e s t r u c t u r e of t h e regional water system, and in p a r t i c u l a r , on t h e r e l a - tive influence of i t s s u r f a c e water and groundwater p a r t s .

Besides a g r i c u l t u r e , public water supply should a l s o b e considered as t h e major economic s e c t o r of t h e Southern Peel region primarily due t o t h e c o n c e r n s in t h e region about possible d e t e r i o r a t i o n of quality of drinking groundwater due t o t h e a g r i c u l t u r a l impacts.

Figure 1.2.1 i l l u s t r a t e s t h e r e s u l t a n t impact diagram t h a t "portrayed"

t h e physical p a r t of t h e S o u t h e r n P e e l region and formed t h e basis f o r t h e subsequent design of t h e decision s u p p o r t system.

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Activities

Impacts on water WRem

Natural systems

Figure 1.2.1: Impact diagram f o r Southern Peel region

@ e n - p i t L i g n i t e m i n i n g r e g i o n o f L u s a t i a , GDR. Open-pit lignite mining is t h e dominant economic s e c t o r in this region as in all lignite mining regions in t h e GDR due t o t h e importance of lignite as t h e basis f o r energy production. Major impacts of lignite mining on t h e environment a r e caused by t h e necessity t o pump huge volumes of water f o r mine drainage.

This dewatering r e s u l t s in t h e formation of regional groundwater depressions and consequently in extensive changes in regional hydrological regimes as well as in conditions f o r water r e s o u r c e s use and management in t h e region and frequently beyond its boundaries. In regional r i v e r basins losses of s u r f a c e water due t o t h e increased infiltration caused by mine dewatering r e d u c e t h e water availability f o r downstream water u s e r s and

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necessitates i n c r e a s e d groundwater pumpage f o r dewatering of t h e lignite mines. Significant a l t e r a t i o n s of n a t u r a l groundwater r e c h a r g e a r e caused by t h e extensive changes of t h e landscape and ecological conditions in open-pit mining areas.

Significant lowering of groundwater t a b l e s in t h e region c a u s e defi- ciencies in t h e moisture supply t o a g r i c u l t u r a l c r o p s (and o t h e r vegetation) through capillary r i s e , and a l s o c a u s e s difficulties with water supply from wells.

The rate of water pumped from t h e mining a r e a into t h e s u r f a c e water system amounts t o a b o u t 30-50 p e r c e n t of t h e t o t a l r i v e r d i s c h a r g e (70 p e r c e n t under low flow conditions).

In lignite mining areas t h e groundwater quality and consequently t h e quality of mine d r a i n a g e water as well as t h e water quality in remaining p i t s a r e strongly a f f e c t e d by t h e oxidation of f e r r o u s minerals (e.g. p y r i t e ) in t h e subsoil. With t h e n a t u r a l groundwater r e c h a r g e t h e oxidation p r o d u c t s a r e flushed o u t , and t h e p e r c o l a t e d water becomes highly acidic. Conse- quently, t h e acidity of t h e groundwater i n c r e a s e s . In t h e post-mining period t h e same effect i s caused by t h e raising of groundwater t a b l e and t h e leaching of acid products.

Besides mining, industrial and municipal water supply as well as a g r i - c u l t u r e should b e considered as major water u s e r s significantly affected by t h e mine drainage. The impact diagram depicting t h e s e interrelationships i s shown in Figure 1.2.2.

An impact diagram p o r t r a y s mostly physical a s p e c t s r e l e v a n t t o t h e scope of regional c o n c e r n s motivating t h e study. And as we remember t h e s e con- c e r n s were focused on measures t o b e t a k e n t o r e d u c e t h e existing and anticipated environmental and economic impacts in t h e region. These measures were meant t o c a u s e changes in t h e existing, anticipated, o r planned a g r i - cultural, mining, and o t h e r regional economic p r a c t i c e s . But t h e n t h e question a r i s e s who makes what changes and why? To analyse t h i s question w e should look into t h e socio-economic s t r u c t u r e of t h e regional system.

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Y

^Naturalecosystems

I

Figure 1.2.2: Impact diagram f o r t h e open-pit mining region of Lusatia,

GDR

1.2.2 Hierarchy of regional decision makers

The basic elements of t h e regional socio-economic s t r u c t u r e are i n t e r - dependent decision makers: f a r m e r s , various regional and governmental agencies, ministries o r t h e i r departments, e t c . A l l t h e s e decision makers have d i f f e r e n t p r e f e r e n c e s and possibilities f o r action and t h e y i n t e r a c t with e a c h o t h e r in a complex way. The knowledge about t h i s system is important f o r designing a decision s u p p o r t system. A s with t h e physical p a r t of o u r regional system this knowledge may b e v a s t and multiaspected and w e should t r y t o omit unnecessary details and find a c o n c e n t r a t e d and simplified r e p r e s e n t a t i o n of t h e regional socio-economic system t h a t i s more focused. on t h e s c o p e of problems of o u r concern.

I t i s a l s o important at t h i s s t a g e t o identify o u r "client", o r , a decision making unit of t h i s s t r u c t u r e f o r which we are designing o u r decision sup- p o r t system. Different decision makers may h a v e d i f f e r e n t p e r s p e c t i v e views on t h e regional development and t h e r e f o r e f a c e quite d i f f e r e n t problems. Consequently, decision s u p p o r t systems f o r them may h a v e d i f f e r e n t s t r u c t u r e s ( o r designed t o answer d i f f e r e n t types of questions). A decision s u p p o r t system f o r a f a r m e r o r f o r managers of a n industrial e n t e r p r i s e may b e d i f f e r e n t from a system f o r a regional water commission, o r f o r a

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governmentai agency.

One important a s p e c t of t h e socio-economic p a r t probably of any economically developed region is i t s inherently h i e r a r c h i c a l s t r u c t u r e . This h i e r a r c h y e x i s t s due t o d i f f e r e n t t y p e s of decisions considered by dif- f e r e n t decision m a k e r s in t h e region, and i t is possible t o consider in t h i s h i e r a r c h y two major c l a s s e s of decision makers t h a t w e refer t o as u p p e r - and l o w e r level d e c i s i o n m a k e r s . This classification is, of c o u r s e , r e l a t i v e in c h a r a c t e r , a n d , t o a c e r t a i n d e g r e e depends on a c o n c r e t e socio- economic system considered, and in p a r t i c u l a r , on t h e choice of a decision making unit t o b e considered as o u r "client".

The u p p e r level decision-makers may include various t y p e s of regional (and/or national) governmental agencies (organisations) whose p r e f e r e n c e s and responsibilities presumably more closely r e f l e c t t h e i n t e g r a l regional economic and environmental p e r s p e c t i v e s . The u p p e r level decision makers themselves may b e interlinked in a complex h i e r a r c h i c a l s t r u c t u r e . But common t o all of them is t h a t usually they d o not d i r e c t l y c o n t r o l a l l choices of decisions by t h e lower level decision makers, but may have varying d e g r e e s of regulation power (depending on t h e p a r t i c u l a r region) for influencing t h e s e choices indirectly using economic, legislative, and o t h e r t y p e s of policies. The feasibility of various regulation policies depends of c o u r s e on t h e political and socio-economic system.

For t h e S o u t h e r n P e e l region in t h e Netherlands, for example, as t h e u p p e r level decision makers w e should consider t h e Regional Water Board (a department of t h e provincial government), departments of some ministries of t h e c e n t r a l government involved in regional water management such as ministries of public works, of a g r i c u l t u r e and f i s h e r i e s , of welfare, health and c u l t u r a l a f f a i r s , of housing, physical planning and environment. Poli- c i e s t h a t may b e considered as decisions of t h e s e agencies may include such measures as regulating e x t r a c t i o n s of groundwater, fixing p r i c e s f o r water, imposing t a x e s on t h e application (and/or production) of manure, etc.

F o r t h e open-pit mining region of Lusatia, a p a r t of t h e c e n t r a l l y planned economy of t h e G D R , t h e u p p e r level decision maker considered i s a form of a Central Planning Authority. In choosing i t s decisions t h i s Author- ity r e f l e c t s p r e f e r e n c e s of t h e r e s p e c t i v e ministries, national p r e f e r e n c e s ,

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a n d a i s o o v e r a l l r e g i o n a l environmental c o n c e r n s . I t s policies may include fixing p r i c e s f o r w a t e r , subsidizing w a t e r supply, introducing penalizing m e a s u r e s f o r polluting w a t e r systems, fixing s t a n d a r d s f o r w a t e r quality, and o t h e r s .

The Lower Level decision m a k e r s ( o r u s e r s of t h e environment) are assumed t o i n t e r a c t d i r e c t l y with t h e environment. These i n t e r a c t i o n s depend upon p r o d u c t i o n a n d o t h e r technologies ( o r , g e n e r a l l y , t h e environment u s e technologies) implemented by t h e s e u s e r s , a n d t h e y a p p l y them a c c o r d i n g to t h e i r p r e f e r e n c e s . F o r a n a g r i c u l t u r a l r e g i o n l i k e t h e test- r e g i o n of S o u t h e r n P e e l in t h e Netherlands, as a n example, t h e lower level decision m a k e r s may include individual f a r m e r s a n d public w a t e r supply companies. T h e i r decisions mostly c o n c e r n c h o i c e s of land u s e p r a c t i c e s , i r r i g a t i o n a n d water supply, t h e u s e of animal wastes a n d chemical fertiliz- ers, etc. F o r a r e g i o n with l a r g e s c a l e open-pit mining like t h e test r e g i o n of I,usatia, in t h e GDR, t h e lower l e v e l decision m a k e r s may include r e g i o n a l b o a r d s of mining e n t e r p r i s e s , of i n d u s t r i a l p l a n t s , of public w a t e r supply a g e n c i e s , c o o p e r a t i v e f a r m e r s . T h e i r decisions c o n c e r n c h o i c e s of technologies of mine d r a i n a g e , of managing remaining p i t s , v a r i o u s a l t e r n a t i v e s and s c h e d u l e s of w a t e r supply, waste water t r e a t m e n t , etc.

The i m p o r t a n t fact h e r e i s t h a t decisions of t h e s e lower l e v e l elements are primarily focused o n t h e i r s p e c i f i c goals, a n d o f t e n are n o t c o o r d i n a t e d with e a c h o t h e r a n d d o n o t fully (if at a l l ) r e f l e c t i n t e g r a l r e g i o n a l environmental a n d economic c o n c e r n s , as long as t h i s coordination a n d r e f l e c t i o n are not e n s u r e d by policies of t h e u p p e r level decision making elements.

This h i e r a r c h y of t h e lower a n d u p p e r level decision m a k e r s i s r e f l e c t e d a l s o by a s p e c i f i c s e q u e n c e of t h e i r decision making. The u p p e r 'level elements c h o o s e t h e i r decisions (policies) a n d inform t h e lower l e v e l elements a b o u t them. The l a t t e r r e s p o n d by making t h e i r own decisions.

This two-step s e q u e n c e c a n of c o u r s e b e i t e r a t i v e l y r e p e a t e d , f o r instance, when r e g i o n a l or governmental a g e n c i e s t r y t o make a d a p t i v e c h a n g e s in t h e i r regulations.

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Clearly, t h e h i e r a r c h y of decision making elements and decision p r o c e s s e s in a region i s far more complex, and no formal description can encompass all i t s a s p e c t s . What w e need at this s t a g e i s a r e p r e s e n t a t i o n of this system t h a t i s simple enough f o r f u r t h e r analysis, and y e t r e f l e c t s i t s most essential h i e r a r c h i c a l a s p e c t s .

Having t h i s in mind, w e use in t h e contexts of o u r two t e s t regions a simple two-level h i e r a r c h i c a l representation of a regional socio-economic (decision making) s t r u c t u r e , illustrated in Figure 1.2.3.

Figure 1.2.3: Two-level h i e r a r c h y of regional decision makers

According t o t h i s scheme we consider only one u p p e r level decision maker t h a t w e r e f e r t o as t h e Policy Making Authority (PMA). Clearly, by t h e PMA we understand not a single agency but r a t h e r a s u r r o g a t e f o r a number of agencies at national and/or regional level which (1) have a n i n t e r e s t and responsibility in t h e development of t h e region in question and (2) have regulatory power t h a t c a n influence this development. Of c o u r s e , t h e s e agencies d o not have t h e same objectives, t h e r e f o r e , t h e single PMA concept is a n obvious f i r s t approximation. But this approximation c a n b e a useful s t a r t i n g point f o r f u r t h e r r e s e a r c h in t h i s direction using more comprehensive institutional models and analytical p r o c e d u r e s .

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Having t h u s formalized t h e s t r u c t u r e of t h e r e g i o n a l decision making we c a n p r o c e e d with outlining a more c o n c r e t e (and t h e r e f o r e , n e c e s s a r i l y a l s o formalized) s c h e m e of decision making in t h i s s t r u c t u r e . R a t h e r t h a n t r y i n g t o c a p t u r e t h e most g e n e r a l case, we u s e a simple i l l u s t r a t i v e scheme.

L e t us c o n s i d e r a system similar t o t h a t in F i g u r e 1 . 2 . 3 b u t with only two lower-level decision m a k e r s DM1 a n d DM2 ( s e e F i g u r e 1 . 2 . 4 ) .

Figure 1.2.4: I l l u s t r a t i v e diagram of decision making p r o c e s s

W e d e n o t e by zl, z z v a r i a b l e c h o i c e s by DM1 a n d DM2 r e s p e c t i v e l y a n d by y we d e n o t e c h o i c e s of t h e PMA. Values of z l a n d z 2 f o r example, may h a v e t h e meaning of amounts of w a t e r f o r i r r i g a t i o n , a s s o c i a t e d with t h e u s e s of c e r t a i n p r o d u c t i o n technologies. Values of y may h a v e t h e meaning of p r i c e s on w a t e r f i x e d by t h e PMA.

W e assume f o r simplicity in t h i s example t h a t t h e o b j e c t i v e of t h e PMA i s t o o b t a i n h i g h e r possible values of some function F ( z l , z z , y ) which may b e meant t o r e f l e c t varying quality of t h e r e g i o n a l environment. W e a l s o assume t h a t t h e s e q u e n c e of decision making i s fixed as follows: f i r s t t h e PMA makes i t s c h o i c e of a value of y (fixes p r i c e ) a n d informs a b o u t t h i s c h o i c e DM1 a n d DMZ. In t u r n , DM1 a n d DM2 knowing t h e value of y r e s p o n d with t h e i r own c h o i c e s of z l a n d z 2 r e s p e c t i v e l y . This scheme c a n b e made more a d e q u a t e to many r e a l cases if we assume t h a t t h e PMA c a n c h o o s e a n d communicate t o DM1 a n d DM2 polices of t h e t y p e y ( z ) , o r , in o t h e r words, i t c a n make i t s c h o i c e s conditioned by c h o i c e s of DM1 a n d DMZ. Using t h e a b o v e i n t e r p r e t a t i o n of y ( p r i c e ) a policy y ( z ) c a n mean, f o r instance,

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p r o g r e s s i v e pricing depending on t h e a c t u a l amounts of water used by lower level decision makers. Other i n t e r p r e t a t i o n s are of c o u r s e possible.

With t h e policy y ( z ) chosen by t h e P M A o u r decision makers D M 1 and D M 2 will have t o pay r e s p e c t i v e amounts y ( z l) ' z and y ( z z) z z f o r t h e i r choices of z l and zz. The problem faced by t h e P M A i s t o determine a n a p p r o p r i a t e policy y ( z ) t h a t would r e s u l t in h i g h e r possible (satisfactory) values of function F introduced e a r l i e r . But values of t h i s function depend a l s o on choices by D M 1 and D M Z . T h e r e f o r e , t o b e a b l e t o choose rationally a policy y ( z ) t h e P M A should use whatever knowledge i t h a s ( o r c a n obtain) about possible r e s p o n s e s of D M 1 and D M 2 t o choices of policies y ( 2 ) . Clearly, t h e b e t t e r t h i s knowledge t h e b e t t e r prediction of r e s p o n s e s of D M 1 . D M 2 c a n b e made resulting in a choice of a more efficient policy y ( z ) by t h e P M A .

S u r e enough, in situations even a little bit more r e a l i s t i c t h a t t h e above example t h e goals of t h e P M A are far more complex t h a n just obtaining h i g h e r possible values of a single function, and t h e analysis in such cases becomes more involved.

An a c c u r a t e formalization and analysis of even t h i s simplified s t r u c - t u r e r e q u i r e s explicit consideration of p r e f e r e n c e s and actions (responses) of a l l t h e decision makers involved. Examples of t h i s t y p e of formalization and of t h e i r analyses based on concepts of t h e h i e r a r c h i c a l game t h e o r y can b e found in Germeyer 1 9 7 6 * ; E r e s h k o and Vatel 1977. This t h e o r y gives a c l e a r understanding of t h e n a t u r e of various t y p e s of regulation policies and r e s p e c t i v e decision p r o c e s s e s and i s v e r y helpful in s t r u c t u r i n g t h e analysis of socio-economic systems.

Two important a s p e c t s of t h e decision making p r o c e d u r e illustrated by t h e above example should b e underlined h e r e . F i r s t , analyses of situations with a number of decision makers may b e d i f f e r e n t depending on from which decision maker's viewpoint t h e analysis i s performed. In t h e above example

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basic concepts and methods of the hierarchical game theory were developed by the group led by the late Professor Y.B. Cermeyer a t the Computing Center of the USSR Academy of Sciences. Unfortunately, no descriptions of these concepts and methods e x i s t in the English s c i e n t i f i c literature. An English translation of the book by Cermeyer

"Games with nonantagonistic interests" is planned for publication i n 1986 by Reidel.

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w e reasoned from t h e viewpoint of t h e PMA since i t r e p r e s e n t e d t h e regional c o n c e r n s which are t h e focus of o u r study.

Second, in making choices of policies t h e PMA h a s t o consider possible r e s p o n s e s of t h e lower level decision makers. Because of t h e obvious impossibility t o formalize precisely t h e s e r e s p o n s e s always involving a human element, choices of t h e PMA h a v e always t o b e based on more o r less adequate hypotheses a b o u t t h e s e r e s p o n s e s and are t h e r e f o r e of subjective n a t u r e . In o t h e r words, no "objectively optimal" policies c a n b e found in socio-economic systems.

Having in mind t h e a b o v e two a s p e c t s , in designing t h e decision s u p p o r t systems w e p i c t u r e t h e analysis t o b e performed using t h e s e systems from t h e viewpoint of t h e u p p e r level regional decision maker PMA, and understand t h e PMA as a major f u t u r e u s e r of t h e decision s u p p o r t system systems under design. Since p r e f e r e n c e s of n e i t h e r PMA, n o r lower level decision makers can b e modeled p r e c i s e l y , no rational regional policies c a n b e found automatically without t h e participation of t h e PMA in t h i s p r o c e s s . There- f o r e , t h e system designed should b e not a n automatic s o l v e r substituting t h e PMA, but r a t h e r a n i n t e r a c t i v e decision s u p p o r t giving t h e PMA opportunity t o effectively p a r t i c i p a t e in t h e p r o c e s s of analysis itself.

1.2.3 Schematic of regional problems

Having a l r e a d y chosen schematized r e p r e s e n t a t i o n s of t h e "physical"

and socio-economic p a r t s of a region w e c a n now make a f u r t h e r s t e p in o u r design p r o c e s s and p i c t u r e more precisely a n o v e r a l l problem t o b e studied using t h e decision s u p p o r t system t h a t w e h a v e in mind.

A t any s t a g e of i t s development a regional system c a n b e r e p r e s e n t e d by values of various c h a r a c t e r i s t i c s of d i f f e r e n t n a t u r e . The specification of t h e s e c h a r a c t e r i s t i c s is determined, of c o u r s e , by t h e goals of t h e study and is t o a c e r t a i n e x t e n t a l r e a d y indicated by t h e impact diagram and by t h e h i e r a r c h i c a l r e p r e s e n t a t i o n of interrelationships between t h e regional decision makers a c c e p t e d e a r l i e r .

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Since t h e p r o j e c t e d use of t h e decision s u p p o r t system by t h e PMA includes t h e analysis of a l t e r n a t i v e s of f u t u r e development of t h e region in time i t i s convenient t o view t h e regional system as a dynamic c o n t r o l sys- t e m , and classify f o r t h i s p u r p o s e t h e c h a r a c t e r i s t i c s r e p r e s e n t i n g t h e region into t h e following t h r e e c a t e g o r i e s exemplified in Section 1 . 4 . 1 :

-

control v a r i a b l e s : r e l a t e d t o t h o s e a s p e c t s of t h e regional development t h a t c a n b e changed d i r e c t l y by t h e decision makers when n e c e s s a r y .

-

uncontrolLed p a r a m e t e r s : r e l a t e d t o t h o s e a s p e c t s o r c h a r a c t e r i s t i c s t h a t change in time but cannot b e controlled by t h e regional decision makers and are "chosen" by n a t u r e , o r determined by exogenous f a c t o r s .

-

s t a t e variabLes: r e l a t e d t o those regional a s p e c t s which undergo changes resulting from changes in controlled variables and uncontrolled parame- ters.

A collection ( v e c t o r ) of values of state v a r i a b l e s r e l a t e d t o a c e r t a i n time can b e r e f e r r e d t o as t h e state of t h e regional system at t h a t time, and w e c a n understand any p a t t e r n of t h e regional development as a sequence of changing states in time and refer t o such sequences as t r a j e c t o r i e s of t h e regional development.

Different policies chosen by PMA (and subsequent decisions by t h e lower level decision makers) may lead t o d i f f e r e n t regional t r a j e c t o r i e s . Speaking about r a t i o n a l policies w e have in mind t h a t t h e PMA h a s c e r t a i n p r e f e r e n c e s with r e g a r d t o t h e s e t r a j e c t o r i e s which enable t h e PMA t o com- p a r e them with e a c h o t h e r . These p r e f e r e n c e s are based on multiple economic, environmental, social, and political c o n c e r n s and c a n n e v e r b e fully formalized even by t h e PMA itself. On t h e o t h e r hand, some more a p p a r e n t quantitative a s p e c t s of t h e s e p r e f e r e n c e s c a n b e included into t h e decision s u p p o r t systems designed t o a s s i s t t h e PMA in t h e p r o c e s s of analysis. This c a n conveniently b e done by introducing i n d i c a t o r s quanti- fying r e l e v a n t economic and environmental a s p e c t s of a regional t r a j e c t o r y (performance).

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To b e a b l e t o use t h e s e indicators f o r comparing t h e "goodness" of various policies f o r t h e PMA we should have provisions in o u r system f o r projecting t r a j e c t o r i e s of f u t u r e regional development invoked by d i f f e r e n t optional policies. And t h i s in t u r n can b e based o n mathematically formalized relationships between uncontrolled p a r a m e t e r s , as well as c o n t r o l and state v a r i a b l e s chosen t o c h a r a c t e r i z e regional development in time. In o t h e r words, w e shall need in o u r system interlinked mathematical descriptions (models) of various r e l e v a n t p r o c e s s e s indicated in t h e impact diagram. A s h a s been said e a r l i e r , some formalized hypotheses about possible r e s p o n s e s of t h e lower level regional decision makers should a l s o b e included.

Using such formal descriptions w e could in principle formulate mathematically r e l e v a n t h i e r a r c h i c a l dynamic c o n t r o l problems and incor- p o r a t e p r o c e d u r e s f o r t h e i r analysis into o u r decision s u p p o r t system. But if w e t a k e into account t h e complexity of t h e interlinked n a t u r a l p r o c e s s e s , t h e difficulties of formalizing p r e f e r e n c e s of t h e PMA and of projecting r e s p o n s e s of lower level decision makers and a l s o multiple uncertainties r e l a t e d to quantification of uncontrolled p a r a m e t e r s t h e n i t becomes c l e a r t h a t such s t r a i g h t f o r w a r d formalization of t h e o v e r a l l problem would b e u n t r a c t a b l e using p r a c t i c a l l y implementable analytical and computational methods.

To obviate t h e s e difficulties w e look at t h e o v e r a l l analysis as decom- posed into two s t a g e s .

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decomposition is d e s c r i b e d in t h e n e x t section.

1.3 Scheme of Analysis: Two- Stage Decomposition

To summarize t h e above description w e c a n visualize t h e type of a n i n t e g r a l problem f a c e d by t h e PMA as follows: to find policies which through complex dynamic interrelationships between n a t u r a l p r o c e s s e s and r e s p o n s e s of t h e lower level decision makers would induce s a t i s f a c t o r y (from t h e viewpoint of t h e PMA) t r a j e c t o r i e s of t h e regional development originating from t h e p r e s e n t state of t h e region.

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By t h e decomposition of t h i s problem we mean i t s analysis in two subsequent stages: s t a g e one

-

scenario analysis, s t a g e two -policy analysis.

At the first stage, t h e analysis aims at determining a t r a j e c t o r y (scenario of f u t u r e regional development) t h a t a p p e a r s s a t i s f a c t o r y t o t h e PMA in i t s economic, environmental and o t h e r a s p e c t s . No behavioural a s p e c t s (responses) of t h e lower level decision makers are explicitly considered at t h i s s t a g e , and in t h e c o u r s e of t h i s analysis t h e PMA c a n t o a c e r t a i n e x t e n t "play" f r e e l y with t h e control v a r i a b l e s many of which in t h e context of t h e o v e r a l l problem a r e controlled by t h e lower level decision makers. A s a r e s u l t of t h i s analysis t h e PMA determines a potentially r a t i o n a l t r a j e c t o r y of f u t u r e regional development t h a t is based on t r a d e - off's among goals of economic s e c t o r s , regional i n t e r e s t groups and i s satis- f a c t o r y environmentally, economically, and in o t h e r a s p e c t s of i n t e r e s t t o t h e PMA. A more detailed description of t h e problems and methods involved is given in subsequent sections.

After having determined a s a t i s f a c t o r y t r a j e c t o r y t h e second stage of analysis (by, o r on behalf of, t h e PMA) i s concerned with t h e s e a r c h f o r t h o s e feasible regulation policies t h a t influence t h e behaviour of t h e lower level decision makers and by doing t h a t can d i r e c t t h e development of t h e region along o r close t o t h e t r a j e c t o r y determined at t h e f i r s t s t a g e .

Since t h e f i r s t s t a g e of t h e analysis i s performed without explicitly considering feasible polices, t h e t r a j e c t o r y of t h e regional development obtained at t h e f i r s t s t a g e may b e practically unattainable. In o t h e r words, t h e r e s u l t of t h e second s t a g e analysis may b e t h a t no o n e of t h e feasible policies of t h e PMA may provide f o r t h e realization of t h i s t r a j e c t o r y . In such c a s e s , t h e analysis will have t o come back t o t h e f i r s t s t a g e t o s e a r c h f o r a n o t h e r probably "less ideal" t r a j e c t o r y t h a t i s attainable using some of t h e feasible policy devices. (Moreover, feasible policies may d i f f e r from e a c h o t h e r by t h e public r e a c t i o n t o t h e i r implementation). Recognizing t h i s f a c t o r , environmentally a n d / o r economically less effective t r a j e c t o r i e s may have t o b e considered t h a t may b e achieved using those "more popular"

regulation policies. Schematically, t h i s decomposition analytical p r o c e d u r e is illustrated in Figure 1.3.1.

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SCENARIO ANALYSIS

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1.4 Scenario Analysis

The s t r u c t u r e of a system f o r s c e n a r i o analysis should r e f l e c t o u r vision of t h e s c o p e of problems t o b e a d d r e s s e d by t h i s analysis. To c h o o s e t h i s s t r u c t u r e we should f i r s t a c c e p t a c e r t a i n formal r e p r e s e n t a t i o n of t h e s e problems a n d t h e n t r y t o find t h e means f o r t h e i r analysis using p r a c - tically implementable mathematical models a n d c o r r e s p o n d i n g computational algorithms. This s e c t i o n i n d i c a t e s major s t e p s of s u c h a p r o c e s s .

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