Design of coordinated energy and environmental policies: use of multi-criteria decision-making

Conventional economic modeling tools that depend upon one criterion to select among possible alternatives for inclusion in an energy or environmental policy have limitations. Formulation of both sets of policies involves large numbers of stakeholders with differing views and preferences. Those views and preferences cannot always be determined in advance or with certainty since many of the attributes of these policy alternatives are non-market valued. The use of multi-criteria decision-making (MCDM) methods in an integrated assessment (IA) framework offers a far better alternative to cost/benefit and similar methods. To facilitate understanding of MCDM methods, we offer a typology for this broad class of models, suggest some of the types of problems that may be analyzed with these methods, and recommend the implementation of several MCDM methods in currently evolving IA frameworks. Depending upon the choice of method from this family of methods, a wide range of attributes associated with multi-pollutant reduction and energy system development strategies, and a diversity of stakeholder preferences may be incorporated into the analysis. The resulting policy space can then provide a basis for comparison and selection of policy alternatives in a political or negotiated process.