Module 3: Decision Making and Communication of Tradeoffs

1. Module 3:Decision Making and Communication of Tradeoffs Bill Werick, Werick Creative Solutions AleixSerrat, Institute for Water Resources & the Univ of Arizona

2. Outline • Emergency, tactical and strategic planning • Planning steps featured in this session • Planning objectives, performance indicators, decision criteria • Evaluation vs. decision making • Plan ranking • Transparent decision making • Informed consent • Plan selection • Adaptive management

3. DECISION-MAKING AND COMMUNCATION OF TRADEOFFS Learning Objective: Show how plans are evaluated, refined, ranked, selected, and adaptively managed

4. Building on Previous Themes • In Module 1 we described two parts of a specific processes for doing IWRM: a 7-step Shared Vision Planning (SVP) process that uses a SVP model • This Module focuses on steps 5,6 and 7 of the planning process, and explains how the model can make planning more successful.

5. How this fits with the rest of the training • Module 4will review many of the tools that can be used for SVP • After reviewing Modules 5 & 6 we will do a critical analysis of a mock model to see whether it is suitable for decision making.

6. Emergency, tactical and strategic planning Three planning and management time horizons: • Strategic planning for the continuous future • Ex: from now to 2050 for long-term water supply issues and flood damage reduction • Tactical planning for limited duration events that could occur sometime in the future • Ex: droughts • Emergency response planning for threats that are not easily defined ahead of time • Ex: fires

7. Strategic Planning • Examples: planning for flood damage reduction, water supply, water treatment • Requires forecasting and risk and uncertainty analysis • Can be “triggered” in a sequence of decisions not made until necessary • Can be linked to Tactical Planning • Flood damage reduction strategy of levees can be supplemented by tactical plan for deploying sandbags • Water supply strategy of new reservoir can be supplemented by drought response plan

8. Tactical Planning • Examples: planning for drought or flood responses • Planning before crisis enables well thought out formal response measures that would be difficult to negotiate during the crisis • Key decision is the criteria for deploying the plan; planners try to avoid both: • false positives (plan is deployed but not needed) • true negatives (plan is not deployed but it should have been)

9. Emergency Planning • Examples: responses to earthquakes, dam breaks, power failures, extreme weather events • Typical differences from tactical plans: • The problem is less easily defined; (we know we might have an earthquake, but we never know when, how bad, or where) • Fast response is necessary • More reliance on process (who is in charge, who has responsibility for types of actions such as evacuations, medicine, construction) • Less ability to spell out specific response measures because the threat is so difficult to predict.

10. Planning Steps Review

11. Planning Objectives • Step 2 in SVP is to develop objectives and metrics for evaluation including: • Planning objectives • Hydrologic/ hydraulic statistical tests • Performance indicators

12. Planning Objectives • Step 2begins with the determination of everyone’s planning objectives. Planning objectives are statements of what we would like to have happen regarding a particular resource in a particular place over a particular period of time. Effect Resource Place Time • Improve • Reduce • Increase • Delay • flooding damages • crop production • energy generation • fish population • species diversity • in the basin • in Peru • at the reservoir • in stream miles 3 to 5 • in the next 4 years • from 2010-2050 • during droughts

13. Planning Objectives Effect Resource Place Time Improve Reduce Increase Delay flooding damages crop production energy generation fish population species diversity in the basin in Peru at the reservoir in stream mile 3 to 5 in the next 4 years from 2010-2050 during droughts Improve crop production in the basin from 2010-2050 Reduce flooding damages in the basin from 2010-2050 Increase fish population in stream mile 3 to 5 during droughts

14. Performance Indicators • Simplest metrics for alternative plans are hydrologic and hydraulic statistics • Exceedance frequencies • Maximum stage • Safe yield • Minimum monthly instream flow • Performance Indicators measures are more powerful; they measure progress towards meeting planning objectives.

15. Flooding Statistics • Dam Alternative 1 lowers the maximum flood stage in a 1 in 100 year flood by 3 meters and costs 1 billion. • Dam Alternative 2 lowers the maximum flood stage in a 1 in 100 year flood by 6 meters and costs 2 billion. • Dam Alternative 3 lowers the maximum flood stage in a 1 in 100 year flood by 9 meters and costs 3 billion. • Does each meet the planning objective better than the one before?

16. Flooding Performance Indicator 3 6 Down meters 9 No dam, $5 billion damage Dam 1, $5 billion damage Dam 2, $3 billion damage Dam 3, $1 billion damage

17. Decision Criteria • Decision criteria are used to rank plans after the evaluation • But they are also connected to performance indicators and hydrologic and hydraulic statistics. Performance Indicator Decision Criteria Statistic Lower peak water levels Lower average annual damages Which plan maximizes economic benefits? More about decision criteria after comparing evaluation and ranking . . .

18. Defining the Baseline of Comparison • Step 3 in SVP is to describe the baseline condition, present and future. Baseline: the way things are now and are expected to be in the basin without the actions taken because of integrated water resources management. 2010 2011 2012 2013 2014 2015

19. How far into the future? • SVP planners select a planning horizon suitable to the particular analysis. • For studies more likely to lead to non-structural solutions such as improved rules for managing water, plans can be evaluated using current conditions, with a sensitivity analysis to test robustness if things change suddenly. • For physical projects that will exist unchanged for a century or more and whose benefits over that time have to be compared substantial present costs, a longer forecast period is necessary – usually 30-50 years.

20. Formulate Alternatives • Step 4 is to formulate alternative plans. SVP encourages interest-based negotiations by focusing on stakeholders’ planning objectives (reduce flood damages) rather than their preferred alternatives (build a levee). • Plan formulation is an imaginative task that can be helped by processes like optimization, brainstorming, and value engineering. • Stakeholders may not have the training to submit complete alternatives, but they may have some good ideas, and involving them is part of educating engineers about needs and stakeholders about the science.

21. Evaluation • Step 5is to pick the best alternatives. • It starts with an evaluation of plans using the metrics developed in previous steps. • Because the SVP model will include all the evaluation routines, every time you invent a new alternative you can immediately evaluate it. • If you have involved stakeholders in building the model, the evaluation will also indicate how each stakeholder group will react.

22. Comparison and Ranking • Step 5also includes the comparison and ranking of plans; selecting the best alternative. • A simple comparison can be pictured as a table with alternatives heading columns and performance indicators and statistics in the rows. The following two slides show the comparison of four plans for regulating the release of water from Lake Ontario in the United States.

23. Average Economic Impacts Blue is better, red is worse than current plan Plans ⇨ • In millions of US or Canadian $ • Plan 2007 has only one significant red number score, Lake Ontario boating • High overall net benefits. • Reduces coastal damages compared to current plan. • Navigation benefits issue • Never more than 4% worse

24. Environmental Ratio Scores Blue is better, red is worse, gray shade is same as current plan • Plan 2007 is: • much better than 1958DD • not as good as B+ • small but solid improvement over D+

25. Evaluation, Comparison, Ranking This is evaluation Performance indicators This is comparison Alternatives This is ranking Ranking is not obvious from the evaluation. It is driven by decision criteria. In this case, the ranking was done by someone who didn’t care too much about cost. Toyota Hyundai Kia

26. Deciding which Alternative is Best • If low cost or low fuel usage was the most important decision criterion, the preference might have been different (Kia) • In public decision making, it is important that the criteria and the importance (weight) assigned to each criterion in the decision are well understood by the public. • Multi-Criteria Decision Models (MCDMs) rank alternative choices by scoring each alternative according to each criterion, then applying user-supplied weights to all the criteria.

27. Evaluation, Comparison, Ranking Performance indicators Alternatives This is ranking This ranking gave a higher weight to acceleration and safety. Toyota Hyundai Kia

28. Evaluation, Comparison, Ranking Performance indicators Alternatives This is ranking Using the same criteria, but weighting cost higher, the order might have been different. Toyota Hyundai Kia

29. MCDMs • There is commercial software available to help you structure this decision • The basic formula is always the same, the sum of weights times scores: Alternative score = w1s1 + w2s 2 + . . . + wnsn • Many of these software packages allow you to factor in non-linearities • Car cost below $22k is a criteria, above $22k is a constraint • Zero to 100 km/h acceleration better than 7 seconds is not more valuable than 7 second acceleration.

30. Problems with MCDMs • People don’t want the computer to decide • Human factors can undermine validity • Users get tired, give thoughtless answers after working with MCDM for a few minutes • Different users might interpret criteria differently • MCDMs can be difficult to understand, frustrating stakeholders

31. Deciding which Alternative is Best • If the public can see why a decision is made, it is described as “transparent.” • Transparency is a goal of integrated water resources management but achieving it requires skill. • In practice, MCDMs have not been successful in providing transparency because of the problems just listed. • In Shared Vision Planning, transparency is achieved through a process of practice decision making called “informed consent.”

32. Informed Consent • In Medicine: “a legal condition whereby a person can be said to have given consent based upon an appreciation and understanding of the facts and implications of an action.” • In water resources management it means “a condition in which experts, stakeholders and decision makers consent to a decision based on demonstrated appreciation and understanding of the facts and implications of an action.”

33. Jerry Delli Priscoli “Twelve Challenges for Public Participation Practice” Interact Vol. 1(1), Fall 1995. [F]ew of us go to the doctor and say, “Heal me.” Instead, we participate in the diagnosis as well as in the healing process itself. So, too, when we turn to traditional, technical, and governmental agencies, we must find new ways to jointly diagnose problems, to decide on plans of action, and to implement them. The new notion of professionalism is driven by an ethic of informed consent as opposed to one of paternalism. The challenge calls us to create ways for participation to pervade hierarchy. It also must address the legitimate concerns of professionals who exclaim, “There are no standards left, anything goes!” It is not that society wants to jettison professional technical expertise and enter a new age of irrationalism. Far from it – we need the expertise. But a new relationship among experts and those whom they serve must be established to liberate this expertise.

34. Informed Consent • Iterative process, starting near the beginning of the study, even when little is known • Ask, “which projects should we recommend?” • Iteration develops and documents criteria, deepens understanding of what the decision means

35. Example: Lake Ontario • Lake Ontario study used 6 practice decisions, plus a draft and final decision process. • Decision makers formulated and tried to apply their decision criteria, finding they had to refine the criteria to make them clear. • The practice decisions helped make sure the studies were producing the information they needed for the final decision. • The public watched the debates in the practice decisions, so they understood and trusted the final process.

36. Example of informed consent, practice decisions 3 6 4 8 5 2 7 1

37. Transparent Decision Making • Emergency, tactical and strategic planning • Planning steps featured in this session • Planning objectives, performance indicators, decision criteria • Evaluation vs. decision making • Plan ranking • Transparent decision making • Informed consent • Plan selection • Adaptive management

38. Implementing the Best Plan • Step 7 in SVP is institutionalizing the plan. • Each decision maker must identify the steps that must be taken to actualize the decision. • This process can be integrated into informed consent so that the right decision makers are involved from near the beginning of the planning study.

39. Adaptive Management • Whatever the chosen plan, there will be uncertainty • Will the future happen as was expected? • Are the hypotheses used in the evaluation of plans correct? • Adaptive Management allows the possibility of modifying the decision according to an agreed upon process if certain changes do occur (e.g. global warming changes water supply patterns) or models turn out to be wrong (e.g., monitoring shows that daily water use for alfalfa is twice what was estimated)

40. Adaptive Management • The concept of adaptive management is very fashionable in the United States • But it is almost never done • Biggest problem is the lack of funding • Second problem is monitoring budgets are usually driven by research scientists, not basin managers • Funding must be applied to those areas of uncertainty where a different answer would lead to a different decision.

41. Exercise • Review the decision criteria from the previous exercise (Exercise 3) • What performance indicators (beyond hydraulic or hydrologic statistics) will inform your criteria for decisions?