You are here: Home > Orientation Hall > Exchange of Experience Modules > V.
D. Methods of assessing the effectiveness of policies/measures
Measuring impacts of policies using techniques such multi-criteria analysis and computable general equilibrium (CGE) models
Techniques such as Cost Benefit Analysis (CBA) work well as a decision-making tool when costs and benefits can be valued in dollar terms. However, the fact remains that many environmental impacts cannot be valued in monetary terms.
Multi-criteria analysis (MCA) is an approach for choosing from among a set of alternatives when there are multiple objectives. The manner in which this is done has been effectively put across by Dr Mohan Munasinghe using the case of drinking water as an example.
MCA is also referred as multi-objective decision making, multi-objective decision support system (MODSS), and multi-criteria decision aid.
CBA may be considered as a special case of MCA, however, there are differences, of which are listed in the table below.
|Differences between CBA and MCA
- CBA is based on economic efficiency criteria (e.g., NPV 0)
- Alternatives are evaluated by performance criteria (e.g., NPV) that are measured in dollar terms.
- It requires only quantitative data
- MCA incorporates other types of criteria such as distributional, equity, ecological and so on
- Alternatives are not being based exclusively on money valuations
- It evaluate both quantitative or qualitative data, or a
combination of the two.
Figure 1: The steps in MCA
For more details, click on the links to each step
The main types of data required for an MCA include scientific, social and economic information about the problem to be addressed, as well as information obtained from identified stakeholders. One of the advantages of MCA is that it facilitates a participatory approach to decision-making.
|Advantages of Multi-Criteria Analysis (MCA)
- Compared to BCA, it enables a more realistic representation of the decision problem to be made, and in particular for the trade-offs to be made explicit.
- The interactive nature of the approach enables both the analyst and the decision maker, who could be a number of groups of stakeholders, to learn more about the problem.
- Although MCA is a structured approach, it is flexible enough to allow the use of value judgement.
- It is suitable for problems where dollar estimates of the effects are not readily available.
|Disadvantages of Multi-Criteria Analysis (MCA)
- There is a possibility that community preferences will be determined, not by the community, but by a single decision-maker, without consultation with the community.
- Although MCA does not necessarily require quantitative or monetary data, the information requirements to compile the effects table and derive the weights can, nevertheless, be considerable.
- Although the weights used in the process are explicit weights, the analyst may unintentionally introduce implicit weights during the evaluation process. If not properly used MCA has the potential to become a 'black box', producing results that cannot be explained.
See also Computable-general equilibrium (CGE) models
Economic impact assessment evaluates the impact of the project on the region (or state), on local communities and on industry sectors. It can be carried out, at an elementary level, by describing the impacts and providing estimates of how many jobs will be created during the construction and operation phases of the project. (More...)