Overview
(Week 5)
In some cases, an organization or a government policy may already be committed to a goal (e.g., zero emissions; climate adaptation). For those, the question is not whether to pursue a mitigation or an adaptation goal, but how to achieve the goal at the lowest net costs–i.e., in the most cost-effective way. Unlike cost-benefit analysis, where the analysis is used to justify the pursuit of the goals of an adaptation project, cost-effectiveness analysis begins with the assumption that the goal is already justified. The question, therefore, is how to achieve the goal in a cost-effective manner.
Examples include a municipal government seeking to achieve a flood risk abatement goal in the least costly fashion, or a business wishing to achieve a set reduction in energy inputs for reputational or strategic reasons.
Multi-criteria analysis typically evaluates the effectiveness of a strategy against a suite of goals or objectives, which often includes cost effectiveness along with other important criteria established by the organization (for example, risk exposure, mission effectiveness (especially for public and non-profit organizations), market appeal, etc.).
Once objectives are established, then various options are assessed and ranked according to their effectiveness in achieving each objective. Objectives are weighted according to their relative importance to the organization. Weighted objectives and ranked options enable the organization to prioritize among options and choose the option that most effectively achieves the objectives.
Multi-criteria analysis is particularly amenable to the use of expert and/or stakeholder opinion, in place of quantified monetary costs and benefits. As such, it is useful when costs and benefits are difficult to estimate or prone to deep uncertainty.
Activities and Assessment
- Online session
- Readings and independent exploration
- Practice exercises and team problem solving
- Analysis workbook #2: Multi-criteria Analysis (Assignment 2)