Environmental Modelling with Reverse Combinatorial Auctions: CRAB Software Modification for Sensitivity Analysis (original) (raw)
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IFIP Advances in Information and Communication Technology, 2015
This paper presents a model that contributes to finding cost-effective solutions when making decisions about building wastewater treatment plants in the planning process defined in the Framework Directive 2000/60/EC of the European Parliament and of the European Council. The model is useful especially when construction and operation of joint wastewater treatment plants is possible for several (neighbouring) municipalities, where a huge number of theoretical coalitions is possible. The paper presents the model principles for one pollutant and for multiple pollutants, describes the CRAB software used for computing the optimal solutions and presents selected applications. It concludes that the computations can contribute directly to decision-making concerning environmental protection projects and also serve for calculating background models for economic laboratory experiments in the area.
Can partial project selection improve conservation auction performances?
Australasian Journal of Environmental Management, 2018
Conservation auctions often follow an 'all or nothing' bid selection approach, which restricts selection of the most suitable parts of a submitted project. The problem with 'lumpy' (or all-or-nothing) project selection has been identified in the literature as a major problem in conservation policy; however, the extent of the problem has been rarely quantified. Using an actual conservation tender dataset from Tasmania, the effect of the approach was estimated. This study finds that with a relatively small budget, the cost-effectiveness loss could be as high as one-quarter. To avoid such problem, a partial bid selection could be applied, which could improve the targeting of environmental programs while being administratively less complicated for environmental planners to implement compared to a combinatorial bidding. The basic principle of a partial bid selection is to invite a single project from each landholder with the option for the environmental planning agency to partially select sections of the offer lands that maximise achievement of the agency's policy objectives. In the case of a partial selection, the landholders are paid a bonus (in inverse proportion of actual selection) to compensate for their potential loss of economies of scale and economies of scope. A sensitivity analysis with different bid and ecological value correction factors shows that when the corrections are low, the partial selection approach could be more cost-effective than an 'all or nothing' approach. The results indicate that agencies should consider alternative project selection approaches with better targeting capabilities.
Agri-environmental auctions with synergies
Auctions are increasingly used in agri-environmental contracting. However, the issue of synergy effect between agri-environmental measures has been consistently overlooked, both by decision-makers and by the theoretical literature on conservation auction. Based on laboratory experiments, the objective of this paper is to compare the performance of different procurement auction designs (simultaneous, sequential and combinatorial) in the case of multiple heterogeneous units where bidders may potentially want to sell more than one unit and where their supply cost structure displays positive synergies. The comparison is made by using two performance criteria: budget efficiency and allocative efficiency. We also test if performance results are affected by information feedback to bidders after each auction period. Finally we explain performance results by the analysis of bidding behaviour in the three mechanisms.
Solving multiple scenarios in a combinatorial auction
Computers & Operations Research, 2009
As part of its social policy, the government of Chile provides more than 1.8 million meals daily to public schoolchildren under the authority of Junta Nacional de Auxilio Escolar y Becas (JUNAEB), the state agency responsible for the program, at an annual cost of 360 million dollars. The service is provided by private firms chosen through an annual public auction. In order to capture economies of scale, a combinatorial auction design is implemented, allowing suppliers to bid on different sets of geographical units within the country. The bid evaluation process must solve multiple scenarios of a difficult combinatorial optimization model. To date, more than 2 billion dollars have been awarded under this methodology. In this paper, we describe the 2006 auction process and report that solution times can be significantly improved if the scenarios are solved in an appropriate order and the optimal solution to one scenario is employed as the initial solution of another. Results reflecting these improvements are given for real instances of the 2006 auction.
Environmental Management, 2005
Multicriteria decision analysis (MCDA) increasingly is being applied in environmental impact assessment (EIA). In this article, two MCDA techniques, stochastic analytic hierarchy process and compromise programming, are combined to ascertain the environmental impacts of and to rank two alternative sites for Mexico City’s new airport. Extensive sensitivity analyses were performed to determine the probability of changes in rank ordering given uncertainty in the hierarchy structure, decision criteria weights, and decision criteria performances. Results demonstrate that sensitivity analysis is fundamental for attaining consensus among members of interdisciplinary teams and for settling debates in controversial projects. It was concluded that sensitivity analysis is critical for achieving a transparent and technically defensible MCDA implementation in controversial EIA.
Conservation auctions: dealing with scope and scale issues in metric design
Abstract Competitive tenders can be used to purchase environmental improvements from landholders. The bid selection process is facilitated by a bid assessment metric, where a summary of environmental improvements is compared to the cost of each bid. That assessment process may be complicated by increasing the scope of the conservation tender, as it expands the range and type of environmental improvements that may need to be assessed. Tender assessment may also be complicated by differences in scale and ...
Implementing Reverse Auctions with Screening Criteria to Provide Ecosystem Services
2018
We introduce a novel auction, a uniform price auction with screening criteria, for acquiring private land to provide ecosystem services. The screening criteria is designed to classify ecosystem service suppliers (bidders) into two groups and is determined so that a bidder can not influence which group she is assigned to. The results of the screening auction are compared with more familiar discriminatory auction and uniform price auction. Results from a laboratory experiment show that the offers generated under a screening auction and a uniform price auction are significantly lower than the offers generated under a discriminatory auction under a low and a high budget scenario. However, the discriminatory auction was still able to acquire the maximum number of units compared to the other two auctions.
Optimal involvement in multiple environmental projects under budgetary constraints
Stochastic Environmental Research and Risk Assessment, 2000
Environmental companies bidding on multiple projects are presented with the opportunity for diversification in several areas of the environmental market but, also, with the risk of exposure to uncertain events that can result in major financial loss and/or make the company liable to future claims. Accordingly, each corporation determines its maximum financial involvement in a project by evaluating a project's risk characteristics. Further, a company usually takes a global perspective on the total amount it is prepared to lose without compromising its operational viability. This frequently translates into taking less than 100% working interest in a contract and having to determine the combination of working interests for the projects that satisfy both the financial constraints to risk and the requirement to maximize the total profit. This study provides a procedure that can be easily implemented numerically to quantitatively assess the participation in a number of projects under exponential and parabolic utility models. In particular, the parabolic utility model lends itself to analytic expressions for the working interests. Application of the method is illustrated in the case of three projects arranged at an increasing order of expected return, tolerance to risk, uncertainty, and potential to financial loss. Depending on the global risk tolerance, a greater interest is taken in the least uncertain (but least profitable) project, riskier projects considered only after full participation has been achieved in safer projects.
A combinatorial optimisation approach to non-market environmental benefit aggregation
2008
This paper considers the use of spatial microsimulation in the aggregation of regional environmental benefit values. The developed spatial microsimulation model uses simulated annealing to match the Irish Census of Agriculture data to a Contingent Valuation Survey that contains information on Irish farmers' willingness to pay (WTP) to have the corncrake restored as a common sight in the Irish countryside. We then use this matched farm survey and Census information to produce regional and national total WTP figures, and compare these to figures derived using more standard approaches to calculating aggregate environment benefit values. The main advantage of the spatial microsimulation approach for environmental benefit value aggregation is that it allows one to account for the heterogeneity in the target population. Results indicate that the microsimulation modelling approach provides aggregate WTP estimates of a similar magnitude as those produced using the usual sample mean WTP aggregation at the national level, but yields regional aggregate values which are significantly different.