O.R. Applications
A conflict analysis approach for illuminating distributional issues in sustainability policy

https://doi.org/10.1016/j.ejor.2007.11.061Get rights and content

Abstract

In the area of environmental and resource management and in policies aiming at sustainable development, conflicting issues and interests are the normal state of affairs. Mathematical approaches cannot of course be a panacea able to resolve all real-world conflicts; but they can help to provide more insight into the nature of these conflicts by providing systematic information. Moreover mathematical models are very useful in helping at finding potential social compromises by making a complex situation more transparent to policy-makers and lay people. This is the main objective of the conflict analysis procedure developed here. Distributional issues are taken into consideration by means of an eclectic approach using concepts from land-use planning, fuzzy cluster analysis and social choice. All the various properties presented by the proposed approach are made explicit thus allowing its evaluation on theoretical and empirical grounds. Possible relationships of complementarity or conflictuality with other existing approaches are also discussed briefly. A real-world illustrative example is presented too.

Introduction

One of the most interesting research directions in modern public economic policy is the explicit attempt to take political constraints, interest groups and collusion effects into account. The issue of “distributional coalitions” has been considered of key importance in determining growth factors (Olson, 1982). In the framework of sustainability policies, the need to deal with conflicts among various social actors is even more unavoidable. Ecosystems are used in several ways at the same time by a number of different users. Such situations almost always lead to conflicts of interest and damage to the environment. Any social decision problem is characterized by conflict between competing values and interests and the different groups and communities that represent them. In sustainability policies, biodiversity goals, landscape objectives, the direct functioning of different environments as resources, the historical and cultural meanings that places have for communities, the recreational options environments provide are a constant source of conflict (Martinez-Alier et al., 1998). Any policy option always implies winners and losers, thus it is imperative to check if a policy option seems preferable just because some dimensions (e.g. the environmental) or some social actors (e.g. the lower income groups) have not been taken into account. This is what was defined in Munda (2004) as the social incommensurability issue.

Historically, the classical evaluation tool for publicly provided goods is cost-benefit analysis. It is generally considered that cost-benefit analysis focuses on efficiency criteria; but, any policy decision affects the welfare of individuals, regions or groups in different ways; consequently, public support for any policy decision very much depends on the distributional effects of such a decision. Cost-benefit analysis is based on the Kaldor-Hicks compensation principle, which needs to attach money value to any negative externality (in the economic jargon this is called “internalization of an externality”). Can we use money values as a social decision tool for sustainability policies? According to the compensation principle, the social cost of a given event is defined as the sum of money paid as compensation to those who have suffered injury. The level of utility1 that the damaged people had before the event took place should determine the amount of compensation to be paid.

According to Baumol (1969) the relevant aspect of externalities is that the activity of a subject negatively interferes in the utility function of another subject without an economic transaction between them. We experience negative externalities in our everyday life: a barking dog at night, the smoke of a neighbour in a restaurant, the volume of teenagers’ music, are a few examples. In many cases related with the environment this interference is in the utility function of a whole community, like for example the case of waste residuals or the pollution of a water source or costal zones.

It is worth remembering how economic values depend on inter- and intra-generational inequalities in the distribution of the burdens of pollution and in access to natural resources. Thus externalities can be seen as “cost-shifting” or as “ecological distribution conflicts” (Martinez-Alier and O’Connor, 1996). In general, if the injured parties are poor (or even not yet born), the cost of the internalization of the externality will be low. This is why a lot of multinationals locate particularly dangerous production plants in developing countries where, in the case of accidents, they are generally forced to pay much lower monetary compensations than in western countries. The accident of the chemical plant of the Union Carbide in Bhopal, India, in 1984, is a sad example (Jasanoff, 1994, Rajan, 2002).

Accepting low values for a negative externality that has negative impacts on a poor community is a “political decision”, that is far from being ethically neutral. Some years ago, an internal document of the World Bank, subsequently made public, suggested that toxic waste should be stored in Africa, since the cost of compensation would be extremely low and would therefore have to be considered as the most efficient solution.

Some revisions of cost-benefit analysis try to include distribution issues directly in the analysis (see e.g. Helmers, 1979). However, all these revisions may sometimes present such theoretical and operational difficulties that it is rather tempting to ignore distributional aspects without further comment. This attitude is rarely defended theoretically, but unfortunately often practiced (Bojö et al., 1990).

Allen et al. (2002) summarize the basic sustainability issues in the following questions.

Sustainability of:

  • 1.

    What?

  • 2.

    For whom?

  • 3.

    How long?

  • 4.

    At what cost?

It is clear that economic instruments are designed to answer only the fourth question, they thus need to be complemented with other approaches if one wishes to deal with sustainability in a comprehensive manner. Monetary valuation methods are based on phenomena such as consumer’s surpluses, market failures and demand curves which are only a partial point of view, since connected with one institution only: markets. From a sustainability point of view, issues connected with actions outside the markets and as well as behaviour of people different from the class of consumers should also be taken into account (Duchin and Lange, 1994). As noted by Funtowicz and Ravetz (1994, p. 198), “the issue is not whether it is only the marketplace that can determine value, for economists have long debated other means of valuation; our concern is with the assumption that in any dialogue, all valuations or “numeraires” should be reducible to a single one-dimension standard”.

I am not opposed to putting economic values on natural resources, to environmental sinks, to natural spaces or to cultural heritage. A location may be valuable for its biodiversity (measured in richness of species or genetic variety), and also as a landscape, yet also have economic value (measured by differential rent or by the travel cost method, or contingent valuation). These are different types of value. The point is that it is misleading to take sustainability decisions based on only one type of value. The “fetishism of fictitious commodities” and “energy myths” must be avoided. Thus, instead of focusing on “missing markets” as causes of allocative disgraces, or trying to explain economic values by means of energy measures (clearly a non-sense from an economic point of view) we should focus on the creative power of missing markets, because they push us away from economic commensurability, towards multi-criteria evaluation of evolving realities.2

In empirical evaluations of public projects and publicly provided goods, multi-criteria decision analysis seems to be an appropriate policy tool, since it makes it possible to take into account a wide range of assessment criteria (e.g. environmental impact and distributional equity) and not simply profit maximization, as a private economic agent might do.

At this point in the discussion the question arises as to who makes the decisions? Some critics of multi-criteria evaluation say that in principle, in cost-benefit analysis, votes expressed on the market by the whole population can be taken into account (naturally with the condition that the distribution of income is accepted as a means of allocating votes). On the contrary, multi-criteria evaluation may be based on the priorities and preferences of only a few decision-makers. (We could say that the way these decision-makers reach their position is accepted as a way of allocating the right to express these priorities.) The criticism may be correct if a “technocratic approach” is taken, in which the analyst constructs the problem relying solely on expert input (“expert” meaning those who know the “technicalities” of a given problem).

For the formation of contemporary public policies, it is hard to imagine any viable alternative to extended peer communities (Funtowicz et al., 1999, Guimarães-Pereira et al., 2006, Kasemir et al., 2003). They are already being created, in increasing numbers, either when the authorities cannot see a way forward, or know that without a broad base of consensus, a policy will not succeed. This necessity has been winning ever more recognition in a multi-criteria decision-aid (MCDA) framework (see e.g. Banville et al., 1998). An effective policy exercise should consider not merely the measurable and contrastable dimensions of the simple parts of the system, which even if complicated, may be technically simulated (technical incommensurability). To be realistic it should also deal with the higher dimensions of the system, i.e. those dimensions in which power relations, hidden interests, social participation, cultural constraints, and other soft values become relevant and unavoidable variables that strongly, but not deterministically, affect the possible outcomes of the strategies to be adopted (social incommensurability).

Social multi-criteria evaluation (SMCE) (Munda, 2004, Munda, 2008) has thus been developed, in which the pitfalls of the technocratic approach are avoided by applying different methods of sociological research. For example, “institutional analysis”, performed mainly on historical, legislative and administrative documents, can produce a map of the relevant social actors. By means of focus groups it is possible to form an idea of people’s desires and then to develop a set of policy options and evaluation criteria. The main limitations of focus group techniques are that they are not supposed to be a representative sample of the population and that sometimes people are not willing to participate or to state publicly what they really think (above all in small towns and villages). For this reason anonymous questionnaires and personal interviews are an essential part of the participatory process.

One should note that policy evaluation is not a one-shot activity. On the contrary, it evolves as a learning process which is usually highly dynamic, so that judgements regarding the political relevance of elements, alternatives or impacts may undergo sudden changes. Hence a policy analysis must be flexible and adaptive in nature. This is why evaluation processes have a cyclical nature. By this is meant the possible adaptation and modification of elements of the evaluation process due to continuous feedback loops among the various steps and consultations among the actors involved (see Fig. 1). Of course, the steps of the process are not rigidly set out. On the contrary, flexibility in real-world situations is one of the main advantages of social multi-criteria evaluation (see e.g. Vargas Isaza, 2004 for an application of SMCE in Colombia, where there was an extreme situation involving social actors belonging to various informal armies (the so-called actor armado); Martí, 2005 who conducted a study with indigenous communities in Peru or Sittaro, 2006 who applies SMCE in the context of indigenous communities in the Amazonian region of Ecuador).

As we know, criteria and criterion scores are not determined directly by social actors. The impact matrix is a result of a technical translation operationalized by the scientific team. Even if the criteria are exactly the ones agreed with the social actors the determination of the criterion scores is independent of their preferences. For example, an interest group can accept the use of a criterion measuring the effects of the various alternatives on the employment, but the determination of the figure cannot be (at least completely) controlled by them. This is one of the main reasons why it is desirable to combine a social impact matrix with the usual technical impact matrix normally used in a multi-criterion exercise.

A well-known approach for dealing with distributional issues in land-use planning, by building a social impact matrix, is the so-called planning balance sheet method (Lichfield, 1964, Lichfield, 1988, Lichfield, 1993). This approach aims to provide a broader framework for the assessment of the gains and losses of a plan by constructing detailed socio-economic accounts of all project effects and by taking into account the different groups in society which are affected in their well-being by the plan. A weakness of this method is that it is primarily meant to present in a systematic way a description of all the distributive impacts, but no elaboration with normative purposes is generally made.

This article presents a possible way of overcoming this drawback of the planning balance sheet method; introducing concepts coming mainly from fuzzy set theory and social choice. Most of the new results presented here proceed from the empirical experience of various real-world applications of the NAIADE conflict analysis procedure (Munda, 1995) over a decade.

Since it is clear that the main limitation of the NAIADE approach was the fact that only possible similarities between social actors were provided, here a fuzzy coalition formation algorithm is combined with a ranking procedure and a veto index founded on social choice principles. Moreover, the possibility of attaching weights as importance coefficients to the various social actors is also introduced. Another distinguishing characteristic of the approach proposed is that all its properties are made explicit. A real-world example is used to emphasize the main operational consequences of the proposed mathematical procedure.

Section snippets

A fuzzy coalition formation algorithm

As in the planning balance sheet method, the proposed approach requires as a first step the construction of a social impact matrix showing the various policy options and their impact on the social actors. From an empirical point of view, the construction of this matrix requires sophisticated field work based mainly on participative techniques (see e.g. Kasemir et al., 2003). However, the results obtained with such techniques are qualitative in nature and often presented in an unstructured

Ranking policy options

Given that there is a consensus in the literature that the Condorcet’ theory of voting is useful for generating a ranking of the available options while Borda’s one is more useful for isolating one policy option, considered the best (Moulin, 1988, Truchon, 1995, Young, 1988, Young, 1995), in our framework, it is desirable to follow the Condorcet tradition. A basic problem inherent in the Condorcet’s approach is the presence of cycles, i.e. cases where aPb, bPc and cPa may be found. This problem

A real-world example

Let us briefly review an application in the field of renewable energy (for more information see Munda et al., 2005, Gamboa Jiménez and Munda, 2007). In the last decade renewable energies and especially wind energy have experienced a strong boost from national and international authorities; typically presented as part of the strategy to deal with global warming and to accomplish the Kyoto Protocol. Although wind energy has a green image, it is difficult to find favourable positions for the

Concluding remarks

In the area of environmental and resource management and in policies aiming at sustainable development, conflicting issues and interests are the normal state of affairs. Formal approaches like the one proposed here cannot resolve all conflict, but they can help to provide more insight into the nature of the conflict by providing systematic information; and to arrive at political compromises by making a complex situation more transparent to policy-makers and lay people.

In the present article,

References (62)

  • M. Truchon

    Voting games and acyclic collective choice rules

    Mathematical Social Sciences

    (1995)
  • H.J. Zimmermann et al.

    Decisions and evaluations by hierarchical aggregation of information

    Fuzzy Sets and Systems

    (1983)
  • T.F.H. Allen et al.

    Supply-side Sustainability

    (2002)
  • M.R. Anderberg

    Cluster Analysis for Applications

    (1973)
  • K.J. Arrow

    Social Choice and Individual Values

    (1963)
  • K.J. Arrow

    Invaluable goods

    Journal of Economic Literature

    (1997)
  • K.J. Arrow et al.

    Social Choice and Multicriterion Decision Making

    (1986)
  • C. Banville et al.

    A stakeholder approach to MCDA

    Systems Research and Behavioral Science

    (1998)
  • W.J. Baumol

    Welfare Economics and the Theory of the State

    (1969)
  • J.C. Bezdek

    Pattern Recognition with Fuzzy Objective Functions Algorithms

    (1980)
  • D. Black

    The Theory of Committees and Elections

    (1958)
  • J. Bojö et al.

    Environment and Development: An Economic Approach

    (1990)
  • J.M. Buchanan et al.

    Public Finance and Public Choice

    (1999)
  • F. Duchin et al.

    The Future of the Environment

    (1994)
  • P.C. Fishburn

    The Theory of Social Choice

    (1973)
  • Funtowicz, S., Martinez-Alier, J., Munda, G., Ravetz, J., 1999. Information tools for environmental policy under...
  • G. Gamboa Jiménez et al.

    The problem of wind-park location: A social multi-criteria evaluation framework

    Energy Policy

    (2007)
  • H. Gravelle et al.

    Microeconomics

    (1992)
  • J. Hartigan

    Clustering Algorithms

    (1975)
  • R.L.C.H. Helmers

    Project Planning and Income Distribution

    (1979)
  • Cited by (52)

    • Socio-technical multi-criteria evaluation of long-term spent nuclear fuel management strategies: A framework and method

      2021, Science of the Total Environment
      Citation Excerpt :

      In turn, their disagreement will make it more difficult to have the multi-criteria analysis method accepted and implemented. In the STMCE method, we avoid this problem by considering all criteria under the equal weighting assumption (Munda, 2009). Different criteria can be used to select a multi-criteria analysis technique for decision support.

    • Sustainable management of fossil fuels: A dynamic stochastic optimization approach with jump-diffusion

      2016, European Journal of Operational Research
      Citation Excerpt :

      Higgins, Hajkowicz, and Bui (2008) develop a multi-objective integer programming model for investments, aiming at maximizing environmental benefits under budget constraints. Munda (2009) describes the concept of sustainability in the context of resource management and argues that economic reasonings cannot be the only routes to follow for taking decisions. This paper moves from this problem and deals with the development of a stochastic dynamic optimization model for identifying the optimal consumption and stock of fossil fuels (mainly, crude oil, natural gas, coal) to be employed in investment, under sustainability assumptions.

    View all citing articles on Scopus
    View full text