This chapter is a major pillar of the theoretical framework and reiterates how this book understands the intricacies of decision-making in the context of transformation towards sustainability. It looks at how power, identities, path dependence, emotions, norms, institutions and paradigms can promote or inhibit effective decision-making. This understanding aims not only to achieve the ‘deconstruction’ of paradigmatically ‘given’ terms, which are widespread within and across disciplines, but, equally importantly, to also develop and/or refine decision tools to address complexity and uncertainty. This understanding also provides benchmarks and indicators to help ease the justification, verification and monitoring of decisions, paving the way for the effective ‘management’ of complexity. Because ‘decision science’ is still in its infancy (see Skorepa 2011), there is still a need to clarify the definitions, terminologies and concepts of decision-making processes that are relevant for this book. In addition, because of the complexity of relevant issues, a ‘salad bowl’ of perspectives, approaches and methodologies should be expected.
Moreover, as this chapter highlights, the contextuality of decisions and the conceptualization of the processes of achieving these decisions require a different stance on normativity. What is ‘good’ or ‘bad’ can no longer be easily determined, because of the lack of clear boundaries between perspectives. This complexity of issues, which implies the diversity of perspectives, prevents a ‘black-and-white’ distinction between ‘good’ and ‘bad.’ As context is reproduced and reinforced by narratives, there will be no single version of reality, or of the future. For example, while democratic principles, such as formal and material participation, are generally considered ‘good,’ such principles may also lead to ‘bad’ conditions, such as inefficient environmental protection measures, thinned out to accommodate the interests of the stakeholders. Trade-offs between poverty alleviation and emission reduction will very likely motivate policy-makers to prioritize poverty alleviation policy goals. In the same manner, purportedly ‘bad’ principles typical of authoritarian regimes that do not have ‘respect’ for human rights may actually be more effective in protecting the environment. In such cases, for example, a military junta leader that grabbed power from corrupt but democratically elected leaders through a violent coup may turn out to be an adamant ‘protector’ of the rule of law, including the protection of ethnic minorities, which may not have been practically respected by previously democratically elected administrations. Nevertheless, it is not being argued by this book that the value of human rights and democracy are to be diminished or disregarded. In this sense, the analyses of decision-making processes need to be aware of ‘normative biases’ in order to maintain proximity to Eurocentric worldviews and to accommodate ‘indigenous’ ideas on modernity. Analyses of decision-making processes need to be able to evaluate ‘alternative paths’ (e.g., the Chinese way, the Asian way, the Russian model, etc.), isolate ‘best practices’ and come up with ‘adapted versions’ of these practices.
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Contextualizing decision-making to achieve sustainability is a situated and interactive activity. The contextualization of decision-making employs descriptive, analytical and prescriptive approaches. It also requires the re-visitation of dominant theories and assumptions that are often taken for granted or presupposed. In addition, because the world system is in a transitional stage, collective decision-making is also in transition or transformation, as the number of issues, actors, and complexities increase along with the scope (see Kremenyuk 2002). The monolithic architecture of the global system is complemented by fragmented decision-making that often leads to gaps that are still being conceptualized and understood.
The analysis of decisions and the processes needed to achieve them involves multiple disciplines and methodologies. Multiple disciplines are used by this book to come up with qualitative and quantitative as well as ‘systemic’ benchmarks and indicators: decision analysis, behavioral science, game theory, sociology, logic, negotiation analysis, etc. Furthermore, the systems approach identifies the different units of analysis to enable an understanding of the processes within such units, their interactions with other units, the dynamics defining their interconnectivity, and the resulting positive and ‘fatal’ synergies. These units of analysis are: actors, issues, structures, processes and outcomes.
In terms of context, as will be demonstrated through the case studies in this book, important main drivers of transformation towards sustainability are identified and evaluated. In this evaluation, the functional, institutional and bargaining interactions are highlighted. This structural analysis is key to understanding how transformation towards sustainability can be facilitated. For example, the case studies present potential entry points to transformation towards sustainability for the selected countries. These entry points may involve resolving current path-dependent impasses such as carbon lock-ins or identifying opportunities that have been so far overlooked. In addition, the case studies analyze how the context defines the agency and audience by, for example, pinpointing how bargaining interactions create more values that further promote sustainability. Nevertheless, there is a need to take one or two steps back and define the main drivers of transformation towards sustainability through trade-offs and turnstiles.
The main drivers are evident, and latent factors behind decisions can be external or internal. Their effects can be regarded as subjective, as the effects of these drivers can only be ‘substantiated’ when they relate to the actors’ dispositions. As Andrea Trianni et al. (2016) suggest, these drivers can be economic (internal costs, opportunity costs, market barriers, demand, supply, etc.), regulatory (tariffs, taxes, public financing, fiscal subsidies, market instruments, etc.), informative (quantification methods leading to the consideration of additional or co-benefits), and educative (learning curves, technological maturity, etc.).
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While these drivers ensure that similar decisions will be made as agents are eventually recalled and replaced, they are often highly contextualized, as these drivers may also occur only once or only as results of the uniquely constituted positive and ‘fatal’ synergies of various factors. For example, in a given developing country, the combination of a deficient element of governance, the unique effect of the global financial crisis due to the country’s high dependence on foreign remittances and foreign direct investment, low social capital following decades of colonization, a recent natural disaster, and an on-going constitutional crisis, can only occur once. In addition, a triggering event may initiate a tipping point as this event may cross the boundary of what actors can accept, or this event may initiate a ‘domino effect’ which further blurs causalities between exogenous and endogenous factors. This event can either be a major game-changing occurrence, such as the natural death of the country’s president, or a relatively unimportant event such as a successful, unexpected take-over bid of a company, which can push the last ‘domino tile’, leading to other events such as the mobilization of labor unions.
Analyzing these drivers, including the related dynamics, synergies, triggers, and tipping points through process-tracing, is a highly complex endeavor. It requires not only a comprehensive and integrated understanding of historical events, not to mention access to confidential decisions made during closed-door meetings, but also the identification and usage of adequate methodologies for content analysis, the definition of units of analysis (components, sequences, or complete models) and for data interpretation, both in terms of theories and in terms of its practical meaning and usability. Nevertheless, a shared understanding of the drivers behind one’s own decisions and the decisions made by others is beneficial, especially when different actors can align their key goals, paving the way for a more mutually acceptable joint agreement.
The case study analyzed in chapters 8 to 12 of this book will highlight the main drivers of various transformation processes.
3.1 Trade-Offs
Trade-offs are paradoxes that inhibit, delay or prevent decision-making. They highlight the ‘human factor’ in decision-making, particularly in transformation processes, where ‘losers’ and ‘winners’ are expected to emerge. Without adequate decision tools to understand the complexity and uncertainty of the issues involved and of the potential ramifications of their decisions, decision-makers will mostly refuse to commit to any purportedly ‘game changing’ decisions, particularly when they will be eventually held accountable or responsible for these decisions.
Transformation processes towards sustainability will most likely touch upon various policy goals. In some cases, the achievement of one policy goal will diminish the possibility of reaching another goal or it may increase the monetary and non-monetary costs of achieving a later goal. Without proper coordination and facilitation when managing these trade-offs, new conflict cleavages will most likely emerge, which may be ‘too much to handle’ and lead to system ruptures. To address this, cluster 3 (transformation management and socio-technical discourse) in the previous chapter has provided impulses.
Table 3.1 enumerates the selected nexus that reflect trade-offs in transformation processes towards sustainability.
Table 3.1
List of trade-offs and caveats (Source Own Representation)
Trade-offs | ||
|---|---|---|
Global | vs. | Domestic/local |
Unit | vs. | Collectivity |
Cooperation | vs. | Sovereignty |
Optimization/Efficiency | vs. | Consensus and Legitimacy |
Choice | vs. | Control |
Prototypes | vs. | Generics |
Linearity | vs. | Non-linearity |
Incremental | vs. | Leap-frogging |
Adaptation | vs. | Latency |
Causal Determinism | vs. | Self-efficacy/Free Will |
Quantitative | vs. | Qualitative |
3.1.1 Global vs. Domestic/Local
The global and the domestic/local can be regarded as two sides of a continuum. While they are, to a significant degree, interconnected with the national spheres and serve as sub-systems, the two can also be defined as two separate systems. Each system has its distinct processes and dynamics and although it will be difficult to ‘think’ of the global without the local (and vice versa), this is theoretically possible from an analytical point of view. Nevertheless, the uncooperative game theory characterization of a system where actors are rational, strategic, and opportunistic and that no outside actor will step in to enforce agreements can be generally applied to both domestic (national/local) and international politics (Martin & Simmons 2010 p. 43). Furthermore, as Lisa Martin and Beth Simmons (2010 p. 43) suggest, with a similar assumption about the nature of actors and their environment, the potential for learning offered by this level of analysis could be enormous.
At first glance, the trade-offs between the global and the domestic/local includes the need to give up a specific degree of sovereignty, that is, of control (see Biersteker & Weber 1996; Aspinall 2002). This means, on the one hand, ‘outsourcing’ some aspects of national decision-making processes to mechanisms outside of state governance and to non-state actors in a franchise-like system (see Hernandez 2014a). This is not only limited to government agencies seeking private providers of outsourced civil services to increase efficiency, but also to the substitution of tedious domestic constituency through mechanisms of various international institutions, where governments can play the “sovereignty” card to block decisions that are against their political agenda. This was, for example, the case when former US President Obama deliberately sidestepped the Congress and formally entered the United States into an international climate change agreement (Davenport & Prusak 2000; see DeMint 2016).
On the other hand, giving up a specific degree of sovereignty can also mean accepting a specific degree of dependence on international governance structures when forging national policies over lower-prioritized issues (see Cede 2012). National governments may, for example, accept the jurisdiction of international arbitration bodies in specific issues, particularly when disputes involve non-citizens (see Cede 2009). In addition, national governments allow themselves to be the subjects of external verification and sanction mechanisms which form a type of hierarchy, either because of rewards and sanctions (see Birnie & Boyle 1992; Boyle 1999), or because non-compliance will merely empower domestic pro-compliance constituencies to monitor and enforce national compliance (Dai 2007).
Another trade-off refers to identity-building and its meaning when accessing resources. When focusing on the above-mentioned distinct processes and dynamics related to transformation towards sustainability, opening the ‘local’ up to the ‘global’ may also promote disengagement among the locals. As the ‘global’ instils new and unfamiliar ‘dominant’ values and norms (often defined by historical experiences of the Global North) leading to the establishment of paradigms, the locals of countries belonging both to the Global North and the Global South are confronted by differences and conflicts between their homes (local) and the new romanticized ‘society-at-large’ (global). For example, in the Philippines, due to its colonial past and as enhanced by globalization, the use of the English language has been used as the defining factor for employment and status quo, whereas the ability to speak English with an American accent (‘elitist English’) promises more job prospects and social prestige. This ability is taken as an indicator of an individual’s access to quality education or even of intellectual capability and therefore offers opportunities that are unreachable to others. Filipinos that speak English (or even Tagalog) with a clear ‘provincial accent’ are ridiculed as backward and uneducated (see Montalvan, III 2010; Hernandez 2014a). Many locals are then confronted with a clear disconnect between their ‘primordial’ identity and the social identity, as the language used at home (one of more than 100 local languages) and the English language they need to speak with an American accent to acquire better employment, for example, in the high-paying call center industry, imply two different incompatible identities. This apparent disconnect implies that their relationships, activities and roles are restrained.
3.1.2 The Unit vs. Collectivity
Trade-offs can also be observed when decisions are made by individuals or by a collectivity. Policies that need to be forged by individual actors in the name of the collectivity will need to address distinct challenges (see Olson 1965; Sandler 2004). In many cases, while unitary decision-making is considered to be efficient because decisions can be goal-oriented and made quickly, it is thought to circumvent proper representation and is therefore regarded as undemocratic and unwarranted. The connection between unitary decision-makers and the collectivity is contextually subjected to existing governance structures, which reflect the political mandate given to decision-makers (see Walker et al. 1988). This political mandate or legitimacy can be derived through electoral processes, for example in democratic countries, and in authoritarian countries through ‘performance outputs’ (see Easton 1975). In some cases, the effectiveness or integrity of decisions can be undermined by a failure to adequately consider the perspectives of all members of the collectivity. Nevertheless, the need to achieve consensus can also delay decisions and delays can incur additional costs or missed opportunities. In the same manner, when a unitary entity has made the necessary decisions alone without any form of consultation, it will most likely lead to the mobilization of opposition, disconnecting basic games from policy games.
Depending on the context, affected stakeholders that were not embedded in the process or did not agree to the decisions made by the majority may resort to legal or paralegal channels that could further increase the costs of decision-making (see Faysse 2006; Cheyns 2011). Furthermore, ‘spoilers’, or those actors that are not open to persuasion or bargaining are further empowered and vindicated and are provided with more arguments against the decisions made (see Mitchell et al. 1997; Pinkse & Kolk 2012). Nevertheless, while collective decisions resulting from consensus-building processes will most likely have fewer difficulties when being implemented, the integrity of these decisions can be doubted, as they can be significantly ‘watered-down’ as a result of compromises (see Ostrom 1990; Sandler 2004). A major trade-off refers to risks of disidentification and disenchantment, where decisions made by the few promote the removal of the signs of identities of the many such as roles, titles and statuses as well as creating new ‘worlds’ that are not ‘real’ for many locals (see Adger et al. 2011). For example, the signing of the Paris Climate Agreement by their national government may mean distress for coal-dependent communities that have already assumed distinct identities. This agreement may also mean that in the medium and long term, they will need to ‘unlearn’ their perspectives in order to survive, which horrifies many. This distress is, for example, considered to be responsible for the loss of the Democrats in Wisconsin and Michigan during the US Presidential Elections in 2016.
3.1.3 Cooperation vs. Sovereignty
While engaging in international cooperation has its distinct advantages, it also often means giving up some elements of sovereignty, whereas sovereignty and its indicators are regarded as matters of perception (see Biersteker & Weber 1996). In addition, trade-offs between international cooperation and sovereignty are often analyzed in the context of power asymmetry. For example, Johannes Urpelainen (2011) argues that under power asymmetry and in the context of cooperation, powerful states are willing to accept constraints on the use of power, as opposed to simply maximizing the supply of the collective enforcement power. Therefore, for weaker countries, engaging in cooperation with powerful states allows them to maintain their sovereignty, because cooperation also limits the motivation and capacity of powerful states to violate the sovereignty of weaker states.
International cooperation may also mean tolerating interference in domestic affairs, and this exclusion from the benefits of cooperation can be used as political leverage (see Axelrod 1984; Bunker & Rubin 1995). As international cooperation may also mean that sensitive information needs to be shared with the others, some countries may engage in ‘tactical’ cooperation to collect information. This means that cooperation could also limit one’s competitive advantage (see Oye 2011; Urpelainen 2011).
In addition, international cooperation can be used by the government to define the paradigm of self-legitimization, particularly when there is a domestic legitimacy crisis. Nevertheless, because international cooperation is highly dependent on the kinds of issues involved, limitations to cooperation due to the demands of sovereignty are rather self-serving. When a government refuses to cooperate on issue A due to sovereignty concerns, and it cooperates on issues B and C, how can this government decide that cooperation on issues B and C do not undermine sovereignty? When such decisions are arbitrary, how can reciprocity, which is a major driver of cooperation, be built?
Limitations to cooperation often lead to questions about which issues should be dealt and to which degree sovereignty should be lost. For example, while it is evident that international cooperation on security will be confronted by different sets of political obstacles, and the national government will more likely prefer to limit the participation of social actors, what compels a government to reject environmental cooperation by claiming that it undermines national security? On the other hand, cooperation on trade and industry, such as free trade that requires involvement in the private sector, will more likely bear witness to a national government seeking the participation of business and industry actors. Why is sovereignty, then, defined by issues? Sovereignty is understood as independence from external influences and is a constitutive principle of ‘legitimacy’ vis-à-vis the audience, that is, one is sovereign not only in the eyes of the international community but also, and more importantly, in the eyes of the constituents.
3.1.4 Optimization/Efficiency vs. Consensus/Participation
Analyzing trade-offs between the efficiency of policy goals and promoting participation in forging and implementing these policies is tricky (see Walker et al. 1988; Cadman 2013). Although efficiency and participation can be regarded as the two sides of legitimacy, with participation serving as a category of ‘input’ and efficiency of ‘output’ legitimacy, they can be seen as competing in the eyes of policy-makers. Efficiency enhances the probability that the implementation of the measures and provisions of the decisions will lead to the achievement of the goals (see Barr 2012). Efficiency is often connoted in terms of the concept “Pareto Efficiency.” Pareto efficiency, which has its origins in social welfare optimization, is the state of allocation of resources from which it is impossible to reallocate to improve one’s own status without making at least one counterpart worse off (Krasner 1991; see Sinn 2007).
Meanwhile, participation means ‘tailoring’ and ‘ownership’ of the decision-making process. It also constitutes the ‘acceptability’ of these provisions in the eyes of the affected audience. In addition, it refers to the probability that the negative consequences of these decisions will be ‘tolerated’ and remain unchallenged by those affected, knowing that the ‘pain’ of indecision is worse than the expected consequences (see Luce & Raiffa 1957; Raiffa 1968). When the status quo ante or the ‘alternative’ to the ‘business-as-usual’ option is better off than the status under these (new) decisions, then legitimacy can be undermined, because of the high probability that the implementation will be rejected (see Tversky & Kahnemann 1986; Toth et al. 2001). Hence, efficiency can also be regarded as a category of legitimacy, as deficient decisions will also most likely lead to resistance.
The choice between efficiency and participation becomes challenging when there are trade-offs between them. In ideal cases, efficiency can be achieved without sacrificing a degree of participation. Nevertheless, particularly in climate protection, ‘effective’ measures and ‘optimization formulas’ will involve a degree of restriction on the part of the population or constraints to specific actors. Therefore, legitimizing channels need to be found to ensure the acceptability of such ‘optimal solutions’, particularly in front of a domestic audience. Because addressing trade-offs in (transformative) decision-making can be best understood, defined and conducted in the context of negotiations (see Winham 1977; Zartman 1994a; Watkins & Passow 1996), efficiency calculations and indicators need to adequately address negotiation pay-offs.
3.1.5 Choice vs. Control
Decisions are ‘purposive,’ because they are framed by goals. To enable decision-makers to evaluate the current status of decisions in terms of how the goals are expected to be achieved, there is a need to come up with indicators and benchmarks as the basis of verification or of performance control (see Freistein 2016; Boavida 2017). Nuno Boavida (2017) suggests that studies about the way indicators are used in technological innovation are significantly rare, despite the centrality of decisions. In addition, Greg Marsden and Carolyn Snell (2009) are critical of the fact that indicators can distort decision-making processes because of poor internal planning processes or unnecessary external constraints.
Indicators are needed to measure the progress of achieving predetermined goals. As discussed in the introduction, the transformation process towards sustainability is purposive due to the centrality of predetermined goals. For example, Greg Marsden and Carolyn Snell (2009) see indicators as crucial to transport planning processes as they can be used for decision-support in all aspects of policy development and assessment, from option generation, through to policy testing and appraisal, to monitoring and feedback. Moreover, indicators can provide insights into whether additional intervention or changes are needed to correct unwanted occurrences. Nevertheless, as indicators are often quantitative, focusing only on indicators may cause decision-makers to miss out on other signs of progress that cannot be measured numerically. For example, while climate protection goals can be measured through the amount of emission savings, specific co-benefits of these goals such as the prevention of destruction of historically important buildings and monuments or the improvement of health are often missed or inadequately included in assessing the benefits of such goals. Therefore, as Marsden and Snell (2009) suggest, an indicator framework needs to be an essential part of effective planning processes for internal management and decision support, as well as for external communication.
Trade-offs arise when decisions involving several actors are given more ‘choices’ as to how to fulfill their responsibilities and ‘shopping’ for indicators become a usual practice. In this situation, indicators are designed and developed to serve the vested interests of the actors. These self-serving indicators become useless in assessing various stages of transformation. Zachary Karabell (2014) argues that the twenty-first century is proving more challenging to measure. He continues that statistics cannot capture the multifaceted and complex national and global economic systems.
Another trade-off refers to choices available during collective decision-making. Choices, particularly long-term ones under certainty, are often linked to flexibility (see Fawcett et al. 2012). As a provision in an agreement, flexibility means one unit less of possible control. For example, the implementation of new policies is often combined with flexibility measures to enable affected actors to manage transition in an acceptable way. In addition to compensatory measures, flexibility may also include ‘grace periods’ or ‘exemptions’ until a given time. For example, Wigley et al (1996) found that the global time flexibility in GHG emission reduction given to developing countries can be justified to some extent. Particularly after the COP15 meeting in Copenhagen, developed countries have expressed their position that they will only commit if developing countries will agree to comparable commitments (Bodansky 2010; Penetrante 2010, 2011). Nevertheless, as Taishi Sugiyama and Liu Deshun (2004) argue, it does not necessarily serve as a rationale to delay the emission reduction commitments and efforts of developed countries.
In a similar way to flexibility, ambiguity in collective decisions increases the set of possible choices while limiting control. Trade-offs are evident in decision-making under uncertainty when policy-makers look for a ‘way out’ from the commitments before signing any agreement. From the negotiation perspective, while reaching an agreement is hard, honoring one may be even more difficulty. Martin Weber (1987) identified methods which are particularly suitable for handling decision situations with incomplete information. The decision-maker is unable to define a precisely defined and stable preference structure because probability distributions vis-à-vis the consequences are not known completely. Ambiguity in some provisions of the agreement would allow decision-makers flexibility, particularly in determining the “how”-provisions of agreements. However, difficulties arise when there are so many flexibility measures, or the goals are too ambiguous that verification (control) becomes useless. Ambiguity may also encourage ‘bad faith negotiators’ (see Churchman 1995) and ‘spoilers’ (see Stedman 1997), who have other vested interests when engaging in negotiations (e.g., to gather information about competitors) and who had no intention to commit from the start. Nevertheless, ambiguity is inevitable as agreements will not cover all possible aspects of interactions. In addition, ambiguity (and flexibility measures in general) encourages participation in bargaining processes. Ambiguity motivates actors to not leave the negotiation table, and should ambiguity and flexibility measures be inefficient, they can be re-negotiated. In these cases, there would be no need to start from square one of collective decision-making.
3.1.6 Prototypes vs. Generics
Decisions as solutions to new emerging problems may be either prototypes or generics. As new and previously unknown problems emerge, decision-makers can look for early samples or models as the basis for a decision. Prototypes intend to test various parameters relevant to the problem and to enhance future decision-making through replication and learning. As such, it follows the principle of ‘trial-and-error’, which implies that unknown negative aspects or unwanted side-effects are expected and will be useful in reconfiguring decisions. Prototypes undergo ‘learning-by-doing’, defining their ‘maturity process’ as problems to be adequately addressed. Uncertainties about these negative side-effects will most likely be used by opposing actors to demand the recanting of previously-made decisions. Depending on how the opposition can mobilize popular support to form a counter-movement to reverse changes, the whole transformation process can be jeopardized. Therefore, decision-makers are highly dependent on verification measures to act as quickly as possible to address these side-effects.
Another approach that can be used by decision-makers when formulating decisions on emerging problems is to seek, or, if not available, to constitute ‘generics’. There is often a ‘general formula’ to address such issues regardless of the unique specificities of these problems. Such ‘standard operating procedures’ (SOPs) are most likely general in scope and cannot address the specificities of these emerging problems. For example, Carlo Guipponi and Alessandra Sgobbi (2013) illustrate a generic decision/policy-making process with its main steps and the areas of influence of participatory planning, simulation planning and decision analysis: (0) political and normative triggering factors (e.g., water management plan); (1) problem exploration and framing (gaps, needs, potentials, constraints); (2) the actor’s involvement and participatory process (stakeholder’s dialogues, focus groups); (3) problem analysis (organization of information and knowledge, mental models); (4) data-processing, modeling and evaluation (simulation models, scenario analysis); (5) the analysis of response options (e.g., multi-criteria or cost-benefit analysis); (6) action-taking and monitoring (implementation plans, investment).
Decision-makers may, on one hand, see the need to look at each problem as it comes, that is, case-by-case. In these instances, decision-makers will start from a ‘default’ position, analyze the problems, investigate the factors responsible for cause-and-effect relationships and then come up with a solution for this specific case. On the other hand, decision-makers may prioritize a ‘rapid response’ to emerging problems and prefer to come up with ‘generics,’ where they have anticipated the problems and have already worked on protocols and SOPs. As a problem emerges, decision-makers will adhere to SOPs and will be less likely to tolerate deviations from presumed procedures.
Trade-offs are for example made between the effectiveness (in the context of usefulness) of the solutions and the speed of reaching decisions. Particularly when dealing with pressing issues while confronted by incomplete or soon-to-be obsolete information, decision-makers must absorb learning and establish adequate institutional memory or “stored knowledge within the organization” (Gibbons 2007). In addition, Jack Corbertt et al. (2018) contend that institutional memory is central to the pragmatic task of policy-making. They continue that memory can be “static,” i.e. memory is singular and held in document form, or “dynamic,” i.e. memory is dispersed across an array of actors that make up the differentiated polity. However, decision-makers in policy circles, particularly those at higher levels, often do not stay long in their positions. Therefore, because they do not especially have dynamic institutional memory, they may tend to prefer prototype decisions (based on static memory), while those at middle and lower levels tend to prefer generic decisions.
3.1.7 Linearity vs. Non-linearity
While the process outlook on decisions implies a ‘holistic’ or ‘systems’ approach, the negotiation perspective provides insights into the importance of different types of preference (utility) functions in collective decision-making, which can be linear or non-linear. An actor with a linear preference function will have strictly monotonous preferences through which larger quantities of a single good will be chosen (higher utility). Furthermore, the actor with a linear preference function will have ‘weakly convex, but not strictly convex’ preferences in which the mixture of two equivalent bundles is equivalent to the combined original bundles (see Gale 1976; Candeal-Haro & Induráin-Eraso 1995). In contrast, actors with non-linear preference functions will be confronted by differences between the ‘objective’ value of a negotiated outcome and the subjective utility attributed to the same outcome. In other words, non-linear preference functions highlight the relevance of ‘experience’, which prevents a constant, subjective utility function. A non-linear preference can encompass both the decreasing and increasing marginally subjective utility of negotiation outcomes on a single issue (see Northcraft et al. 1995 p. 298).
The prevalence of non-linear preference functions is not only to be found in economics, but also in negotiation studies. Gregory Northcraft et al. (1998) have compared the effects of both linear and non-linear preferences on negotiated settlements. They claim that while non-linear preference functions dramatically alter the dynamics of negotiation exchanges by creating more value, called ‘logrolling’ (see Pruitt & Rubin 1986), they also promote ‘concession cross-over’ (see Northcraft et al. 1995). The paradox of concession cross-over occurs when an issue originally less valued by a negotiator becomes subjectively more valuable, merely because concessions were already made in the past. In addition, non-linearity implies that set-backs can also contribute to the achievement of the envisaged outcome, particularly when set-backs are understood as ‘materials’ or ‘lessons’ for future decisions. This ‘non-linearity’ of the decision-making process allows a more pragmatic stance on decision-making. Nevertheless, policy-makers often assume linearity of processes, as implied by their dependence on indicators and benchmarks to legitimize their decisions. The understanding of non-linearity allows a problem-solving outlook on process-related challenges that inhibit decision-making.
Nevertheless, non-linearity not only fails to consider more interconnected conflict cleavages that need to be addressed simultaneously, it also implies challenges on legitimizing policies, as policy-makers require indicators and benchmarks to assess the effectiveness of their decisions in terms of the value of concessions. While preference utilities can be non-linear, decisions cannot fully make use of these, especially when multiple issues are involved; therefore, they tend to use assessment tools that assume the linearity of preference utilities over issues and over the process in general. As Max Bazerman et al. (1985) as well as Margaret Neale & Gregory Northcraft (1986) claim, because actors can also have linear subjective utility (preference) functions, their preferences will most likely not change as their endowment, or holding, of other resources increases or decreases. For example, in negotiating monetary compensation for relocation due to the construction of dams for hydrogen power, a person might already have a specific minimum amount that he or she considers to be acceptable. The ‘reservation value’ or the ‘walk away’ (Raiffa 1982), or in this case, the minimum level of compensation that a person can accept, although subjective, is most likely linear. The person will most likely refuse relocation if not given any comparable values such as housing allowance, which can be ‘converted’ to monetary compensation.
Therefore, because concessions cannot always acknowledge or incorporate the diversity and complexity of possible subjective utility functions (see Northcraft et al. 1995), decision-makers will most likely be confronted by trade-offs between objective and subjective utilities. For example, to implement the low carbon transition of energy systems, the government plans to build two wind mills in the first year and another mill in each following year. Although the monetary value of this project increases every time a wind mill is installed, the utility function of the households living in the area may not increase to the same level or may even decrease after a specific threshold has been passed. Hence, trade-offs between linear and non-linear utilities or preferences need to be effectively addressed when facilitating transformation processes.
3.1.8 Incremental vs. Leap-Frogging
Transformation processes are dependent on technological innovation that supports the implementation of policy goals (see Carraro & Siniscalco 1994; Markard & Truffer 2008b). In some cases, innovation can initiate the transformation process, as societies find solutions to problems that have long existed. Step by step, as the transformation process unfolds, minor changes are made to achieve predetermined policy goals. Therefore, transformation processes are driven by incremental knowledge. Nevertheless, the maturity of technologies is often a result of constant exchanges with societal actors. During such exchanges, technology providers can adapt technologies according to the demand or to anticipated demand. While not all technological innovations are embraced by the population, those that have garnered attention will be further developed. Synergies are made as other products are developed that complement the initial technology (e.g., batteries and storage for new transportation modes).
In addition, synergies between technological and social innovation may improve transformation as shifted paradigms lead to new institutions and even new forms of governance. New information technologies will most likely lead to changes in modes of accountability and transparency. For example, a government prioritizing the elimination of corruption can further advance this policy goal by digitalizing various services provided by the government. Another example is that as it becomes evident that new green technologies can create new job opportunities, governments will have, ideally, started developing or adjusting existing political and market instruments. Nevertheless, because political actions depend on the incremental character of knowledge generation and technological innovation, the government and other state agencies might need to ‘adjust’ their mandate as well as some provisions in the ‘social contract.’ Digitalization might, for example, require new public debate and consensus related to data protection and freedom of speech.
Being incremental also means that a learning process is inevitable. However, in the national or global academic and political climate debate, there is a narrative that is gaining ground: that it is better for developing countries with emerging economies to omit this tedious, emission-rich and expensive learning process and accelerate transformation towards sustainability by bypassing certain stages of development. In current climate change negotiations, many governments and experts call for developing countries to ‘leapfrog’ (see Goldemberg 1998; Zerriffi & Wilson 2010; Correa d’Almeida & Poon 2015).
The concept of leap-frogging argues that it is possible for a country to change to a higher level of development without going through the intermediate stages. In other words, it means that developing countries should not follow the ‘dirty’ economic development path made by developed countries, and should accelerate development by skipping inferior, less efficient, more expensive or more polluting technologies and industries and move directly to more advanced ones (see Goldemberg 1998; Steckel et al. 2013; Jakob et al. 2014). When technologies as well as financing models are already available, why should developing countries not avoid the environmentally and socially harmful stages of development? In a highly globalized world, technology transfer can allow developing countries to ‘assume’ high technological development without the being country that has produced this technology.
Technological development needs to be complemented and guided by social change, which is highly context dependent. For example, as Victor Berrueta et al. (2015) conclude from their case study of Mexico’s Patsari improved cook stove project, while a new low-carbon cooking technology can be easily distributed to poor households in developing countries, there is no guarantee that this technology will ‘sink in’ and be used, especially when cultural aspects have been disregarded. Moreover, new technologies may also lead to the reproduction or reinforcement of existing social fragmentation, as access to these technologies may further strengthen the hierarchy between urban (core) and rural (periphery) areas (see Jonas 1984; Meadowcroft 2005; Stirling 2008). Therefore, not only can too ambitious and rapid technology-driven social change disenfranchise a huge portion of the population and promote social division, it can also limit the potential benefits of technological innovation, as the society is not able to fully ‘absorb’ and ‘replicate’ innovation, which may lead to further frictions (e.g., legitimacy gaps).
3.1.9 Adaptation vs. Latency
Talcott Parsons (1951) highlighted in his AGIL-functions the systematic depiction of certain societal functions, which every social system needs to maintain stability. He argued that the stability of a social system depends on various functional prerequisites: adaptation, goal attainment, integration and latency. Adaptation refers to the capacity of the system to interact with its environment. Goal attainment pertains to the system’s capacity to set goals for the future and formulate provisions and strategies to attain these goals. Integration points to the harmonization of the system through values and norms that are solid and sufficiently convergent. Latency, also referred to as latent pattern maintenance, refers to the capacity of the system to maintain integrative elements to ‘mediate’ or facilitate cohesion between different generations and actors within the system.
In the context of transformation processes towards sustainability, the trade-off or conflict cleavage that is often the subject of public discourse is between the ‘old’ and the ‘new,’ that is, between adaptation and latency. Some proponents of the ‘old system’ argue that there is no need to change something that has proven to have worked. One argument is that the system is constantly changing, and it needs to adapt to these changes if it wants to survive. Transformation can also be regarded as a self-preserving mechanism. With the ability to adapt to occurring changes, the system is able to avert perceived system ruptures. For Nietzsche, transformation is a matter of survival and well-being. In his work “Also sprach Zarathustra” (1883), he highlighted the necessity of allowing the three major episodes of the metamorphoses of the “human spirit” as a process of self-discovery. The camel, which is able to collect “burdens, conquests and scars,” needs to transform into a lion over time to prevent the “risk of being poisoned by bitterness, despair and the spirit of despair.” This “destructive” lion however needs to turn into a child, who represents a “new beginning” where the original “innocence” is revived.
Transformation is one of the most intuitive responses to a changing environment. Change management in organizations including business companies is an integral part of strategies in which their survival is highly dependent upon their capacity to adapt to changes and identify and utilize competitive advantages before their competitors do. For many major business companies, adaptation means seeing a different future for the company and being unafraid of making large scale changes (Simpson 2011). Now known as one of the world’s largest chemical companies, DuPont (NYSE: DD) started as a gunpowder supplier. As new opportunities were identified, DuPont pioneered new plastics and synthetics, fertilizers and new healthcare and nutrition products.
Another argument is that the system needs to maintain its basic fiber. Latency does not resist changes in the system per se but focuses on maintaining basic structures or elements that mediate or facilitate between conflicting actors or elements within the system. Latency can be understood in terms of the governance theory introduced by Renate Mayntz (2009). Her definition of governance is functional and refers to how political facilitation (politische Steuerung) determines the agency or the capacity to act in vertically differentiated governance structures. For example, this definition can be referred to as channels of finding solutions to problems, realization of specific values such as climate protection and human rights, as well as the improvement of specific services such as energy supply security. For example, institutions such as the constitution can mediate belief systems and values between generations, ensuring social cohesion and therefore stability of the system. The literature has argued that transition or transformation is a process with various possible pathways that include low, moderate and extreme changes, depending on different configurations and multi-level interactions (Smith 2005; Patwardhan et al. 2012). As such, transition does not need to lead to ruptures, as it merely reorients existing development trajectories. Latency therefore means that the regime adopts certain niche innovations into the system which leads to a gradual reconfiguration of the basic architecture, including guiding principles, beliefs and practices (Smith 2005; Geels & Schot 2007a).
Trade-offs between latency and adaptation become relevant when decision-makers are compelled to maintain some elements of the system for it not to lose its identity, which binds differences between constituents while allowing some changes to adapt to the new environment, either globally or locally. María Eugenia Sánchez (2010) attributes a loss of identity to the process of creating a de-territorialized or multi-local world productive system, which is more informational than industrial and more speculative than productive. She argues further that the breakdown and disarticulation of institutional and symbolic mediations of the past have had a strong impact on identities. In addition, while some institutions can facilitate the identification of common ground, these institutions are themselves also subject to changes they need to adapt to. It remains a question of how much change these institutions can undergo before they lose their credibility as facilitators. For example, Patricia Gumport (2000) problematizes some changes in the academic landscape of public higher education in the United States over the past 25 years. She identifies a macro-trend whereby the mandate of public higher education has shifted from being a social institution to an industry. She explains that this pattern of academic restructuring that reflects multiple institutional pressures may lead to a loss of legitimacy, as universities move away from their historical character, functions, and accumulated heritage as educational institutions.
3.1.10 Causal Determinism vs. Self-Efficacy/Free Will
The assessment of possible decisions is often based on causal determinism, also referred to as cause-and-effect. Causal determinism is “the idea that every event is necessitated by antecedent events and conditions together with the laws of nature” (Hoefer 2008). In other words, all events have causes and identical causes will lead to same effects. While determinism can be less problematic in certain technical issues, attributing deterministic principles to collective decision-making can be challenging. Determinism in decision-making implies predictability. However, such determinants can also include human choices and actions that do not occur as a first cause but rather as responses. As events are perceived to be bound by causality, it makes sense to investigate how agents absorb information and constitute responses. Nevertheless, determinism is often considered to discard self-efficacy or ‘free will’, because determinism connotes predictability in human behavior (see Franklin 1968).
Furthermore, determinism seems to ignore self-driving and self-enforcing dynamics, where factor A leads to the occurrence of factor B, but only when factor C is near A, or where factor A leads to the occurrence of factor B, but the next occurrence of B is no longer dependent on factor A, because factor B is now able to reproduce itself. In these two examples, causality has ceased to be relevant, because of the lack of attribution. For example, the German government’s “Energiewende” (energy transition) to the new German energy and climate policies (factor B) was primarily caused by the decision to phase out nuclear energy (factor A). It is often argued that the Fukushima incident (factor C) has influenced the decision to phase out nuclear energy (Hennicke & Welfens 2012; see Wille 2017). Regarding this matter, Dominik Smyrgala (2017) presents a statistical analysis of the impact of the 2011 Fukushima nuclear incident on the Energiewende. He argues that the decision of the German government to phase out Germany’s nuclear plants triggered this “irrational” behavior. Nevertheless, for the proponents of determinism, irrationality is non-existent. There was a causality and this causality occurred. Furthermore, it can be argued that while the Fukushima incident motivated Energiewende, it merely provided the pretext for the decision and no direct causality between the Fukushima incident (factor C) and Energiewende (factor A) can be established, because if that was case, then other countries should have done the same as the German federal government
In evaluating transformation processes, it can be useful to analyze not only how a specific decision has come into being and how this decision will elicit further decisions and actions, but also why other (national) systems failed to reach similar decisions as well as how comparable decisions failed to elicit further decisions and actions. Nevertheless, the complexity and uncertainty of various issues will bring challenges, particularly when human accountability comes into the picture. For example, after low-carbon system transition costs are calculated, the next step is to find a formula to distribute these costs among actors, both perpetuators and recipients (victims) as well as both suppliers and consumers. The costs can, for example, be distributed according to the anticipated benefits, where actors expecting more benefits should pay more. In addition, costs can also be distributed according to their accountability.
The trade-off between determinism and free will can be particularly evident when mechanisms of rewards and sanctions are to be established as part of an international and national verification regime. Determinism foresees a clear attribution of negative externalities, while self-efficacy entails the responsibilities behind these decisions. Using the common understanding of fairness, equity and justice, those who have inflicted costs upon others (recipients) ‘with intent’ will need to be held accountable and responsible for the negative effects inflicted upon the others. Those perpetuators that did not, with free will, inflict the costs, are also held accountable according to their degree of guilt, but with lower sanctions after considering mitigating conditions. Therefore, the level of accountability (and the costs/sanctions linked with it) must also take into consideration causal determinism and free-will. However, this can be difficult, as there are no clear indicators that could objectively separate and measure factors that attest to causal determinism or free will.
3.1.11 Quantitative vs. Qualitative Valuation
Outcomes of a collective decision-making process are intended to reflect the goals and targets set by the actors prior to the process. This juxtaposition between the purported goals/targets and the negotiated outcomes is assessed through corresponding indicators. International organizations such as the World Bank and the IMF have developed ‘measurement regimes’ that have led to various paradigm shifts (see Freistein 2016), not only at the global but also at the domestic/local level. The development of these indicators is, however, also the subject of public debate, as ‘control’ over the development of these indicators can ‘dictate’ the paths of future policies (see Lyytimäki et al. 2013; Tokimatsu et al. 2013). Jari Lyytimäki et al. (2013) note that following the criteria for a good indicator does not guarantee that the indicator will be used, nor does it guarantee its use will produce the desired effects. For example, the scientists and experts drafting the Fifth Assessment Report of the IPCC have used the World Bank indicators to classify countries according to their level of income. This was a significant paradigm shift, because it was perceived to mean moving away from the UNFCCC’s own categorization of countries through its Annex List. During the IPCC Approval Session of the Fifth Assessment Report of the Third Working Group in April 2014 in Berlin, developing countries, particularly the Gulf countries, protested against the use of the World Bank country labels (e.g., high, middle, low income countries), as this implied a different political understanding of historical responsibilities.
The functionality of indicators can also ‘concretize’ political mandates, because indicators are expected to enforce the unambiguity and applicability of provisions stipulated by the outcomes (see Underdahl 2002; Wilson & Wu 2016). Indicators can either lead to the success of implementation or can hinder implementation, particularly when the numbers reflected by indicators cannot be translated into realities. For example, Sarah Fredericks (2012) identifies definitions of justice used in sustainability discourse and evaluates how these concepts are aligned with different sustainability indicators and indexes, including the 2010 Environmental Performance Index and Eurostat’s Sustainable Development Indicators. She concludes that while these indicators cover various aspects of justice, they are still confronted by limitations such as the availability of data and the inability of monitoring inequities between subpopulations. Finding appropriate indicators is a challenging task, as they not only need to fulfil several criteria such as the availability of data, their capacity of being monitored and their general suitability (see WRI 2009; World Databank 2011; Cobham 2014), but also because of the legitimacy impact of such indicators.
Particularly in the context of sustainable, low-carbon transformation, where quantitative and qualitative indicators are both used to monitor and verify compliance and progress, academic research on negotiations has been mostly qualitative and has depended on case studies to come up with insights useful for conducting negotiations (see Hopmann 2002). This is usually the case, because quantitative methods are not often seen as useful in negotiation studies. In addition, as Andy Scerri and Paul James (2010) explain, because achieving sustainability is often undertaken as a technical task, some methodological issues arise when setting out to develop and implement qualitative indicators of sustainability that incorporate quantitative metrics.
Additional challenges arise when quantitative indicators are bestowed with qualitative value to legitimize decisions and actions. A major concern refers to doubts about the universality of the results of quantitative measurements using merely a small fraction of the total population. In addition, it is not clear how quantitative indicators can make use of random and context-dependent occurrences. While quantitative indicators use average or median values, these can either ‘water down’ or exaggerate in a way that becomes useless for decision-making in a local context. Therefore, trade-offs between quantitative and qualitative valuation involves on one hand policy-makers who must be aware of the need of ‘contextualizing’ numbers, and on the other hand, the need to base their decisions on something ‘objective’ and ‘representative’.
3.2 Interim Conclusion
Structural analysis is key to understanding functional, institutional and bargaining interactions in the context of the transformation towards sustainability. This chapter highlighted trade-offs and turnstiles as the main drivers of transformation, which define the contextualization of transformation. By clarifying which stumbling blocks (trade-offs) and opportunities (turnstiles) inhibit or promote transformation, the “ripeness” of decisions conducive to transformation can be strategically instigated.
These trade-offs and turnstiles are the “lever” that require proper management. They allow a degree of predictability in reproducing decisions. The trade-offs and turnstiles summarize the conceptual and methodological challenges of studying and managing multi-level transformation towards sustainability. Through the understanding of these challenges, policy goals can be more strategic and target-oriented. These trade-offs and turnstiles cut across scholarly disciplines and political jurisdictions. They uncover the dilemmas that might distort effective decision-making.
Referring back to the research design of this project, this chapter sets the stage for data assessment by providing parameters for process-tracing and congruence methods. By attributing distortions of decision-making to trade-offs, scholars and decision-makers can reflect more purposively and can strategize actions more effectively.
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