The Use of Screening in the Pawn Study

Abstract

In most policy analysis studies there are a large number of alternative policies and a large number of impacts to be considered. Time and budget constraints make it impossible to calculate all the impacts for all of the alternatives As a result, such studies often include a step (which we call screening) in which a large number of policy options(tactics) are evaluated in terms of a small number of impacts in order to screen out those tactics that are clearly not attractive. The screening method is often implicit and non-scientific. This paper describes the systematic approach to screening that was used in the PAWN study. A two stage process was used. In the initial screening step, a tactic's cost was compared with an estimate of the maxiqpm benefit that any tactic could conceivably produce when applied for the same purpose. Only the tactics whose costs were less than the maximum benefits survived to be evaluated in the next step. The second screening step involved obtaining an upper bound on the expected annual benefits from the tactic under various assumptions about future demands for surface water, and comparing this upper bound with a measure of the annual cost of the tactic --the tactic's annualized fixed cost. If the annualized fixed cost was less than the upper bound on the expected annual benefits, the tactic was considered promising, and was retained for further analysis. If not, the tactic was screened out. The benefits considered in the screening analysis were (1) reductions in agriculture shortage losses, benefits from a tactic was obtained by taking a weighted average of the estimated benefits in four years of varying dryness. The weights were based on the probabilities of occurrence of the various types of years. In general, we found that, unless the demand for surface water increases significantly above current levels, there are relatively few tactics that are worth considering further. In the case of increased demand for surface water, we found a number of promising tactics. Most of them were small, inexpensive regional tactics. Almost all of the large, expensive, national tactics (some having investment costs of over $ 100 million that had been under discussion in The Netherlands for many years) were screened out.