Decision Support Instruments in Environmental Impact Assessment (EIA)
introduction
The purpose of the research report is to compare the decision support instruments cost-benefit analysis – CBA, multi-criteria analysis – MCA and environmental impact assessment – EIA. The report will compare the frameworks for their similarities and differences and thereby understand how they complement each other. Decision making process is important for taking protective measures for the environment against natural hazards and other issues that raise environmental concerns. The decision-making process is complex because a variety of criteria need to be considered before resources could be utilised for putting the environmental protection plan into action. The stakeholders in environmental management are also diverse and hence require a multidisciplinary approach. Environment is a public good and hence need to be protected from utilitarian point of view. Environmental consumption is collective and no one party has the right or ability to detract the other from its non-consumption. Environmental decisions affect general public, organisations, producers and tax payers (Compton, et al., 2013) . Since the government is in charge of efficient allocation of a public good like environment, it must use the decision support systems. Economic, social and ecological criteria have to be implemented in order to take environmental protection decisions. The environmental assessment and impact can be measured using the decision support instruments like the cost benefit analysis (CBA), multi- criteria analysis (MCA) and the environmental impact assessment (EIA). The cost benefit analysis is the single criterion method for evaluating and follows a monetary approach. The multicriteria method follows a non-monetary approach (Nath, 1998) . The literature review will present the existing literature on the decision support instruments.
Literature review
Conceptual overview of the three systems:
The first half of the literature review section presents the conceptual overview of the main decision support environments like the CBA, MCA and EIA. These tools provide sound information for decisions makers regarding environmental economics. According to the Bruntland Report 1987, sustainability has been defined as meeting the developmental needs of the present without compromising on the ability to meet the future needs. These needs are defined in terms of economic, social and environmental needs. In order to ensure sustainable development of the present world these three evaluation tools are necessary.
Environmental Impact Assessment (EIA) is a process of evaluating the impact of an economic or monetary project on the environment and assessing the likely problems or issues the project may cause by taking into consideration the economic, socio cultural and health related impact of the project that could be beneficial or otherwise (UNEP, 2013) . The EIA is therefore a formalised plan for the evaluation process that uses two popular and widely known methods, the MCA and CBA. The main steps in executing an EIA process are briefly summarised as below:
- Identification of proposal
- Preliminary screening
- Scoping
- Analysing the impact of the project
- Mitigation of risks
- Statement of environment
- Review
- Making a decision
- Monitoring
The existing literature on the EIA says that it is an important tool for implementing the project at the right cost and time. According to the UNEP, EIA can be used to assess the economic and environmental benefits of the project which will reduce the implementation delays that arises from faults in the design or execution of the project or the impact of regulations on the project. Sadler and Verheem (1996) also came up with the term Strategic Environmental assessment or SEA which would encompass the process of identifying and evaluating environmental consequences of the project and make sure that the proposed policies or programmes are in line with the strategic goals and objectives of the organisation. The tool ensures optimal use of resources to ensure environmental sustainability.
According to Hanley and Spash (1993), CBA facilitates efficient allocation of resources by converting the environmental considerations in monetary terms. Under CBA all the impacts are considered in monetary terms like assessing the future cost of construction, monetary benefits of future production and employment possibilities arising out of the project. Money is therefore the single and the final variable in assessing the selection or rejection of the project. The costs and benefits that arise from the project are discounted and the net present value of the project is arrived at by adding the discounted costs (Mariotti, et al., 2011) . If the NPV method is employed to assess the project, then the project with the highest NPV is chosen. The first step in the implementing the CBA is the identification of impact of implementing the project. The impact could be positive or negative. For instance, a positive impact from a project results when the result is better supply of consumer goods resulting in higher profits for producers and maximum welfare for consumers. The negative impact of a project could result from shifting of resources from projects that otherwise might have increased welfare of the society. The CBA chooses to analyse only the economic aspects of the project. In order to assess a project both quantitatively and qualitatively the CBA will note the cause-and-effect relationship between the physical outcome of the project and the utilitarian benefit that it would have on the society. The physical quantification of impact arising from the project is the next step in the assessment. For example, an environment protection measure would mean analysis of the number of protected lives or assets arising after implementation of the project or the land area that has been destructed due to the project. Only the economically relevant impact of the project will be considered in monetary terms and arrives at an equation between costs and benefits. The CBA lays down direct and indirect approaches to valuation of projects. The concept of Willingness to Pay (WTP) is used to determine the monetary value arising out of the project. The direct value could be the pricing of the project while the indirect value could be the hedonic value or avoidance costs derived from the project. The most widely used method of direct valuation of the project is the contingent valuation approach, which assesses the willingness to pay by the consumers or end users of the project (Gamper, et al., 2006) .
The MCA refers to the procedures which are about multiple conflicting criteria that can be used in the decision-making process. There are several variables or criteria, like economic, socio cultural, health and so on in this analysis which could be beneficial or adverse to the multiple stakeholders in this relationship. Both these decision criteria have certain similarities and differences. The main process involved in the MCA are :
- Definition of the decision to be taken or content
- Identifying the performance criteria
- Assigning weights to criteria
- Judging each of the criteria by combining scores and weights
- Examining the results and performing the review
Multi criteria analysis as the name suggests would choose a alternative from a set of known options. The analysis would be based on choice of criteria’s that would describe the options and their importance in the decision-making process (Tudela, et al., 2006) . The literature on MCA highlights several methods that could be applied for evaluation and some of the commonly applicable ones are AHP, ANP, REGIME and ELECTRE family. According to Stirling and Mayer (2000) all the stakeholder interests have to be adequately represented when conducting the analysis. Fandel and Spronk (1983) have made suggestions regarding creation of various options in different circumstances. MCA can be used to specify the best option under certain constraints for example the cost constraints (Dogson, et al., 2001) .
The MCA uses different scales and units which makes the tool easily adaptable to all kinds of situation. Some MCA criterions can be expressed in monetary terms (or quantitative) or can be expressed in qualitative terms like good or bad. In the EIA framework, MCA deals with the economic, environmental and social aspects of the project. There are several techniques in the MCA evaluation tool where some require complete information from the decision makers on the aims of the project. Some require participation of other decision makers to clarify their priorities. The multi-criteria options have different weight attached to them. The decision makers create a performance matrix that would establish a relationship between options and their impact. This process adds weight to the options. Since different numerical options have varying measures a comparison among them is not possible without denominating them with a common scale. After assigning weights to each option, the decision maker would rank each of the option using the option’s score. In this way the options are ranked and where simpler models of the MCA are used, an option can be recommended. In this way an optimal selection of the options can be carried out (Aldian & Taylor, 2005) .
Similarities and differences between the methods:
Both the CBA and MCA begin by collecting the information flow of the costs and benefits that are likely to arise from a project. Both CBA and MCA have the same objectives like establishing the decision context for the project, identifying and evaluating the best project options. Both these methods aim at selecting a project that is efficient and optimal. All the cases where the EIA, CBA and MCA are used as decision support tools it would be necessary to make predictions regarding future cash flows, future values and number of criteria’s ad the stakeholders. Both these techniques require a sensitivity analysis to be carried out in the last stage as it is difficult to make very accurate forecasts.
There are some differences among the EIA, CBA and MCA techniques in spite of the commonalities among them. MCA and EIA are used as complementary methods to the CBA tool while evaluate environment projects. According to Edwards-Jones et al. (2000) the MCA is not an alternative techniques to the existing technique but is a formal structure where the results from other techniques like the CBA could be integrated.
Methodology
In order to understand the similarities and differences between CBA, MCA and EIA and perform a comparative analysis, the research paper used several secondary data in the form of journals, empirical research reports and discussion paper. The methodology for the data collection and analysis will follow a qualitative approach, which means that there will be no usage of statistical and mathematical tools for the analysis.
Analysis and results
Based on the secondary sources of data gathered from journals, reports and discussion papers, the paper performed a comparative analysis that can be tabulated as below. The review of the journal and analysis of the findings from the academic resources on the three tools explicitly bring out the differences among the three. The CBA would determine if a particular project would produce the most economic, environmental and social benefits and identify future costs. The MCA would allow the planning bodies to set clear objectives and work in order to assign weights to each criterion. The projects would then be evaluated and communicated with the preferred choice. The EIA would ascertain which project would have the minimal impact social, economic and environmental impact. It would thus propose a measure that would improve the project to acceptable levels.
Analysis and results
Based on the secondary sources of data gathered from journals, reports and discussion papers, the paper performed a comparative analysis that can be tabulated as below. The review of the journal and analysis of the findings from the academic resources on the three tools explicitly bring out the differences among the three. The CBA would determine if a particular project would produce the most economic, environmental and social benefits and identify future costs. The MCA would allow the planning bodies to set clear objectives and work in order to assign weights to each criterion. The projects would then be evaluated and communicated with the preferred choice. The EIA would ascertain which project would have the minimal impact social, economic and environmental impact. It would thus propose a measure that would improve the project to acceptable levels.
| Criteria | CBA | MCA | EIA |
|---|---|---|---|
| Focus | On public sector projects Environmental and socially applicable projects. Environmental projects cannot be monetised. | Environmental economic and social based projects Applied to local projects | Potential environmental issues |
| Simplicity | Simple and easy to use Uses a single unit to measure | Used in complex situations Used as linear process | Complicated to use as defining environmental impact is not easy. Used as iterative process |
| Time | Short and expensive. | Takes a lot of time to implement. | Takes long period for negotiation. |
| Accuracy | Uses the time value of money The results could be biased Is based on judgement | The study builds on a specific objective Lacks credible data. Is based on judgement Can be biased | Outcomes and costs are hard to predict in the early stages of the implementation of the EIA. The results could be biased. |
| Human resources | Requires participation of minimum of one user or expert. | Requires the participation of several stakeholders. Involvement of public | Involvement and participation of several stakeholders. Involvement of public |
| Output | Generates good decisions. Can be used to get new projects The results are sensitive to change | Guides good decisions. Used for getting new projects Evaluating the alternatives. Forms the basis for decision making | Helps in taking better decisions. Evaluating alternatives Forms the basis for decision making in the future. Can be used for raising environmental consciousness at public meetings and exhibitions. |
Some of the common limitations in all the three tools are that they are time consuming process, based on judgement of the experts and that the expert’s opinion could be biased. The three methods can be used to together as they complement each other. The three decision support tools would help in smoothening the planning process and minimise the risks in the project. The EIA tool would help in safeguarding the environment while the CBA and MCA will identify the socio-economic benefits in the project. Both the CBA and MCA have certain strengths and weaknesses. CBA is a useful tool when ascertaining public and private environmental costs on a large scale (Dompere, 2004) . MCA is useful at a micro scale when all the stakeholders to the project can be individually evaluated. Although CBA is useful in bringing about project efficiency and avoiding wastage of resources, the MCA makes its importance felt even more by being more effective in getting results (Boardman, et al., 2001) .
Recommendations and Conclusions
The discussion on the various decision support tools, their similarities and differences and their comparative study has contributed its bit to the field of Environmental Impact Assessment (EIA). The knowledge of the three tools would facilitate the decision-making process of organisations by engaging their stakeholders also in the decision-making process. The appropriate applications of these tools would ensure that the benefits are derived from the projects and all the negative impacts are mitigated. It is recommended that organisations that want to assess the environmental impact of their projects make the evaluation process more transparent and free of bias. The decision-making process should be carried out by an independent person who possesses knowledge about the EIA process and related theories. On concluding notes, the report finds that EIA tool would safeguard the environment and the CBA and MCA will identify the socio economic benefits. However, to assess the sustainability of a project the environmental, economic and social aspects should be considered. This means all the three must be used in conjunction and must complement each other.
Bibliography
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