Multicriteria analysis vs. externalities assessment for the comparative evaluation of electricity generation systems

Multicriteria analysis vs. externalities assessment for the comparative evaluation of electricity generation systems

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Article ID: iaor19991827
Country: Netherlands
Volume: 102
Issue: 2
Start Page Number: 364
End Page Number: 379
Publication Date: Oct 1997
Journal: European Journal of Operational Research
Authors: ,
Keywords: geography & environment
Abstract:

Attributing costs to the environmental impacts of energy production and use could greatly assist in environmental planning because monetary values are capable of directly influencing energy decisions without changing the rules of the market. Despite the considerable progress made recently in the valuation of environmental externalities there is still an open debate about the reliability of the estimated damage costs. This paper is aimed at comparing the external costs calculated for a number of power plants using different energy sources with the outcome of a multicriteria analysis where environmental impacts are expressed in physical terms or on a qualitative scale. Similarities and disparities in the obtained rankings are identified and clarified on the basis of the fundamental principles of the two approaches. It is concluded that, although external costs do not accurately reflect the traditional value system of individual decision makers, they give suitable price signals and thus help in eliminating distortions of the current energy market.

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