Assignment #1

Article 1

“Some Simple-Minded Observations on the Role of Optimization in Public Systems Decision-Making”

Jon C. Liebman
August 1976
INTERFACES Vol. 6, No.4

Summary

The private sector has long applied models to problems and, with great success, optimized those models to solve the problems and reach the goals of the decision-maker: whether that goal be related to increasing efficiency, optimizing profits, or reducing costs in military and industrial applications. By and large, these problems were relatively straightforward and simple. Times have changed.

At the time this article was written, models were becoming more complex in the private sector and model optimization was beginning to be applied to public applications. Although the tools and techniques for solving optimization problems had advanced and become more complex –accounting for most of the added complexity in the private sector – the complexity of modeling in the public sector had to do with the nature of the public’s problems.

Dissimilar from the private sector, which typically has well established goals and a unified set of decision-makers, the public sector is often hampered by a number of stakeholders with a diversity of problem perceptions, objections, goals, measures of effectiveness, and constraints. The author suggests that the old way of modeling, optimizing, and then applying will no longer work and that this approach should be abandoned when solving complex public problems (which he coins as being “wicked”). However, the author still believes there is a place for optimization and modeling in the public sector.

The author suggests that the role of models and optimization in the public sector should be to “illuminate conflicts and generate a set of alternatives for further exploration.” The analyst should use their intuition, insight, and understanding - along with the model - to guide the decision-makers through the maze of conflicting resolutions and priorities of the numerous stakeholders.


Discussion

The author was very straightforward at the beginning of his article in saying that “This paper will not provide any earth shaking answers… Further, this paper will not raise any new and highly penetrating questions.” I would deem his assertion accurate. In most cases I would consider a paper that doesn’t pose any new questions or answers as a paper unworthy of journal publication. However, the author was very clear from the beginning that his intention was to merely provide some “simple-minded observations” as opposed to groundbreaking research. Personally, I found the paper very interesting because of my relatively limited knowledge on the optimization of models and the author’s simple and concise writing style - which made it easy to grasp some of the major elements of modeling and optimization.

I would be interested in research documenting the progression of optimization over the 30 years since this paper was written. What advancements have been made in the tools and techniques used by analyst? Has complexity been reduced or increased with the new tools and techniques? What role has advanced computer modeling played in this field since the paper was written?




Article 2

“The Optimal Joint Provision of Water for Irrigation and Hydropower”

Bishu Chatterjee, Richard E. Howitt, and Richard J. Sexton
July 1998
Journal of Environmental Economics and Management
Article No. EE981047

Summary

The main focus of this article is on the trade-off between water used for agriculture versus water used for hydroelectric power, namely in the central California. The central issue arises because there is a timing discrepancy between peak irrigation demands and periods of peak demand for power. It was found that the citizens who were actively involved in decision making (via voting and attending meetings) were primarily farmers who used the water for irrigation. Therefore, the cooperative water supply organization (WSO) set its primary goal to deliver water for irrigation to farmers. However, the authors demonstrate that this is not the optimal way to utilize the water.

The research presented establishes rules for the optimal intraseasonal allocation of surface water for a WSO that produces water for both irrigation and hydropower. The rules prescribe the allocation pattern that maximizes farmer-members’ welfare as users of irrigation and as de facto owners of the scarce water resource. The article outlines the benefits and possible negative side effects of instituting the proposed optimal water allocation.

Discussion

The article was very interesting in that it dealt with the very important issue of optimizing water allocation – an issue that will continue to gain attention as water becomes scarcer around the world. Although interesting, I would liked to have seen the research incorporation other demands on the water resource, such as the water used for municipalities or industry in the area. I realize that the major users in the area are agriculture and hydropower but I don’t think they should simply ignore all other uses in the optimization model.

There will continue to be a lot of research and studies in optimizing water allocation. It will be interesting to see the reallocation of water in certain areas around the country as the economics of water use continue to evolve and be understood more fully.