A Rational Take on Decision Making : A Case Study of Sweden’s Budget for Energy, Climate and Environment

University essay from KTH/Energiteknik; KTH/Energiteknik

Author: Emil Gustafsson; Fredrik Nordström; [2015]

Keywords: ;

Abstract:

This project is written under the supervision of KTH and its energy department (dESA). The key inspiration to this report is the “rational decision making approach” employed by the Copenhagen Consensus Centre. Their research is outstanding in the way that it rationalizes every investment decision to its measurable and unmeasurable out- comes. The research is intuitive yet groundbreaking when it comes to cost-benefit analysis.

The objective of this report is to apply the pillars of rationality using a Multiple-Criteria Decision Analysis (MCDA) on the Swedish approach to making decisions regarding cli- mate and energy policy. The goal is to give an indication of the effectiveness of the budget decision made by the Swedish government.

The first part of the report accounts for the establishment of the simplified comparison model (MCDA). The literature review accounts for previous work conducted within this field, both by the Copenhagen Consensus Center but also other parties, to lay groundwork for the model used in the second part. The method then generates a model to be used to evaluate the Swedish budget for climate and energy policy. The second part applies the model established in the first part on the Swedish budget to result in a reference point for evaluation.

The main outcome is the development of a model that can be calibrated to that which generates the most effective good. The model is to be seen as a prototype subject to many iterations before official use. Early results of the model indicate that investments in preservation of nature and similar have a low benefit compared to that of investments in sustainable cities and research. 

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