Portfolio decision analysis methods in environmental decision making

Tuomas J. Lahtinen*, Raimo P. Hämäläinen, Juuso Liesiö

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

11 Citations (Scopus)

Abstract

Environmental modellers recurrently work with decisions where a portfolio of actions has to be formed to effectively address the overall situation at hand. When creating the portfolio, one needs to consider multiple objectives and constraints, identify promising action candidates and examine interactions among them. The area of portfolio decision analysis deals with such tasks. This paper reviews portfolio modelling approaches and software that are applicable in environmental management. A framework for environmental portfolio decision analysis is provided that consists of steps ranging from problem framing to modelling and optimization, as well as to the analysis of results. The use of this framework is demonstrated with an illustrative case describing planning of urban water services. The problem is analyzed with a recently introduced portfolio decision analysis method called Robust Portfolio Modelling, which enables the use of incomplete preference information and consequence data. This feature can be particularly useful in environmental applications.

Original languageEnglish
Pages (from-to)73-86
Number of pages14
JournalEnvironmental Modelling and Software
Volume94
DOIs
Publication statusPublished - 1 Aug 2017
MoE publication typeA1 Journal article-refereed

Keywords

  • Environmental decision making
  • Modern portfolio theory
  • Multi-criteria decision analysis
  • Portfolio
  • Problem structuring
  • Resource allocation

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