SANGWON SUH

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Qualitative CBA for recommendations-- Example --

• SANGWON SUH AMY COWELL

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Objectives of CBA

• Overall, our role is to facilitate a structured
  discussion about why some recommendations should
  draw more attention than others.
• We will be comparing apples and oranges, and
  subjectivity is unavoidable.
• The objective is to elucidate rationales behind
  the recommendations.

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A fictitious recommendation

• New policy to increase ethanol production using
  cellulosic biomass to 2.1 billion gallon by 2022
  (1/10 of the national target).

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Cellulosic feedstock to make 2.1 billion gal

• Backgrounds
• Cornstover available to cover up to 600 million
  gallon of ethanol.
• Prairie and woody biomass may be able to fill up
  the rest, but currently no infrastructure for
  transportation, harvest and conversion.
• This will require 30 40 more ethanol plants.
• Expected to have around 2/gallon of production
  cost.

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Costs and Benefits

• Costs
• High capital investment required.
• May require up to 1 billion dollar of subsidy to
  make it really work (50 cents per gallon).
• May require 10 20 billion gallon of drinking
  water.
• New transportation and harvest infrastructure
  needed.
• May require higher fertilizer application.
• Benefits
• Higher energy independence.
• Reduced GHG emissions.
• Rural development and income creation

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Criteria to be evaluated
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Example evaluation
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Next step

• The evaluation result makes sense only in
  relation to other evaluations (only relative
  meaning).
• Gathering all other evaluations, we will
  calibrate the evaluation results.
• Cost-effective recommendations will be identified
  by comparing these evaluation results.