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doi:10.3808/jei.
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Multi-Variable Simulation Decomposition in Environmental Planning: An Application to Carbon Capture and Storage

M. Kozlova1 and J. S. Yeomans2 *

  1. School of Business and Management, Lappeenranta University of Technology, Lappeenranta 53850, Finland
  2. OMIS Area, Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada

*Corresponding author. Tel.: (416) 736-5074; fax: (416) 736-5687. E-mail address: syeomans@schulich.yorku.ca (J. S. Yeomans).

Abstract


Environmental decision-making commonly involves multifaceted problems that demonstrate considerable uncertainty. Monte Carlo simulation approaches have been employed in a variety of environmental planning venues to address these uncertain aspects. Simulation-based outputs are frequently presented in the form of probability distributions. Recently an approach referred to as simulation decomposition (SD) has been introduced that extends the analysis of Monte Carlo results by enhancing the explanatory power of the cause-effect relationships between the multi-variable combinations of inputs and the simulated outputs. SD constructs sub-distributions of the simulation output by pre-classifying some of the uncertain input variables into states, clustering the various combinations of these different states into scenarios, and then collecting simulated outputs attributable to each multi-variable input scenario. Since the contribution of subdivided scenarios to the overall output is easily portrayed visually, SD can highlight and disclose previously unidentified connections between the multi-variable combinations of inputs on the outputs. An SD approach is generalizable to any Monte Carlo model with negligible additional computational overhead and, hence, can be readily used for environmental analyses that employ simulation models. This study illustrates the efficacy of SD in environmental analysis using a carbon capture and storage project from China.

Keywords: simulation decomposition, Monte Carlo simulation, environmental decision making under uncertainty, planning and strategy


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