TXC example: Cost-benefit analysis of controlling emissions from a power plant

TXC.ana is an example cost-benefit analysis to examine how much to control emissions of TXC. TXC is a fictional toxic air pollutant, but it provides a useful illustration for a cost-benefit analysis of regulations to control of particulates, sulfur oxides, and other harmful emissions from a coal-fired power plant. This TXC model is actually an updated version of the very first Analytica model -- based on a model in Demos, the predecessor of Analytica, developed in 1979 by Max Henrion as part of his PhD at Carnegie Mellon.

It is a great example to see how you can use Analytica to look at:

  • Cost-benefit analysis under uncertainty -- comparing the cost of controls against the benefits of reduced mortality from controlling emissions
  • Exploring the effects of alternative decisions -- the level of emissions reductions
  • Nonlinear costs -- control cost increases exponentially with the level of control, reflecting low costs for small levels of control and increasingly higher cost per reduction at lower emissions levels.
  • A health damage function with a threshold conncentration below which TXC has no effect.
  • Sensitivity analysis for the "Value of a statistical life" used to quantify benefits of reduced mortality.
  • Uncertainty expressed as probability distributions about key quantities, including control cost, the threshold and slope of the health damage function, and the number of people exposed.
  • Importance analysis lets you see the relative contribution of each uncertain variable to the uncertainty in the results (Net benefits), as a function of the Decision variable, Control level.
  • Parametric analysis to explore how the "Net benefits" vary with level of control and "Value of a statistical life"

The model lets you select a level for the Decision variable Emission control from 0 (no control) up to 95%, that eliminates 95% of emissions. The Control costs increase exponentially with the level of control -- a simple way to reflect the common situation.

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