Compromise Policies: An Integration of Economic and Environmental Criteria

The set of efficient policies could be too large to serve as a useful guide for real action. In this chapter we use compromise programming (CP) to reduce the number of eligible policies and get more precise policy recommendations than those derived from the efficient set itself. Apart from being efficient, so-called compromise policies have the property of minimizing the distance to the ideal point. We first perform a CP exercise which is a natural continuation of Chap. 6 . We seek to offer policy recommendations that are as close as possible to the maximum growth rate and the minimum level of CO2 emissions. We conclude that the compromise set basically consists of a single point, which turns out to be a very handy property for policy making in practice. We also present a review of some general interesting properties of the compromise set and interpret its usefulness for our case. Finally, we broaden the scope of our exercise by solving a policy-making problem with four (rather than two) criteria. We discuss that, although not all the interesting properties of the compromise set can be guaranteed, it is still a useful device for real policy making.