Marginal Cost Analysis Research Articles

Building retrofit optimization considering future climate and decision-making under various mindsets

Building retrofit is effective in reducing building energy use and improving comfort levels for existing buildings. However, conducting multi-objective optimization for individual buildings can be challenging due to the laborious computational cost of using white box models and the difficulty in visualizing and understanding the decision-making process. Additionally, the impact of climate change has not been fully considered for the post-retrofit lifecycle. This research proposes a pragmatic automated scheme that integrates a feature selection method based on marginal abatement cost analysis and variance-based sensitivity analysis, multi-objective optimization supported by non-dominated sorting differential evolution (NSDE) algorithm, tailor-made decision-making support under different mindsets, and tree-based retrospection scheme of decision-making pathways. The simulation engine used in this study is a low-order white box modeling tool developed by the research team. The proposed scheme was applied to two educational buildings with different thermal characteristics, and the results showed that a certain number of sampling sizes were needed to achieve reliable feature selection results. The hierarchical clustering based decision-making support scheme has demonstrated robustness in visualizing and supporting decision-making for Pareto front. Two retrofit mindsets - aggressive and balanced - were assumed in the decision-making process, and the proposed method produced distinct final solutions accoridng to the two mindsets. This framework can support informed decision-making, helping stakeholders implement sustainable practices and transition to a low-carbon built environment.

THE ROLE OF DIGITIZATION IN MANAGEMENT AND STRATEGIC DECISION-MAKING IN MODERN MANAGEMENT

This research aims to assess the impact of digitization on management efficiency and strategic decision-making, a pivotal aspect in the contemporary business world. By integrating digital technologies with traditional mathematical models and analyzing survey data from 250 management professionals, the study provides a comprehensive understanding of the multifaceted effects of digitization.The principal outcomes from the mathematical analyses, including Marginal Cost Analysis, Break-Even Analysis, and Linear Programming, indicate substantial improvements in operational efficiency following digitization. Specifically, Marginal Cost Analysis shows a significant decrease in the cost of production, and Break-Even Analysis reveals a reduction in the break-even point by approximately 15%, underscoring enhanced cost-effectiveness. Linear Programming results demonstrate a 20% improvement in resource allocation efficiency. The survey analysis complements these findings, revealing a positive perception of digitization in enhancing managerial adaptability, efficiency, and decision-making effectiveness, with average rating improvements of 0.3, 0.4, and 0.5 points, respectively, on a 5-point scale. Regression analysis further highlights the positive influence of technological affinity on decision-making effectiveness. However, ANOVA results suggest variability in the impact of digitization across different industry sectors, necessitating sector-specific digital strategies.Digitization significantly elevates management efficiency and strategic decision-making capabilities. The integration of digital tools with traditional management techniques results in more informed, efficient, and strategic business decisions. However, the varied impact across sectors and the rapid pace of technological advancement calls for continuous adaptation and sector-specific strategies. These findings provide vital insights for businesses navigating the digital era, emphasizing the strategic integration of digital tools in management practices for sustained success and competitiveness.

Environmental and economic evaluation of decarbonization strategies for the Indian steel industry

Decarbonizing hard-to-abate sectors, such as iron and steel, is critical to achieving climate change goals given the unique and often fossil fuel-based manufacturing processes. Evaluating the iron and steel sector for India is also pertinent, given the immense industrial growth expected in the upcoming decades (IEA, 2021). Cost and emission models have been developed and analyzed using the Sustainable Energy Systems Analysis Modelling Environment (SESAME) Industry and Industrial Fleet models. The models calculate cradle-to-gate greenhouse gas (GHG) emissions and the levelized cost of several steel production pathways. In addition to plant-level analysis, the models estimate emissions and energy consumption for the Indian steel sector.From the marginal abatement cost (MAC) analysis, smelting technologies with carbon capture provide the best option with a MAC as low as $9/t CO2e and a 70% emission reduction relative to the BF-BOF. However, the green H2-DRI pathway reduces emissions even more (84%) with a higher MAC of $112/t CO2e. For existing NG-DRI plants, switching to hydrogen is more advantageous than carbon capture with MEA since the emissions are sensitive to natural gas upstream methane leakages. Sector scenario analysis with The Energy Resource Institute steel demand and International Energy Agency production pathway projections indicate that combined resource efficiency efforts and decarbonization pathways will aid in decreasing cumulative 2050 emissions by about 27% from the baseline scenario. Future steel production will need to be flexible to new fuels for reducing agents and potential CCS retrofitting to support the decarbonization efforts and mitigate climate change.

Understanding the paradox between tragedies of the commons and the anticommons: From a cognitive psychology perspective.

The tragedy of the commons refers to the overuse of resources which are rival in consumption but lack excludability and it also refers to rent dissipation. While the tragedy of the anticommons is a tragedy closely connected with underuse of resources that are rival in consumption and with too strong excludability. The prior studies proved that the tragedy of the commons and the tragedy of the anticommons are symmetric from the perspective of pure mathematics, especially the game theory, which was later refuted by behavioral economics experiments. According to them, the tragedy of the anticommons is severer than the tragedy of the commons. The asymmetry of the tragedy of the commons and the tragedy of the anticommons is a paradox by these different research methods. This paradox shows that there are imperfections in the completely rational economic man hypothesis set up by neoclassical economics. As a fundamental theory, the tragedy of the commons is quite influential in many disciplines, such as microeconomics, public sector economics, ecological economics, environmental economics, management, sociology, property law, and political science. And the tragedy of the anticommons theory has also opened its door of both theoretical research and practical implications since its acceptance by Nobel laureate Buchanan, the main founder of public choice school. Only when theoretical issues are thoroughly discussed and made clear enough, can people avoid misunderstanding or misusing the commons theory. Thus, it is necessary to elucidate the paradox between them. Based on Simon’s bounded rationality, Kahneman and Tversky’s prospect theory, value function, Thaler’s mental accounting, endowment effect, and other cognitive psychological tools, this study clearly shows that agents’ decision-making process is not just based on the long-believed marginal benefit and marginal cost analysis advocated by traditional neoclassical economists. Agents’ decision-making is a process in which agents selectively absorb, code the objective marginal revenue and marginal cost, and feed relevant information to their brain. Therefore, what plays a directly decisive role is not the objective marginal revenue and marginal cost per se, but the mentally perceived subjective utility of marginal revenue and marginal cost by the human brain. Followed by this research clue, the paradox between the tragedy of the commons and the tragedy of the anticommons is elucidated from the perspective of cognitive psychology.

An Integrated Optimization Model for Industrial Energy System Retrofit with Process Scheduling, Heat Recovery, and Energy Supply System Synthesis

The urgent need for CO2 reduction is calling upon the industry to contribute. However, changes within local energy supply systems including efficiency enhancement are bound to several economical and technical constraints, which results in interfering trade-offs that make it difficult to find the optimal investment option for CO2 mitigation. In this article, a new optimization model is presented that allows to optimize the design and operation of a supply and heat recovery system and production scheduling simultaneously. The model was used for retrofitting of a small brewery’s local energy system to identify decarbonization measures for eight potential future scenarios with different technical, economical and ecological boundary conditions. The results show that the proposed cost-optimized changes to the current energy system only slightly reduce carbon emissions if decarbonization is not enforced since the optimal solutions prioritize integration of photo voltaic (PV) modules that mainly substitute electricity purchase from grid, which is already assumed to be carbon free. However, enforcing decarbonization rates of 50% for the assumed future boundary conditions still results in cost savings compared to the current energy system. These systems contain heat pumps, thermal energy storages, electric boilers, and PV. Battery storages are only part of the optimal system configuration if low to moderate decarbonization rates below 50% are enforced. An analysis of marginal costs for units not considered in the optimal solutions shows that solar thermal collectors only require small decreases in collector cost to be selected by the solver.

Health Service Costs for a Predialysis Dietetic Clinic: A Retrospective Cost Analysis Study

Effect of dietetic consultation (DC) on clinical outcomes is an under-researched component of predialysis education. Predialysis DC has been associated with a 7.5-month delay in requiring dialysis commencement, having potential cost implications for health services. Limited studies have evaluated the possible impact of predialysis DC on health service costs. This study aimed to investigate the hospital health service costs associated for patients attending a predialysis dietetic clinic. A cost analysis comparing hospital health service costs over 4years in a cohort of predialysis patients with and without DC. Retrospective study data were used (n=246) along with outpatient renal clinic visits, hospital admissions records to estimate total hospital service costs. A generalized linear model evaluated associations between total cost and the marginal effects of DC and other variables on total costs. Mean total cost for patients (outpatient visits, admissions, and dialysis) was AUD$178,913 (95% confidence interval=$158,735-$199,090) or $185/day (95% confidence interval=$12-$161). The DC group total costs/day were lower than the no-DC group with a mean difference of $51/day ($155 vs. $206; P=.03). Patients in the DC group had less admissions compared to the no-DC group (6.32 vs. 8.06; P=.02). The highest marginal costs estimated for the entire cohort were lower estimated glomerular filtration rate at admission ($123,511, P=.001), inpatient admissions ($189,333, P<.001), commencing dialysis ($581,812, P<.001), having diabetes ($94,590, P=.014), and cerebrovascular disease ($177,080, P=.01). DC advice did not influence total costs. Patients who received DC had lower total health services costs/day compared to those who did not receive DC. Marginal cost analysis indicates the cost difference to be attributed to less time on dialysis and fewer hospital admissions in this retrospective observational cohort. An assessment of dietetic staffing in predialysis renal services is warranted.

Convergence analysis of regional marginal abatement cost of carbon dioxide in China based on spatial panel data models.

China has announced to launch a national emission trading system (ETS). The heterogeneity of marginal abatement cost (MAC) is prerequisite for trading, and the knowledge about the evolutionary characteristics of MAC is particularly necessary. However, the β convergence theory has been proved to be suitable yet rarely applied to the study of MAC of CO2. To fill this gap, this paper connects them creatively, and the convergence of MAC during 2001-2015 and the influential factors are explored by spatial panel data models. Results show that China's MAC converges during the study period whether the spatial effect is considered or not. When evaluating the convergence of MAC, the spatial effect should not be ignored, because it will improve the explanatory power of models and promote the convergence. The size of labor force, emission level, coal consumption, foreign direct investment, and industrial structure significantly affect the growth rate of MAC. Low-carbon policies could be formulated fully considering the factors and their spillover effects. Those findings are certainly significant in imposing carbon reduction targets and adopting policy instruments. In addition, a national ETS is more applicable to China's reality at this stage and suggested to introduce carbon tax in due course in the future.

Reduction of nitrogen pollution in agriculture through nitrogen surplus quotas: an analysis of individual marginal abatement cost and different quota allocation schemes using an agent-based model

Nitrogen (N) pollution has mostly been controlled using command-and-control instruments. However, nitrogen surplus permits (NSPs), which are tradeable, can be more cost-efficient in addressing the problem. To model this instrument, we calculated the individual marginal abatement cost curve for a sample of about 3,400 Swiss farms using farm-optimization models implemented in the agent-based agricultural sector model SWISSland. We also used SWISSland to analyze the effects of two NSP distribution systems (grandfathering and land-based allocation) on different farm types. The results showed that different farm types range in their abatement costs to reduce N surplus from an average of −0.04 CHF kg−1 N on arable farms to 51.06 CHF kg−1 N on special crop farms. We also found that N surpluses hardly explain the level of abatement costs. The biggest differences in effects of the distribution scheme were found in intensive livestock farm types such as pig or poultry farms.

Costing of Cesarean Sections in a Government and a Non-Governmental Hospital in Cambodia-A Prerequisite for Efficient and Fair Comprehensive Obstetric Care.

Knowing the cost of health care services is a prerequisite for evidence-based management and decision making. However, only limited costing data is available in many low- and middle-income countries. With a substantially increasing number of facility-based births in Cambodia, costing data for efficient and fair resource allocation is required. This paper evaluates the costs for cesarean section (CS) at a public and a Non-Governmental (NGO) hospital in Cambodia in the year 2018. We performed a full and a marginal cost analysis, i.e., we developed a cost function and calculated the respective unit costs from the provider’s perspective. We distinguished fixed, step-fixed, and variable costs and followed an activity-based costing approach. The processes were determined by personal observation of CS-patients and all procedures; the resource consumption was calculated based on the existing accounting documentation, observations, and time-studies. Afterwards, we did a comparative analysis between the two hospitals and performed a sensitivity analysis, i.e., parameters were changed to cater for uncertainty. The public hospital performed 54 monthly CS with an average length of stay (ALOS) of 7.4 days, compared to 18 monthly CS with an ALOS of 3.4 days at the NGO hospital. Staff members at the NGO hospital invest more time per patient. The cost per CS at the current patient numbers is US$470.03 at the public and US$683.23 at the NGO hospital. However, the unit cost at the NGO hospital would be less than at the public hospital if the patient numbers were the same. The study provides detailed costing data to inform decisionmakers and can be seen as a steppingstone for further costing exercises.

Societal benefits of halving agricultural ammonia emissions in China far exceed the abatement costs

Mitigating agricultural ammonia (NH3) emissions in China is urgently needed to avoid further damage to human and ecosystem health. Effective and feasible mitigation strategies hinge on integrated knowledge of the mitigation potential of NH3 emissions and the associated economic costs and societal benefits. Here we present a comprehensive analysis of marginal abatement costs and societal benefits for NH3 mitigation in China. The technical mitigation potential of agricultural NH3 emissions is 38–67% (4.0–7.1 Tg N) with implementation costs estimated at US$ 6–11 billion. These costs are much lower than estimates of the overall societal benefits at US$ 18–42 billion. Avoiding unnecessary fertilizer use and protein-rich animal feed could provide 30% of this mitigation potential without additional abatement costs or decreases in agricultural productivity. Optimizing human diets with less animal-derived products offers further potential for NH3 reduction of 12% by 2050.

PT428 - Direct and marginal cost analysis of not aiming for the target in a MRI-targeted prostate biopsy pathway

PT428 - Direct and marginal cost analysis of not aiming for the target in a MRI-targeted prostate biopsy pathway

Determining the optimal capacity and occupancy rate in a hospital: A theoretical model using queuing theory and marginal cost analysis

We model the hospital as seeking to balance the costs to itself in providing care, as well as the societal cost of people waiting for care. We use queuing theory to show that the optimal capacity and the corresponding optimal occupancy rate are dependent on the marginal cost of expanding capacity, the marginal cost of waiting, and the rates of patient arrival and discharge. Therefore, a universal occupancy target is unfounded. As well, the model shows that increasing capacity to respond to increased patient influxes is inadequate, suggesting that the health care system must explore alternate responses to burgeoning patient populations.

Multi-criteria assessment of energy sector nationally appropriate mitigation actions in Sri Lanka

Sri Lanka has shown its commitment for greenhouse gas mitigation by publishing nationally determined contributions. Key share of mitigation targets is from the energy sector, amounting to about 40 Mt CO2e during 2020-2030. 52 mitigation options (MOs), referred to as nationally appropriate mitigation actions (NAMAs), were identified with a total mitigation potential of 75 Mt CO2e. Globally, the commonly used methodology for prioritization of NAMAs is the marginal abatement cost (MAC) analysis. However, this approach has received criticism over the effectiveness due to its inability to consider other important aspects such as barriers, enablers and co-benefits. The present study proposes a multi-criteria assessment (MCA) methodology involving more comprehensive characteristics of MOs and use of sustainability criteria/indicators to broaden the applicability of MAC analysis. The proposed methodology involves a stage-wise evaluation in three levels. Firstly, MOs identified are pre-screened based on technology maturity and information availability as indicators for chance of success in implementation. Among 52 MOs, 38 qualified for the next assessment level. These MOs are then undergone screening, where MAC and mitigation potential are combined with a scoring system together with a prescribed benchmark value as a qualifying criterion. Accordingly, 31 MOs are qualified, which represent a total mitigation potential of 62 Mt CO2e.Finally, at third level, indicators in relation to barriers, enablers and co-benefits are used to derive an overall score of MCA. The results of MAC and MCA analyses are used in conjunction to prioritize MOs under three appealing levels as 07 highly, 14 moderately and 10 least, with a total mitigation potentials of about 17.1, 32.4 and 12.8 Mt CO2e, respectively. Accordingly, the 21 high and moderate appealing MOs could contribute to the NDC targets. It is concluded that MCA methodology proposed is a sound approach in prioritizing MOs.

Solid Waste Management Cost Function Analysis in Industrialising Cities: Lessons from the Healthcare Sector

Better solid waste management (SWM) is a critical need for many industrialising cities in the world, with institutional and financial issues critical to improving management. Great progress was made from 1970–2000 in estimating the costs for healthcare in industrialising cities, while to date very little progress has been made in improving cost function analyses on SWM. The similarities between the two sectors are strong, and the history of healthcare cost function analysis used to elucidate a pathway to improved cost function analyses for industrialising cities. The following cost function issues are explored: economy of scale, marginal cost analysis, cost function analysis, economies of scope, relationship between size of service provider and costs, accounting for outpatient and informal sector activities, input prices and ownership and control. The recommendation is that future work on SWM cost analysis should prioritise (1) analysis of which variables need to be included or can be excluded in cost function analysis, (2) use of cost functions to analyse questions related to service provision and (3) collection of more and more appropriate data to allow development of cost functions analysis methods specifically suited to SWM in industrialising cities.

Matching donations based on social capital in Internet crowdfunding can promote cooperation

Social capital is an important but often overlooked intangible resource. Unlike other ways of matching donations, we try to match the social capital contributed by individuals in Internet crowdfunding to promote cooperation, and at the same time publish the material capital along with social capital to stimulate people’s enthusiasm for donations. Evolutionary results show that making full use of social capital attracts more public donations on the Internet. Through the analysis of marginal cost, it can be found that the organization can achieve higher level of cooperation at lower cost. Furthermore, there is an optimal threshold for publishing donation lists on the Internet to achieve better cooperation. We also find that network structure, historical information and the existence of altruists have influences on cooperation. Our research helps organizers effectively solve the dilemma of insufficient public participation in public utilities and high construction cost of public goods.

A marginal cost analysis of a Big Brothers Big Sisters of America youth mentoring program: New evidence using statistical analysis

The objective of this study was to evaluate the cost of serving one additional youth in the Big Brothers Big Sisters of America (BBBS) program. We used a marginal cost approach which offers a significant improvement over previous methods based on average total cost estimates. The data consisted of eight years of monthly records from January 2008 to August 2015 obtained from program administrators at one BBBS site in the Mid-Atlantic. Results show that the BBBS marginal cost to serve one additional youth was $80 per mentor-month of BBBS mentoring (irrespective of program type). The cost to offer services for the average match duration of 19 months per marginal added youth was $1503. The marginal costs per treated program participant in school-based versus community-based programs were $1199 and $3301, respectively. Marginal cost estimates are in the range of youth mentoring programs with significant returns on investment but are substantially higher than prior BBBS unit cost estimates reported using less robust estimation methods. This cost analysis can better inform policy makers and donors on the cost of expanding the scale of local BBBS programs as well as suggest opportunities for cost savings.

Research on Urban Low Carbon Intelligent Traffic Control Model

Intelligent transportation control is an important part of the entire transportation system, and low-carbon transportation is the ultimate goal of urban transportation development. Realizing the balance of supply and demand of intelligent transportation control in metropolis is one of the strategic means to build a low-carbon intelligent transportation in metropolis. The paper collects a time series related traffic data during the ten years of the metropolis, combined with the knowledge of systems engineering and economics, and constructs the supply and demand system model to the traffic volume of metropolitan intelligent control transportation; different vehicle costs and the marginal benefit of private transportation are both analysed accordingly. Modelling and systematic analysis of marginal cost, marginal revenue and marginal cost of public transportation are adopted to conduct optimal traffic volume of urban roads, with a view to constructing a low-carbon intelligent traffic model for metropolis from the perspective of supply and demand. Macro-control strategies for urban low-carbon intelligent traffic control are provided accordingly.

The Cost of Clean Water in the Delaware River Basin (USA)

The Delaware River has made a marked recovery in the half-century since the adoption of the Delaware River Basin Commission (DRBC) Compact in 1961 and passage of the Federal Clean Water Act amendments during the 1970s. During the 1960s, the DRBC set a 3.5 mg/L dissolved oxygen criterion for the river based on an economic analysis that concluded that a waste load abatement program designed to meet fishable water quality goals would generate significant recreational and environmental benefits. Scientists with the Delaware Estuary Program have recently called for raising the 1960s dissolved oxygen criterion along the Delaware River from 3.5 mg/L to 5.0 mg/L to protect anadromous American shad and Atlantic sturgeon, and address the prospect of rising temperatures, sea levels, and salinity in the estuary. This research concludes, through a nitrogen marginal abatement cost (MAC) analysis, that it would be cost-effective to raise dissolved oxygen levels to meet a more stringent standard by prioritizing agricultural conservation and some wastewater treatment investments in the Delaware River watershed to remove 90% of the nitrogen load by 13.6 million kg N/year (30 million lb N/year) for just 35% ($160 million) of the $449 million total cost. The annual least cost to reduce nitrogen loads and raise dissolved oxygen levels to meet more stringent water quality standards in the Delaware River totals $45 million for atmospheric NOX reduction, $130 million for wastewater treatment, $132 million for agriculture conservation, and $141 million for urban stormwater retrofitting. This 21st century least cost analysis estimates that an annual investment of $50 million is needed to reduce pollutant loads in the Delaware River to raise dissolved oxygen levels to 4.0 mg/L, $150 million is needed for dissolved oxygen levels to reach 4.5 mg/L, and $449 million is needed for dissolved oxygen levels to reach 5.0 mg/L.

The Long-Term Impact of Employment Bans on the Economic Integration of Refugees

Many European countries impose employment bans that prevent asylum seekers from entering the local labor market for a certain waiting period upon arrival. We provide evidence on the long-term effects of these employment bans on the subsequent economic integration of refugees. We leverage a natural experiment in Germany, where a court ruling prompted a reduction in the length of the employment ban. We find that, five years after the waiting period was reduced, employment rates were about 20 percentage points lower for refugees who, upon arrival, had to wait for an additional seven months before they were allowed to enter the labor market. It took up to ten years for this employment gap to disappear. Our findings suggest that longer employment bans considerably slowed down the economic integration of refugees and reduced their motivation to integrate early on after arrival. A marginal social cost analysis for the study sample suggests that this employment ban cost German taxpayers about 40 million Euros per year, on average, in terms of welfare expenditures and forgone tax revenues from unemployed refugees.

Risk-based analysis of a detention basin for urban runoff control

Various uncertainties exist in detention basin design which contribute to the potential failure or unsatisfactory performance of the system. Risk-based analysis provides a systematic framework to explicitly consider the trade-off among the cost of facility, its failure probability, and failure consequences. Conventional risk-based analysis requires the information of failure damage function. Such information is often unavailable and this hinders the implementation of risk-based analysis. Under this circumstance, a viable procedure is presented according to marginal cost analysis for risk-based design of a detention basin. The procedure utilizes the physical characteristics of system failure (overflow volume) which generally can be straightforwardly obtained from flow simulations. In addition to using the mean value of annual overflow volume, the suggested procedure further incorporates variability of overflow volume in decision-making. For illustration, this study applies the modified rational method in the risk-based framework for sizing the detention basin.