I've just scanned the John Adams paper (thanks Jeremy) from the recent risk
assessment seminar. He applies a similar conceptual analysis to valuation.
In very basic terms Cost Benefit Analyses (CBA) weigh obviously costs and
benefits. These are often elicited as Willingness to Pay (WTA) and
Willingness to Accept (WTA). Tons of studies in the literature showing that
contrary to economic theory assuming "perfect markets" WTA frequenlty exceeds
WTP by factors of say 2 to 10! Economists try to explain this away with all
sorts of....struggling explanations. But the pattern remains. Adams then
notes that depending on how the elicitation is structured a condition can be
a cost in one but a benefit in another. Now assuming C<>B, that means that
the result will be positive in one variant and negative in the other. But
when we understand that WTP and WTA can differ by orders of magnitude the
significance is much more than plus-minus or gain-loss.
The point, as Martin makes here, is that the conceptual analysis and the
maths attached can make a drastic difference in what the data come out saying.
Way too easy to get caught up in analysis and numerical results. I think,
and I'm happy for other thoughts, Adams's point is that all these analyses
must be framed by common sense.
SC
----- Original Message -----
From: Martin Norris
To: UK Tree Care
Sent: Monday, August 20, 2007 4:23 AM
Subject: RE: The missing factor in risk assessment
The influence of each of the variables in tree risk methods is quite
interesting and rarely discussed. The influence of each input variable can be
calculated, and will vary according to the range and weighting of each input
and the mathematics used to calculate the output value. Various sensitivity
analysis methods exist. Regression sensitivity is relatively easy to apply,
attached is an analysis of a two category tree risk method (just to make a
change from QTRA!). It shows that Likelihood with this method accounts for
about 80% of the variation in the output, whilst Consequence only accounts
for 19% of the variation.
Regards
Martin
________________________________
From: Simon Valente [mailto:arborist@xxxxxxxxxxxxx.wanadoo.co.uk]
Sent: Mon 20/08/2007 5:57 PM
To: UK Tree Care
Subject: RE: The missing factor in risk assessment
Hi Mike,
Thanks for the clarification.
I See you did not disagree with my main point... that being able to foresee
tree failure is a major component of the risk assessment process.
Simon Valente
========================================
Message Received: Aug 20 2007, 07:06 AM
From: "Mike Ellison"
To: "UK Tree Care"
Cc:
Subject: RE: The missing factor in risk assessment
Simon
You said " there will still always be a element to the risk assessment
that requires a surveyor/inspector to come up with some sort of responce
to the question "how likely is it to fail" Even using QTRA which IMHO is
the best risk assessment method for trees available to us, we still have
to answer this key question, it is a major (one third) component."
Probability of Failure isn't a third, it is one of three primary
components being assessed but may contribute substantially more or less
than a third to the risk of harm outcome.
Mike
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Trees are for life, not just for christmas.
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