Incorporating risk in multi-criteria decision making: The case study of biofuel production from construction and demolition wood waste

Utilization of construction and demolition (C&D) wood waste to produce biofuels has economic, environmental and social impacts, therefore, evaluation of such biofuel projects requires the consideration of multi-criteria. In this study, a new approach is proposed to quantify the risk, resulted from variations in parameters, and incorporate it in a multi-criteria decision making model. Risk in this study is quantified using the mini-max regret approach within the framework of decision making under uncertainty. In this approach, after quantifying the risk (regret) for each alternative and each criteria, alternatives are ranked based on the weighted sum of the maximum regret of all criteria. Finally, the alternative with the minimum worst-case regret is selected as the best option. This method of incorporating risk does not require complete information on probability distribution of the uncertain parameters. The proposed approach and the new model are used to evaluate different alternatives for producing biofuel (wood chips) from C&D wood waste in the City of Vancouver, Canada. The waste management alternatives are defined based on the capacity and the type of equipment pieces used in the facility. The three considered criteria are the annual worth, savings in greenhouse gas emissions, and savings in landfill space. According to the results, the installation of a large facility is recommended. Sensitivity analysis is also performed and showed no change in the recommendation when criteria weights varied. The proposed approach to incorporate risk in a multi-criteria decision model can be applied to other cases and regions.