Integrated transitions toward sustainability: The case of water and energy policies in Israel

Transition Management literature has examined how long-term transitions could be directed toward greater sustainability. However, it has mostly taken a sectoral approach which neglects the potential relationships between environmental changes and policy dynamics in different sectors. This paper examines parallel and interrelated dynamics in the Israeli water and energy sectors by combining insights from the literature on policy dynamics, transition management, co-evolution, and policy integration. The developed approach examines how sectoral transitions may be coupled and technological regimes may co-evolve. Israel has battled water, energy and other scarcities from its formation. Consecutive dry years, the loss of stream flows, salinization of the coastal aquifer, and severe pollution are problems facing water managers, while air pollution, imported fossil fuels and carbon emissions are salient energy issues. Water and energy sectors are both in transition because earlier policies have resulted in socially-induced scarcity, degradation of environmental assets and loss of adaptive capacity to respond to future challenges. Current approaches to water and energy scarcities have evolved around technological configurations which emphasize traditional supply side solutions such as seawater desalination and additional power plants. They may be difficult to change without explicit integrative transitions management.     

Manipulation in Conditional Decision Markets

Conditional decision markets concurrently predict the future and decide on it. These markets price the impact of decisions, conditional on them being executed. After the markets close, a principal decides which decisions are executed based on the prices in the markets. As some decisions are not executed, the respective outcome cannot be observed, and the markets predicting the impact of non-executed decisions are void. This allows ex-post costless manipulation of such markets. We conduct two versions of an online experiment to explore scenarios in which a principal runs conditional decision markets to inform her choice among a set of a risky alternatives. We find that the level of manipulation depends on the simplicity of the market setting. When a trader is alone, has the power to move prices far enough, and the decision is deterministically tied to market prices or a very high correlation between prices and decision is implied, only then manipulation occurs. As soon as another trader is present to add risk to manipulation, manipulation is eliminated. Our results contrast theoretical work on conditional decision markets in two ways: First, our results suggest that manipulation may not be as meaningful an issue. Second, probabilistic decision rules are used to add risk to manipulation; when manipulation is not a meaningful issue, deterministic decisions provide the better decision with less noise. To the best of our knowledge, this is the first experimental analysis isolating the effects of the conditional nature of decision markets.     

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