IN THE 25 years since Earth Day, increased environmental concern has helped us avoid some mistakes by focusing attention on many environmental problems.

But concern alone is insufficient. No amount of concern will be enough to avoid environmental harm if information is of poor quality and incentives are perverse. How can we best channel our interest in environmental quality into constructive action? "Least-cost planning" offers one approach.

Least-cost planning has two basic components. First, planners must scrutinize their assumptions and consider the feasibility of alternatives when reality does not unfold as planned - and it seldom does. Second, planners must look fairly at all alternatives and select least-cost options, not favored technologies. Least-cost plans tend to select flexible, adaptable options that can be changed when conditions change.

Thirty years ago, E.F. Schumacher noted that small is beautiful and that approaches or technologies that fit in one place may not do so in another. Least-cost planners generally agree. The Northwest's Washington Public Power Supply System (WPPSS) fiasco is the catastrophe that launched least-cost planning into the electric and gas utility markets. Can we apply this lesson to inflexible, capital-intensive transportation options, such as light rail, to avoid future financial catastrophes and a resultant disenchantment with government actions at all levels?

In 1968, the Bonneville Power Administration (BPA), which markets electricity for the Bureau of Reclamation, Army Corps of Engineers, and publicly owned utilities, began developing its Hydro-Thermal Power Program. In developing this program, BPA made two crucial mistakes.

First, it embraced untenable assumptions about the future demand for electricity. During the 1950s and 1960s, the Northwest's consumption of electricity grew by an annual average of 7 percent. Regional power planners assumed these increases would continue indefinitely. They "knew" that neither technological change nor price increases would slake our thirst for electric power.

Second, BPA looked at one option, nuclear power, and made an inflexible plan around that option. BPA envisioned utilities constructing and operating 20 undesigned, untested nuclear power plants between 1975 and 1990. The novel nature of the nuclear plants foreshadowed large unanticipated costs.

The program carried a price tag of billions. BPA offered a carrot and a stick to the region's utilities to encourage them to commit to the program. The carrot was a financing mechanism that shifted much of the risk onto BPA's rate payers. It remains with us today.

BPA Administrator Donald Hodel, Ronald Reagan's future Secretary of Energy, offered the stick in 1976: a warning that after 1983, BPA could no longer guarantee adequate power to the region. (He later replaced Jim Watt as Secretary of Interior.) Hodel proudly called himself "a prophet of shortage." Utilities signed up. WPPSS started five of the seven nuclear plants it was to build. Puget Power tried siting two plants on the Skagit River. Utilities in Oregon tried siting two nuclear plants at Pebble Creek.

However, BPA's program was static, and the economy, like a complex ecosystem, is dynamic.

Economic change was as catastrophic to WPPSS as the end of the ice age was to the woolly mammoths. Rising interest rates in the 1970s and early 1980s dramatically reduced the attractiveness of capital-intensive investments such as nuclear plants. Industrial demand fell as people responded to higher energy prices. We insulated water heaters and attics, lowered thermostats, and installed double-, triple- and quadruple-paned windows. The projected annual 7 percent increases in consumption dropped dramatically; today, most utilities expect 1-2 percent annual growth.

By 1983, WPPSS defaulted on bonds valued at $2.25 billion. Like echoes in a canyon, repercussions of that default continue to echo across the Northwest. Poor planning and perverse incentives led public officials to approve projects that squandered millions of dollars every year.

In the end, even fierce resistance by nuclear power enthusiasts, WPPSS insiders, and Wall Street financiers could not staunch the financial hemorrhaging, technical mismanagement, and public disgust with WPPSS. WPPSS collapsed. Like the mammoths, it left many skeletons while a few collected ivory. WPPSS also left behind a valuable lesson.

Reformers thrust least-cost planning upon BPA's central planners. Least-cost planning found lower-cost means to meet consumer demands and made it much harder to justify investment in favored technologies such as nuclear power or perhaps light rail. "Low-tech" conservation enabled electrical power demand to grow without the addition of untested, costly nuclear plants. Better use is made of existing facilities, a matter of no small environmental consequence.

In a dynamic system like the economy, flexible and adaptable resources are required to meet changing demands. Least-cost planning has saved billions for Northwest electricity users and has lessened the impact of regional growth on the environment.

It would be ethically and intellectually irresponsible not to apply the lessons from WPPSS to an inflexible, capital-intensive program in the Northwest today: light rail.