modelling the redirection of technical change the pitfalls of incorporeal visions of the economy this paper discusses attempts to represent the role of r d in the transition towards a low carbon economy through models with no meaningful granularity to inform the studied phenomenon by means of a critical analysis of acemoglu et al 2012 we show that the advantage of these models their analytical tractability does not make up for their disadvantages lack of control over policy implications and questionable numerical results on the one hand a comprehensive analysis of the results of acemoglu et al 2012 shows that even research subsidies do not pave the way for ambitious climate policies with low transitory costs thus contradicting their policy message on the other hand critical parameters such as the elasticity of substitution between clean and dirty technologies carbon sinks or the productivity of researchers are not in accordance with existing scientific knowledge we show that using more realistic parameters leads to even more pessimistic conclusions and that their model provides no leeway for overcoming them we suggest that a too highly aggregated model can only describe an incorporeal economy and comes to a deadlock we propose a more promising route for economic research in order to break this deadlock

an econometric analysis of u s foreign direct investment this paper constructs a theoretical model of foreign direct investment and examines the extent to which the model can explain the level of outward direct investment by u s companies over the last two decades the authors find that market size and factor costs both labor and capital are important factors in the investment decision instrumental variable estimation is used to demonstrate that the expectation of short run fluctuations in the dollar also influences the timing of investment copyright 1996 by mit press

discount rates equity weights and the social cost of carbon abstract equity weighting has been proposed as a way of allowing welfare equivalents to be included in the social cost of carbon since a dollar to a poor person is worth more than a dollar to a rich one here we use the page2002 integrated assessment model to show that the social cost of carbon is higher without equity weights an elasticity of marginal utility with respect to income of 0 than with them this might seem counter intuitive but it comes about because of the logical link between equity weights and discount rates as the elasticity goes from 0 to 0 5 to 1 0 the social rate of time preference rises and the drop in present values that results far outweighs the small increase in impacts that equity weights bring

endogenous information flows and the clustering of announcements we consider the strategic timing of information releases in a dynamic disclosure model because investors don t know whether or when the firm is informed the firm will not necessarily disclose immediately we show that bad market news can trigger the immediate release of information by firms conversely good market news slows the release of information by firms thus our model generates clustering of negative announcements surprisingly this result holds only when firms can preemptively disclose their own information prior to the arrival of external information these results have implications for conditional variance and skewness of stock returns jel d21 d83 g12 g14 l11

not only what but also when a theory of dynamic voluntary disclosure we examine a dynamic model of voluntary disclosure of multiple pieces of private information in our model a manager of a firm who may learn multiple signals over time interacts with a competitive capital market and maximizes payoffs that increase in both period prices we show perhaps surprisingly that in equilibrium later disclosures are interpreted more favorably even though the time the manager obtains the signals is independent of the value of the firm we also provide sufficient conditions for the equilibrium to be in threshold strategies

beyond the stern review lessons from a risky venture at the limits of the cost benefit analysis this paper argues that debates amongst economists triggered by the stern review are partly relevant focusing on key parameters translating real ethical issues and partly misplaced in that they do not consider enough other determinants of climate change damages i the specifications of the utility function used for the assessments preference for the environment preference for smooth growth paths ii the interplay between uncertainty and the sequentiality of the decision and iii whether the growth engines behind the integrated assessment models can account for transient disequilibrium and sub optimality we derive some suggestions for any future research agenda in integrated assessment modelling whatever the position of the analysts about the relevance of the intertemporal optimisation framework and the bayesian approach to uncertainty in the climate affair

adjustment costs from environmental change abstract the paper is concerned with the case whereby the distribution of a firm s productivity shocks changes without the knowledge of the firm over time the firm learns about the nature and extent of the change in the distribution of the shock and adjusts incurring adjustment costs in the process the long run loss in profits due to the shift in the distribution we term the equilibrium response the transitory loss in profits incurred while the firm is learning about the distribution shift is termed the adjustment cost the theory is then applied to the problem of measuring adjustment costs in the face of imperfectly observed climate change in agriculture the empirical part of the paper involves estimating a restricted profit function for agricultural land in a five state region of the midwest us as a function of prices land characteristics actual weather realizations and expected weather we then simulate the effect of an unobserved climate shock where learning about the climate shock is by observing the weather and updating prior knowledge using bayes rule we find adjustment costs to climate change are 1 4 of annual land rents

risk aversion intergenerational equity and climate change the paper investigates a climate economy model with an iso elastic welfare function in which one parameter measures relative risk aversion and a distinct parameter measures resistance to intertemporal substitution we show both theoretically and numerically that climate policy responds differently to variations in the two parameters in particular we show that higher but lower leads to increase emissions control we also argue that climate economy models based on intertemporal expected utility maximization i e models where may misinterpret the sensitivity of the climate policy to risk aversion

bottom up world climate policies preserving fossil fuel deposits vs capping fuel consumption the policy of purchasing fossil fuel deposits for preservation is an alternative to the demand side climate policies that predominate in practice and in professional studies this paper analyzes the deposit purchase approach and compares it to the standard demand side policy in a model with international trade and non cooperative governments that account for the effects of their policies on equilibrium prices we investigate how the two regimes differ with respect to their equilibrium allocations and in particular with respect to the countries mitigation effort and welfare if countries are symmetric mitigation is stronger in the demand side than in the supply side regime and the transition from the latter to the former is welfare enhancing for all countries if countries have different endowments of deposits in a two country economy the country with higher extraction costs does not purchase deposits for preservation and the country with lower extraction costs is better off with the supply side than with the demand side policy finally we consider the case of combined policies and find surprisingly that no equilibrium in pure strategies exists when heterogeneous countries apply both policy instruments politiques climatiques mondiales ascendantes preservation des gisements de combustibles fossiles par opposition a la limitation de la consommation de carburant la politique d achat de gisements de combustibles fossiles aux fins de preservation represente une alternative aux politiques climatiques axees sur la demande predominant a la fois dans la pratique mais aussi dans les etudes professionnelles cet article analyse l approche fondee sur l achat de gisements et la compare a la politique standard axee sur la demande dans un modele de commerce international et de gouvernements non cooperatifs prenant en compte les effets de leurs politiques sur les prix d equilibre nous avons recherche en quoi les deux regimes differaient relativement a leur repartition de l equilibre et notamment relativement a l effort d attenuation et a la protection sociale si les pays sont symetriques l attenuation est plus prononcee dans un systeme axe sur la demande comparativement a un systeme axe sur l offre et la transition du second au premier systeme permet d ameliorer la protection sociale pour tous les pays dans une economie a deux pays differemment dotes en matiere de gisements le pays ayant les couts d extraction les plus eleves n achete pas de gisements a des fins de preservation tandis que le pays ayant les couts d extraction les moins eleves se retrouve en meilleure posture dans une politique axee sur l offre plutot que sur la demande pour terminer nous examinons le cas des politiques combinees et etonnamment nous constatons qu il n existe aucun equilibre en matiere de strategies pures lorsque des pays heterogenes appliquent les deux moyens d action

the damage costs of climate change a note on tangibles and intangibles applied to dice economic cost benefit analysis of the costs of greenhouse gas emission abatement and climate change often points towards limited abatement this note elucidates one reason why this result is obtained the way in which the intangible damages are treated and the utility function is specified on the basis of the dice model it is shown that by putting the intangible damages directly into the utility function and by assuming them to grow with per capita income the optimal reduction increases and in the second case more than triples compared to nordhaus s original results

the changing climate of climate change economics climate change economics is now four decades old much of what it has achieved as a field of academic enquiry can be linked back to issues of integrated assessment modelling this paper shows that the standard approach is going through a major change in scope as of the last five years the conventional focus on determining optimal mitigation paths based on modelling the social cost of carbon is being enlarged to embrace promising new waves of research these are 1 the economics of insurance against catastrophic risks 2 the economics of trade and climate and 3 the economics of climate change adaptation the paper helps to bridge the gap between economics and climate policy by showing that the analytical toolkit of climate change economics has shifted towards more realistic representations of climatic policy

energy conservation investment do consumers discount the future correctly we argue that the apparently high discount rates attributed to investors making energy conservation investments are not irrational or the result of some market failure rather they may result from an investor recognizing that many conservation investments entail substantial sunk costs in the presence of these costs and uncertainty over future conservation savings consumers should use a higher hurdle rate for investment than if there were no uncertainty simulations suggest that the hurdle rate should be about four times greater than the standard rate an implication of our model is that tax subsidies for the purchase of conservation capital are likely to be ineffective we discuss alternative policy approaches which are more likely to increase energy efficient investment namely mandatory efficiency standards and energy taxes

in search of substitution between foreign production and exports abstract are foreign production and exports substitutes or complements standard theory of the multinational corporation mnc assumes substitution while previous empirical work examining the relationship has generally found strong evidence of complementarity this study examines product level data which more closely fits the assumption of a single product firm often used in mnc theory and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with japanese automobile parts for the us market i also test for and find evidence of substitution using product level data on a set of japanese produced final consumer goods

foreign direct investment and exports a time series approach the impact of the accelerated internationalization of the last decade on the austrian economy is a controversial issue granger s concept of casuality is used to investigate one aspect of the internationalization of production the realtionship between foreign outward direct investment and exports using aggregate flow data from the austrian economy the stationarity of the time series is examined and cointegration tests for the adequacy of the multivariate time series approach are performed the estimation results suggest significant causality of austrian foreign outward direct investment and exports in both directions impulse response analysis and varience decomposition show a very slow dynamic response of both variables to exogenous shocks of the other it furthermnore indicates the possiblity of a positive effect of exogeneously increased foreign direct investment on exports and a negative effect of export shocks on foreign direct investment however significant long run effects are not established

energy justice and the contested petroleum politics of stranded assets policy insights from the yasuni itt initiative in ecuador abstract ecuador s progressive yasuni itt initiative operational 2007 to 2013 would have left almost one billion barrels of crude oil locked in perpetuity beneath one of the most intact and diverse nature reserves on the planet the project attempted to strand these oil assets in order to protect biodiversity respect the territory of indigenous peoples combat climate change and encourage more sustainable economic development the yasuni itt proposal would have had the international community pay ecuador 3 6 billion roughly half the value of the oil found there in exchange for not developing the ishpingo tambococha tiputini itt oilfields funds would have been placed into social and environmental development programs and the promotion of domestic renewable energy instead the project collected only 13 million and succumbed to a series of challenges including limited financing intense political pressure a national commitment to oil and carbon leakage this article summarizes the history benefits and insurmountable obstacles facing the yasuni itt initiative and presents six broader lessons and implications for climate and energy analysts practitioners and policymakers it questions the political viability of and serves as a stark warning against those promoting and advocating policies centered on carbon budgets stranded assets negative emissions and carbon revenue streams

discounting and distributional considerations in the context of global warming the economics of global warming is reviewed with special emphasis on how the cost depends on the discount rate and on how costs in poor and rich regions are aggregated into a global cost estimate both of these factors depend on the assumptions made concerning the underlying utility and welfare functions it is common to aggregate welfare gains and losses across generations and countries as if the utility of money were constant but it is not if we assume that a e co2 equivalent dlubling implies costs equal to 1 5 of the income in both high and low income countries a pure rate of time preference equal to zero and a utility function which is logarithmic in income then the marginal cost of co2 emissions is estimated at 260 590 usd ton c for a time horizon in the range 300 1000 years an estimate which is large enough to justify significant reductions of co2 emissions on purely economic grounds the estimate is approximately 50 100 times larger than the estimate made by nordhaus in his dice model and the difference is almost completely due to the choice of discount rate and the weight given to the costs in the developing world as well as a more accurate model of the carbon cycle finally the sensitivity of the marginal cost estimate with respect to several parameters is analyzed

does ecological economics have a future contradiction and reinvention in the age of climate change abstract this paper addresses the role of neoclassical methodologies in ecological economics and the contradictions these methodologies pose to the field s critical founding principles we first consider robert costanza s treatment of nicholas stern s global deal and then survey climate change related articles published in this journal over the past five years this survey reveals how mainstream neoclassical methodologies dominate discourse and do so by marginalizing more critical political economy analyses this situation imperils the field s founding vision of a no growth steady state it also fails to address the related growth dynamics of capitalism without such a critical treatment the field s formal embrace of methodological pluralism actually entails an ideological empiricism that renders ecological economics theoretically incoherent this situation undermines the field s historical promise as an alternative economic paradigm ecological economics now faces a problematic future its survival in a form faithful to its founding vision will require an explicit choice to address its internal contradictions and reinvent itself in ways relevant to our contemporary context without such a choice ecological economics will likely succumb to an implicit acceptance of the hegemony of mainstream economic methodologies and their pro growth imperatives

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

strategic information revelation we analyze the problem in which agents have non public information and are to play an asymmetric information game the agents may reveal some or all of their information to other agents prior to playing this game revelation is via exogenously specified certifiable statements the equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information sufficient conditions are provided for complete revelation of all private information a number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information models encompassing both of these characteristics have been used successfully to examine questions in many fields usually using the concept of bayesian nash equilibrium as the solution concept typically the agents information is given exogenously and is fixed throughout the analysis modelling the information structure as static is appropriate for some problems but not for all in particular situations that are inherently dynamic most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably in such circumstances it is possible that at least one or more of the agents possessing non public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact to the extent that such a communication is believed by the other agents the priors of the other agents will change and we will have what is in essence a new asymmetric information game new in

a critical review of multi criteria decision making methods with special reference to forest management and planning abstract this paper provides a review of research contributions on forest management and planning using multi criteria decision making mcdm based on an exhaustive literature survey the review primarily focuses on the application aspects highlighting theoretical underpinnings and controversies it also examines the nature of the problems addressed and incorporation of risk into forest management and planning decision making the mcdm techniques covered in this review belong to several schools of thought for each technique a variety of empirical applications including recent studies has been reviewed more than 60 individual studies were reviewed and classified by the method used country of origin number and type of criteria and options evaluated the review serves as a guide to those interested in how to use a particular mcdm approach based on the review some recent trends and future research directions are also highlighted

a real effects perspective to accounting measurement and disclosure implications and insights for future research accounting measurement and disclosure rules have a significant impact on the real decisions that firms make in this essay we provide an analytical framework to illustrate how such real effects arise using this framework we examine three specific measurement issues that remain controversial 1 how does the measurement of investments affect a firm s investment efficiency 2 how does the measurement and disclosure of a firm s derivative transactions affect a firm s choice of intrinsic risk exposures risk management strategy and the incentive to speculate 3 how could marking to market the asset portfolios of financial institutions generate procyclical real effects we draw upon these real effects studies to generate sharper and novel insights that we believe are useful not only for the development of accounting standards but also for guiding future empirical research

why the far distant future should be discounted at its lowest possible rate abstract a critical feature of the distant future is currently unresolvable uncertainty about what will then be the appropriate rate of return on capital to use for discounting this paper shows that there is a well defined sense in which the lowest possible interest rate should be used for discounting the far distant future part of any investment project some implications are discussed for evaluating long term environmental projects or activities like measures to mitigate the possible effects of global climate change

the economics of foreign direct investment and trade with an application to the u s food processing industry this article investigates the determinants of foreign direct investment and its relationship to trade in the u s food industry a multinational corporation maximizes profits by choosing between production at home which is exported and production in a host country this introduces the possibility that foreign affiliate sales can substitute and or complement exports the empirical framework consists of a four equations system with foreign affiliate sales exports affiliate employment and fdi as endogenous variables the results confirm small substitution between foreign sales and exports and that the host country s protection policies affect the decision to invest abroad

why economic dynamics matter in assessing climate change damages illustration on extreme events extreme events are one of the main channels through which climate and socioeconomic systems interact and it is likely that climate change will modify the probability distribution of the losses they generate the long term growth models used in climate change assessments however cannot capture the eects of such shortterm shocks to investigate this issue a non equilibrium dynamic model nedym is used to assess the macroeconomic consequences of extreme events this exercise allowed us to dene the economic amplic ation ratio as the ratio of the overall production loss due to an event to its direct costs this ratio could be used to improve the cost benet analysis of prevention measures we found also that unlike a solow like model nedym exhibits a bifurcation in gdp losses for each value of the capacity to fund reconstruction gdp losses remain moderate if the intensity and frequency of extremes remain under a threshold value beyond which gdp losses increase sharply this bifurcation may partly explain why some poor countries that experience repeated natural disasters cannot develop applied to the specic issue of climate change this model suggests that changes in the distribution of extremes may entail signican t gdp losses in absence of specic adaptation it suggests therefore that to avoid inaccurately low assessments of damages researchers must take into account the distribution of extremes instead of their average cost and make explicit assumptions on the organization of future economies

manipulated news model electoral competition and mass media abstract this paper investigates the relationship between media manipulation the strategic suppression of relevant information by mass media and self mediatization the strategic exploitation of media coverage by candidates in elections in the model a voter cannot directly observe the policies proposed by two office motivated candidates the voter learns this information through media reports before voting takes place while the media outlet suppresses some of this information because the voter s decision making could be incorrect direct distortion the candidates have an incentive to win the election by influencing the media coverage through policy settings indirect distortion as a result policy convergence to the voter s ideal policy occurs if and only if the media bias is sufficiently small we then characterize the set of equilibria in terms of the degree of distortion the results suggest that if either strategic media manipulation or competition among the candidates is omitted then the distortion is nonnegligibly misspecified

disclosure and choice an agent chooses among projects with random outcomes his payoff is increasing in the outcome and in an observer s expectation of the outcome with some probability the agent will be able to disclose some information about the true outcome to the observer we show that choice is inefficient in general we illustrate this point with a characterization of the inefficiencies that result when the agent can perfectly disclose the outcome with some probability and can disclose nothing otherwise as in dye 1985a in this case the agent favours riskier projects even with lower expected returns on the other hand if information can also be disclosed by a challenger who prefers lower beliefs of the observer the chosen project is excessively risky when the agent has better access to information excessively risk averse when the challenger has better access and efficient otherwise we also characterize the agent s worst case equilibrium payoff we give examples of alternative disclosure technologies illustrating other forms the inefficiencies can take for example in a two dimensional setting we demonstrate a hitting for the fences effect where the agent systematically focuses on the harder dimension at the expense of success on the easier

informational feedback adverse selection and optimal disclosure policy faceless trading in a secondary stock market not only redistributes wealth among investors but also generates information that feeds back to real decisions using this observation we re evaluate the leveling the playing field rationale for disclosure to secondary stock markets by partially preempting traders information advantage established from information acquisition disclosure reduces private incentives to acquire information resulting in two opposite effects on firm value on one hand this narrows the information gap between informed and uninformed traders and improves liquidity of firm shares on the other hand this reduces the informational feedback from the stock market to real decisions this tradeoff determines the optimal disclosure policy the model explains why firm value can be higher in an environment that simultaneously promotes disclosure and private information production and why growth firms are endogenously more opaque than value firms

leaving oil underground in ecuador the yasuni itt initiative from a multi criteria perspective abstract the ecuadorian proposal to keep 846 million barrels of crude oil in the yasuni national park underground for the purposes of avoiding co2 emissions and to protect both the biological diversity and the indigenous peoples in isolation who inhabit this area of the amazon is evaluated from a multi criteria analysis the main purpose of the paper is to compare this policy option with other alternatives across different values an analytical framework is used that recognises the inherent complexity of a problem of this nature in which the financial values are indeed relevant for policy but other values are also relevant the economic in a broad sense social environmental cultural and political the results confirm that from a financial standpoint extracting the oil is preferable but by incorporating the non monetary values into the multi criteria decision process one can plausibly defend the yasuni itt initiative as the most desirable policy option indeed the social and environmental benefits or criteria signalling an economic transition towards a model based on renewable sources of energy along with the protection of critical environmental and social capital make up for the financial gap

does economic development impact the foreign direct investment trade relationship a gravity model approach the purpose of this study is to examine the relationship between foreign direct investment fdi and trade in a bilateral context that is home source country s exports and fdi to a host recipient country are analyzed using a gravity model approach the fdi trade relationship has been a centerpiece of the international economics literature over the past decade the home country s primary concern here is on the possible loss of employment due to more fdi than trade lipsey of late there have been concerns on knowledge spillovers and the erosion of technological leadership market failure due to capital outflows for a host country the focus is on the effects of fdi on economic growth and development and technology transfer prior theoretical studies have used mostly imperfect competition models to identify the fdi trade relationship helpman and krugman markusen and venables a majority of the empirical studies has used regression techniques with one period lagged trade and fdi as an argument in current trade or fdi equations barrell and pain gopinath pick and vasavada egger aggregate firmlevel data and industry product specific data have been used in many of these studies blonigen lipsey and ramstetter some have used cointegration methods to infer on the long run association between trade and fdi pfaffermayr however few fdi trade

ecology and valuation big changes needed abstract ecological economics has developed as a transdisciplinary science but it has not taken significant steps toward a truly integrated process of evaluating anthropogenic ecological change the emerging dominance within ecological economics of the movement to monetize ecological services when combined with the already well entrenched dominance of contingent pricing as a means to evaluate impacts on amenities has created a monistic approach to valuation studies it is argued that this monistic approach to evaluating anthropogenic impacts is inconsistent with a sophisticated conception of ecology as a complex science that rests on shifting metaphors an alternative pluralistic and iterative approach to valuation of anthropogenic ecological change is proposed

liberalization fdi and growth in developing countries a panel cointegration approach using a panel cointegration framework the article explores the two way link between fdi and growth for a panel of 23 developing countries in addition it investigates the impact of liberalization on the dynamics of the fdi and gdp relationship a long run cointegrating relationship is found between fdi and gdp after allowing for heterogeneous country effects the cointegrating vectors reveal a bidirectional causality between gdp and fdi for more open economies for relatively closed economies long run causality appears unidirectional and runs from gdp to fdi implying that growth and fdi are not mutually reinforcing under restrictive trade and investment regimes

the optimal amount of discretion to allow in disclosure in this paper a party with private information can verifiably disclose some but not all of his information the optimal amount of discretion to allow the informed party is studied that is should the informed party be allowed unlimited discretion in choosing which elements of his information set to disclose or should restrictions be imposed that limit this discretion the model is formulated in the spirit of a persuasion game it is demonstrated that under certain circumstances rules that limit discretion increase the informativeness of disclosures and thus improve economic decisions

energy contribution to latin american indcs analyzing sub regional trends with a times model central and south america and the caribbean countries share energy and climate features that are quite different from the rest of the world including a highly renewable energy mix and very high renewable energy potentials along with high deforestation and degradation rates which call for regional answers to regional issues this paper assesses the impact of national contributions to the united nations framework convention on climate change using an energy prospective model from the markal times family this approach enables a bottom up comparison between past pledges nationally appropriate mitigation actions and the nationally determined contributions ndcs agreed on at cop21 long term economic optimization leads to decarbonizing the power sector even in the absence of climate constraints stringent climate policies as modeled here achieve emission reductions of 40 below the current baseline by 2050 ndcs produce stronger emission reductions than namas at regional scale however the first contributor to emission reductions in absolute terms in latin america is the agriculture forestry and other land use afolu sector not energy

buen vivir vs development ii the limits of neo extractivism like the entire andean region ecuador has an economic structure that is dependent on primary exports during the last boom in commodity prices the neo extractivist development strategy generated economic growth and simultaneously reduced inequality however this bonanza was not used to advance in economic diversification or for transition towards buen vivir sumak kawsay good living as postulated in the constitution and the national development plans we establish that neo extractivism is not compatible with buen vivir analysing three concrete aspects to this end the failure to fulfill the rights of nature and ecological sustainability the lack of advances in transforming the productive matrix insufficient results in matters of redistributive social policies

the burden of proof in a game of persuasion abstract an arbitrator faces the task of deciding the level of compensation to be received by a plaintiff from a defendant the arbitrator must rely on the verifiable submissions of the two interested parties because the information of the interested parties is not verifiable the unravelling argument has no force nevertheless a class of equilibria of this game gives rise to a particularly simple decision rule for the arbitrator which appeals to a probability distribution over the payoff relevant state space alone the uncertainty concerning the precision of the disputants information enter as parameters in this distribution this parametrization yields an answer to how the arbitrator s decision rule should be modified as the information of the disputants changes journal of economic literature classification numbers d78 d82 l51

discount rate and the social cost of carbon dioxide a korean forecast this paper is to forecast the korean long term social discount rate of carbon dioxide sdrc and the social cost of carbon dioxide scc it is estimated using the ramsey function savings behavior

ecuador s yasuni itt initiative the old and new values of petroleum abstract this article examines the financial mechanism currently known as the yasuni itt initiative by which ecuador would be compensated for not exploiting the reserves of heavy crude lying underneath the yasuni national park a biosphere reserve for humanity located in the amazon region an analysis of the ways in which the proposal is being debated is offered to illustrate the unique problems posed by the incorporation of natural capital in economic decisions a focus on the creative measurements and calculations offered by a range of social actors highlights the relevance of morally framed evaluations in defining the future economic use of the park i show how an anthropological perspective may complement ecological economics and various political and economic approaches to development policy and enrich our understanding of the specific challenges posed by the design of economic instruments for the protection of ecological wealth in latin american countries poor in financial capital but rich in biological diversity

should intangibles be measured what are the economic trade offs we investigate whether a firm s intangible investments should be measured and separated from operating expenses we find that the information extracted from accounting reports of investments and earnings is different when intangibles are measured and identified separately from operating expenses than when intangibles are left commingled with operating expenses this difference in the market s information causes a change in the behavior of market prices inducing changes in the firm s investments and cash flows thus from a real effects perspective measuring intangibles is not unambiguously desirable we identify the conditions under which providing information on intangibles may be desirable this study also shows the inadequacy of statistical associations between accounting numbers and prices as a basis for evaluating the desirability of measuring intangible investments we show that the measurement of intangibles alters the very distribution of cash flows about which the measurement regime is seeking to provide information

disclosures and asset returns public information in financial markets often arrives through the disclosures of interested parties who have a material interest in the reactions of the market to the new information when the strategic interaction between the sender and the receiver is formalized as a disclosure game with verifiable reports equilibrium prices can be given a simple characterization in terms of the concatenation of binomial pricing trees there are a number of empirical implications the theory predicts that the return variance following a poor disclosed outcome is higher than it would have been if the disclosed outcome were good also when investors are risk averse this leads to negative serial correlation of asset returns other points of contact with the empirical literature are discussed

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

decision criteria of european and latin american market actors for tropical forestry projects providing environmental services converting the environmental services of tropical forests from public goods to tradable services is a promising approach to sustaining tropical forests ecosystem functions and services we hypothesize that the development of markets for these environmental services will substantially depend on compliance with requirements of key market actors representing supply and demand sides this paper analyzes market actors decision criteria related to engagement in tropical forestry projects that provide environmental services in a questionnaire survey 45 experts from latin america and europe representing key market actor groups i e certifiers consulting companies financial institutions governmental organizations industrial companies and non governmental organizations ngos were asked to name and weight criteria that tropical forestry projects should meet in order to attract their institution s engagement many of these 45 institutions are already involved in several market activities related to tropical forestry projects and environmental services including asset management certification consultancy credit business investments project ownership and trade brokerage the collected criteria cover a variety of topics that clearly go beyond frequently applied sustainability dimensions in forestry related multi criteria based decision making i e social environmental and economic dimensions for example relatively many criteria involve topics such as project management risk management or marketing while differences in criteria weighting among market actor groups are not significant we found a significant interaction between criteria weights and the provenance of participants indicating that latin american and european market actors nominate and weight single decision criteria differently the five criteria with highest mean weights in the european sample are social benefits legal compliance sustainability environmental benefits and stakeholder participation the latin american market actors weighted highest expertise and capacity building financial resources political aspects information management and markets generally latin american market actors emphasize criteria related to markets and information knowledge management whereas european participants tend to assign importance to social and environmental benefits and sustainability the survey provides preliminary insights into bottom up defined decision criteria relevant for key actors in the market of tropical forestry based environmental

discounting climate and sustainability climate policy recommendations differ widely because of disagreements over what discount rates to use disagreement reduces the impact of economic models and signals a need for improved methodology the problem is related to the choice of intergenerational welfare functions a first questionnaire finds that the standard welfare function swf fails to capture people s dislike of overshooting and fluctuating consumption paths a second questionnaire reveals that when very long term sustainability of well being is threatened people s implicit discount rates resemble the low estimates used by the stern review an alternative welfare function awf reflecting consumption growth can potentially capture the preference structure revealed in both questionnaires this makes the awf an interesting candidate when searching for policies for sustainable development under uncertainty importantly the questionnaires demonstrate that people are able to choose among policies by inspecting time graphs of policy consequences thus it is possible to circumvent the complexities and disagreements introduced by welfare functions and discounting

twenty thousand sterling under the sea estimating the value of protecting deep sea biodiversity the deep sea includes over 90 of the world s oceans and is thought to be one of the most diverse ecosystems in the world it supplies society with valuable ecosystem services including the provision of food the regeneration of nutrients and the sequestration of carbon technological advancements in the second half of the 20th century made large scale exploitation of mineral hydrocarbon and fish resources possible these economic activities combined with climate change impacts constitute a considerable threat to deep sea biodiversity many governments including that of the uk have therefore decided to implement additional protected areas in their waters of national jurisdiction to support the decision process and to improve our understanding for the acceptance of marine conservation plans across the general public a choice experiment survey asked scottish households for their willingness to pay for additional marine protected areas in the scottish deep sea this study is one of the first to use valuation methodologies to investigate public preferences for the protection of deep sea ecosystems the experiment focused on the elicitation of economic values for two aspects of marine biodiversity i the existence value for deep sea species and ii the option value of deep sea organisms as a source for future medicinal products