the impact of possible climate catastrophes on global warming policy abstract recent studies on global warming have introduced the inherent uncertainties associated with the costs and benefits of climate policies and have often shown that abatement policies are likely to be less aggressive or postponed in comparison to those resulting from traditional cost benefit analyses cba yet those studies have failed to include the possibility of sudden climate catastrophes the aim of this paper is to account simultaneously for possible continuous and discrete damages resulting from global warming and to analyse their implications on the optimal path of abatement policies our approach is related to the new literature on investment under uncertainty and relies on some recent developments of the real option in which we incorporated negative jumps climate catastrophes in the stochastic process corresponding to the net benefits associated with the abatement policies the impacts of continuous and discrete climatic risks can therefore be considered separately our numerical applications lead to two main conclusions i gradual continuous uncertainty in the global warming process is likely to delay the adoption of abatement policies as found in previous studies with respect to the standard cba however ii the possibility of climate catastrophes accelerates the implementation of these policies as their net discounted benefits increase significantly

the greenhouse effect damages costs and abatement the buildup of so called greenhouse gases in the atmosphere co2 in particular appears to be having an adverse impact on the global climate this paper briefly reviews current expectations with regard to physical and biological effects their potential costs to society and likely costs of abatement for a worst case scenario it is impossible to assess in economic terms the full range of possible non linear synergistic effects in the most favorable although not necessarily likely case of slow paced climate change however it seems likely that the impacts are within the affordable range at least in the industrialized countries of the world in the third world the notion of affordability is of doubtful relevance making the problem of quantitative evaluation almost impossible we tentatively assess the lower limit of quantifiable climate induced damages at 30 to 35 per ton of co2 equivalent worldwide with the major damages being concentrated in regions most adversely affected by sea level rise the non quantifiable environmental damages are also significant and should by no means be disregarded the costs and benefits of 1 reducing cfc use and 2 reducing fossil fuel consumption as a means of abatement are considered in some detail this strategy has remarkably high indirect benefits in terms of reduced air pollution damage and even direct cost savings to consumers the indirect benefits of reduced air pollution and its associated health and environmental effects from fossil fuel combustion in the industrialized countries range from 20 to 60 per ton of co2 eliminated in addition there is good evidence that modest e g 25 reductions in co2 emissions may be achievable by the u s and by implication for other countries by a combination of increased energy efficiency and restructuring that would permit simultaneous direct economic benefits savings to energy consumers of the order of 50 per ton of co2 saved a higher level of overall emissions reduction possibly approaching 50 could probably be achieved at little or not net cost by taking advantage of these savings we suggest the use of taxes on fossil fuel extraction or a carbon tax as a reasonable way of inducing the structural changes that would be required to achieve significant reduction in energy use and co2 emissions to minimize the economic burden and create a political constituency in support of the approach we suggest the substitution of resource based taxes in general for other types of taxes on labor income real estate or trade that are now the main sources of government revenue while it is conceded that it would be difficult to calculate the optimal tax on extractive resources we do not think this is a necessary prerequisite to policy making in fact we note that the existing tax system has never been optimized according to theoretical principles and is far from optimal by any reasonable criteria

international real interest rate equalization a multivariate time series approach this paper investigates the dynamic behaviour of monthly ex post real interest rates from several countries over the period 1980 to 1991 it is found that real interest rates are stationary over this period and that deviations from real interest parity are significant in the short run but disappear in the long run the latter evidence is established using the concept of co dependent time series proposed by gourieroux and peaucelle 1989 for the analysis of multivariate stationary time series

the term structure of euromarket interest rates an empirical investigation abstract this paper is an empirical investigation of the predictability and co movement of risk premia in the term structure of euromarket interest rates we present regression results which suggest that risk premia in three euromarket term structures and on uncovered foreign asset positions move together we test formally the hypothesis that these risk premia move in proportion to a single latent variable we are unable to reject this hypothesis the single latent variable model can be interpreted as in hansen and hodrick 1983 and hodrick and srivastava 1984 as a specialization of the icapm in which assets have constant betas on a single unobservable benchmark portfolio

the theory of mixed demand functions abstract the properties of samuelson s mixed demand functions which express demand as a function of a mixed set of prices and quantities are derived by analyzing compensated or substitution effects and uncompensated effects the relationships between mixed demand functions and conditional or rationed demands are examined this provides insights on the behavioral implications of consumer theory for alternative demand specifications

arbitrary values good causes and premature verdicts abstract this paper offers an alternative interpretation of the conclusions kahneman and knetsch propose based on two contingent valuation cvm surveys the evaluation argues that while framing is important to cvm estimates the design implementation and empirical findings reported from these surveys do not support their judgments moreover with the exception of temporal embedding conventional economic descriptions of individual behavior can explain the response patterns that they suggest are at variance with standard value theory

do ordering effects matter in willingness to pay studies of health care willingness to pay studies are increasingly being used in the evaluation of health care programmes however there are methodological issues that need to be resolved before the potential of willingness to pay can be fully exploited as a tool for the economic evaluation of health care programmes of particular methodological interest are the consequences of varying the order in which willingness to pay questions are presented to respondents in contingent valuation studies this paper examines the possibility of ordering effects in willingness to pay studies in health care that is when asking willingness to pay questions about three health care programmes within a single survey does the order the programmes are presented have an impact on the reported willingness to pay ordering effects are observed in the ranking of the programmes in the proportion of zero values reported and in the wtp for one of the programmes the results suggest that the best explanation for the ordering effects is one of fading glow whereby the first programme in any sequence captures much of the utility associated with giving

no arbitrage near cointegrated var p term structure models term premia and gdp growth abstract the recent macro finance literature does not agree either about the empirical properties of the expectation part and of the term premium on long term bonds or about the importance or even the direction of the relationship between the term premium and future economic activity this paper proposes a two step approach to handle both problems first in a var setting we extract a reliable measure of the term premium by means of averaging estimator techniques aiming at optimally solving prediction problems when highly persistent processes are present and thus providing a so called near cointegrated var p approach second we analyze the dynamic response of gdp to shocks to the term premium by using the new information response function concept as far as the first problem is concerned we find that the ncvar based term premium measure is rather stable and counter cyclical as suggested by interest rates survey based estimation of yield curve models and by its risk compensation role regarding the second problem we find that an increase in the long term spread caused by the term premium induces two effects on future economic activity the impact is negative for short horizons less than 1 year whereas it is positive for longer ones

firm behavior under quantity controls the theory of virtual quantities the theory of virtual quantities the dual to virtual prices provides a framework to analyze competitive multiproduct firm behavior under multiple quantity controls on inputs and outputs including command and control quotas and transferable property rights the framework addresses the firm s reactions to regulatory controls impacts of adding or dropping quantity controls inferring unrationed from rationed production and conversion from command and control quotas to cap and trade systems with transferable property rights and secondary market behavior the paper develops reasons for failure of quasi concavity of technology extends the elasticity of intensity s properties and integrates the virtual price and virtual quantity frameworks virtual quantities are applied to assess potential firm responses to quantity controls and a potential transferable property right in a malaysian fishery

sequence effects in the valuation of multiple environmental programs using the contingent valuation method in contingent valuation the willingness to pay for hypothetical programs may be affected by the order in which programs are presented to respondents with inclusive lists economic theory suggests that sequence effects should be expected however when policy makers allocate public budgets to several environmental programs they may be interested in assessing the value of the programs without the valuations being affected by the order in which the programs are presented using single bounded dichotomous choice contingent valuation questions we show that if respondents have the possibility to revise their willingness to pay answers sequence effects are mitigated

double co2 and beyond benefits costs and compensation abstract economic decisions over what action if any to take concerning the greenhouse effect tend to revolve around the social discount rate implicitly the debate concerns how to attribute intertemporal weights to welfare and implies a moral stance that is rarely given explicit recognition refocusing on the outcomes of current actions emphasises the role of compensation a conflict is apparent between the view that the current generation need be unconcerned over the loss or injury caused to future generations because they will benefit from advances in technology investments in both man made and natural capital and direct bequests and the requirement to avoid harming the innocent changes in units of welfare cannot be viewed as equivalent regardless of their direction in general doing harm is not cancelled out by doing good the result is a rejection of the potential compensation principle which underlies the current economic stance and a reconsideration of the acceptability of compensation altogether the concept of human rights and a non utilitarian perspective are used to show how cost benefit analysis denies the existence of inalienable rights and economics limits the moral considerability of harm

the term structure of euro interest rates and rational expectations abstract this paper analyzes the short end of the maturity spectrum of euro interest rates using recent monthly data the data for the euro franc and euro dm interest rates support the rational expectations hypothesis whereas those true for euro dollar interest rates do not this result is explained by the different approaches used to conduct monetary policy in the usa switzerland and west germany

nontrade concerns reconciling domestic policy objectives with freer trade in agricultural products since the conclusion of the uruguay round of trade negotiations in 1994 there has been increasing debate about the implications of freer trade for domestic or nontrade objectives in agriculture these range from traditional concerns such as food security and rural development to more recent issues such as the relationship between agriculture and the environment and the effects of agricultural practices on human health and animal welfare for countries reluctant to reduce agricultural protection a key issue is the extent to which domestic policy objectives would need to be sacrificed under freer trade for countries espousing trade liberalization the issue is whether domestic policy objectives will be used as a guise to undermine freer trade in agricultural products in this paper we focus on two areas of concern that are stressed by rich developed countries the linkage between agriculture and the environment and animal welfare environmental issues are prominent in asia europe and increasingly in north america while animal welfare is a major issue in europe it is generally acknowledged that agricultural support provided through implicit consumer taxes and direct subsidies in developed countries generates much of the distortion in global agricultural trade the more than 300 billion of agricultural support that is provided annually by oecd countries disadvantages developing country exporters and causes distortions in importers ensuring that there are effective disciplines on trade distorting forms of support will be vital to the suc

consequences of a carbon tax on household electricity use and cost carbon emissions and economics of household solar and wind abstract the study was conducted to determine the consequences of a carbon tax equal to an estimated social cost of carbon of 37 2 mg on household electricity cost and to determine if a carbon tax would be sufficient to incentivize households to install either a grid tied solar or wind system u s department of energy hourly residential profiles for five locations 20 years of hourly weather data prevailing electricity pricing rate schedules and purchase prices and solar panel and wind turbine power output response functions were used to address the objectives two commercially available household solar panels 4 kw 12 kw two wind turbines 6 kw 12 kw and two price rate structures traditional meter smart meter were considered averaged across the five households the carbon tax is expected to reduce annual consumption by 4 4 552 kwh year for traditional meter households and by 4 9 611 kwh year for households charged smart meter rates the carbon tax increases electricity cost by 19 202 year for a household cost of 202 year the carbon tax is expected to reduce social costs by 11 annual carbon tax collections of 234 household are expected adding the carbon tax was found to be insufficient to incentivize households to install either a solar panel or wind turbine system installation of a 4 kw solar system would increase the annual cost by 1546 247 and decrease co 2 emissions by 38 2526 kg valued at 94 household the consequence of a carbon tax would depend largely on how the proceeds of the tax are used

the causes of order effects in contingent valuation surveys an experimental investigation contingent valuation researchers have found that the hypothetical values respondents place on a nested sequence of environmental goods are sensitive to the order in which the goods are presented typically the smallest bundle of goods is valued more highly if presented first than if following more comprehensive bundles such effects appear even when each bundle is valued from an exclusive list or as an alternative to any other so that income and substitution effects are controlled we conduct lab experiments where participants are asked to value sequences of nested goods for purchase from an exclusive list using an incentive compatible becker degroot marschak mechanism we test whether order effects occur in valuation for a induced value goods b actual private goods and c identical private goods that are to be donated to charities we find significant order effects when the goods are valued for own use but not when they are valued for donation

estimation of distance decay functions to account for substitution and spatial heterogeneity in stated preference research in a site selection choice experiment various hypotheses are tested related to spatial heterogeneity in willingness to pay wtp for environmental improvements spatial heterogeneity is measured through distance decay effects substitute sites inside and outside the experiment s choice set and spatial trend variables we demonstrate that distance decay functions differ between users and nonusers and across study sites also the distance to substitutes outside the choice set explains spatial variation in wtp we show that further extending the model with spatial trend variables reveals additional spatial heterogeneity in choices accounting for spatial heterogeneity patterns results in significantly different wtp estimates for environmental improvements jel q25 q51

management of transnational commons coordination publicness and treaty formation this paper focuses on the formation of treaties to manage transnational commons when efforts must be coordinated among a minimal sized group so as to make cooperation worthwhile by focusing on mixed strategy equilibria we are con cerned with instances where the intentions of others are uncertain the number of required participants the pattern of payoffs transaction costs and the underlying technology of public supply aggregation are key factors behind the achievement of coordina tion we apply our analysis to explain the outcome of negotiations on stratospheric ozone depletion global warming acid rain and tropical deforesta tion jel q20 d70

the term structure of eurodollar interest rates and its relationship to the us treasury bill market abstract this paper examines an efficient market of the term structure of eurodollar interest rates and its relationship with the us treasury bill market standard test procedures and granger causuality tests are conducted which provide evidence showing that past changes in short term eurodollar or domestic interest rates are not useful in predicting changes in long term eurodollar interest rates the eurodollar market appears to be efficiently integrated with the us domestic financial market

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

revisiting the concept of payments for environmental services this article revisits the payments for environmental services pes concept and reviews existing pes definitions based on weberian philosophy of science it is argued that an ideal pes type strongly embedded in pes theory is needed to understand their logic many broader empiricist definitions fail to distinguish pes from the larger generic family of positive environmental incentives thus eroding their meaning by excessive vagueness arguably pes definitions should focus on describing a functional tool rather than normatively integrating desirable pes outcomes a modified narrow pes definition is proposed outlining conditionality as the single defining feature avoiding the buyer seller terms and linking pes to offsite externalities extensive explanatory guidelines address many valid conceptual concerns raised in the recent pes literature

the rhetorics of ecological economics since the early 1980s there has been a lively discussion about the rhetoric of economics ecological economists however so far have not tried to incorporate this discussion into their work this paper is a first step towards including the discourse on rhetoric into the self awareness of ecological economics after a brief outline of what this discourse is about the importance of metaphors as one aspect of rhetoric is examined connections of the rhetorical discourse to ecological economics as a post normal science are shown it is argued that two rhetorics of ecological economics can be distinguished internal and external rhetoric while the former refers mostly to methodological issues the latter is of particular importance for the political impact that ecological economics can have finally some suggestions for research are made

government interventions in sustainable supply chain governance experience in dutch front running cases numerous multi actor governance systems have recently emerged ensuring sustainability of international traded products business and civil society actors play a dominant role in initiating and governing sustainable supply chain governance systems sscg systems within specific product markets we see the emergence of various competing sscg systems this has led to debates on effectiveness transparency and legitimacy of these forms of self governance in the market these developments also call for a debate on appropriate roles for national governments most of the academic literature in this field focuses on methodologies for supply chain governance and their impacts but hardly addresses the roles taken on by governments and effectiveness of possible government interventions this article combines analysis of market dynamics in the timber and coffee product chains with policy analysis integrating approaches from the research fields of sustainable business and policy analysis the article shows how competition between various sustainable supply chain governance systems in the netherlands has resulted in recent market breakthroughs while initially government interventions were very limited and diverse the article suggests an approach for more systematic analysis of these dynamics and the roles of various actors by identifying both the public policy cycle and the private policy cycle

environmental services as a strategy for sustainable development in rural amazonia abstract rural amazonians especially indians extractivists and other forest dwellers desperately need something that they can sell sale of material commodities taken from the rainforest is the focus of most attempts to encourage sustainable development for these populations but the mother lode waiting to be tapped is not a material commodity but rather the forest s environmental services converting services like biodiversity maintenance carbon storage and water cycling into monetary flows that can support a population of forest guardians requires crossing a series of hurdles reliable quantification of the magnitude of services being offered is a first necessity how to convert forest environmental services into an income stream and how to convert this stream into a foundation for sustainable development in rural amazonia is a great challenge effort should be focused on tapping environmental services as a long term strategy for maintaining both rainforest and its population in addition to progressing toward long term goals immediate measures are needed to support the population and to avoid further loss of forest

on designing constructed markets in valuation surveys in this paper i consider some of the methodological issues involvedin designing valid contingent valuation cv scenarios i identifythe several parts of these scenarios and the design issues particularto those parts although my principal example is the scenario i andothers used in the exxon valdez oil spill study of the naturalresource damages to prince william sound alaska i generalize toother types of cv scenarios

near unit roots cointegration and the term structure of interest rates the term structure of interest rates is often modelled as a cointegrated system with the yield spreads forming the cointegrating vectors testing whether the yield spreads span the cointegration space is problematic because conventional tests on the cointegration vectors tend to overreject when the largest autoregressive roots deviate from unity as is likely to be the case with interest rates a new test that is robust w r t deviations from the exact unit root assumption is developed and applied to monthly us interest rate data from 1952 1 1991 2 taking into account the regime shift in 1979 the hypothesis of the yield spreads being the cointegrating vectors cannot be rejected using the robust test copyright 2000 john wiley sons ltd

saving tropical forests as a global warming countermeasure an issue that divides the environmental movement abstract saving tropical forests as a global warming countermeasure has become one of the environmental movement s most divisive issues divisions are just as sharp as the better known ones between government positions while the debate is often couched in scientific terms and with appeals to high universal principles the positions of the different partisans to the debate are better understood in terms of hidden agendas conscious or not in the case of european governments which oppose inclusion of forests in the kyoto protocol s clean development mechanism the exclusion of forests would lead to improvement of industrial competitiveness as compared to the us in the case of brazil opposition to including avoided deforestation fits with conspiracy theories regarding internationalization of the amazon for european and european dominated non governmental organizations ngos opposition to forests is best explained as an opportunistic blow at us consumption culture which is reviled for reasons largely unrelated to climate change from the point of view of brazilian ngos concerned with maintaining amazonian forest these alternative agendas are side issues that attractive as they might be do not merit throwing away a major opportunity for obtaining monetary flows for forest maintenance more carbon can be maintained in the forests than the amount of carbon credit granted in this way even if the carbon in the forests is temporary at some point a net benefit exists for the climate from having the forest project instead of a smaller reduction in fossil fuel emissions proposals for ton year accounting and for temporary credits effectively deal with issues such as carbon permanence to make the climatic benefits of avoided deforestation real allowing both a gain for climate and the maintenance of biodiversity and other values through carbon mitigation activities the importance of tropical deforestation in global greenhouse gas emissions means that agreement will eventually have to be reached on how to account for the benefits of avoided deforestation and incorporate them into mitigation activities this will continue to be the case regardless of the course of negotiations in the coming months in the wake of the march 2001 announcement by us president george w bush of his desire to renege on us commitments under the protocol

the predictive power of yield spreads for future interest rates evidence from the danish term structure the predictive power of yield spreads for future interest rates is examined using a new database of zero coupon bonds yields from the danish bond market the evidence shows that during the period of monetary targeting 1976 1 1985 7 yield spreads have substantial predictive power and the results tend to support the rational expectations version of the classical expectations theory of the term structure however for the recent period 1985 8 1991 12 characterized by a shift to a policy of interest rate targeting the predictive power of yield spreads disappears

cooperation and subgame perfect equilibria in global pollution problems with critical threshold the paper examines the issue of international pollution control under a dynamic framework involving heterogeneous countries and a critical threshold we propose an appealing specification for this type of problem and its novelty is illustrated by the fact that countries use linear strategies in equilibrium although their utility and damage functions are highly convex the stock of pollution under cooperation is always lower surprisingly emissions are always higher in distant periods under the cooperative scenario and we show through examples that this is a significant finding rather than some marginal effect it is also shown that the efficient allocation of pollution abatement is driven only by the respective technologies of the countries finally a dynamic transfer scheme allowing to implement the cooperative solution is proposed

green for green the perceived value of a quantitative change in the urban tree estate of new zealand abstract the urban tree estate impacts on the quality of urban life through the provision of a series of benefits that are ecological aesthetic social and economic in nature most of these benefits do not have a market price and exact information on the type of values people attach to urban trees is scarce the optimal allocation of resources towards the management of this natural asset is therefore problematic this study measures by contingent valuation the perceived monetary value of avoiding a 20 decrease in the urban tree estate of 15 cities in aotearoa new zealand the results reveal that on average households would be willing to pay around 2003 nzd 184 annually for the avoidance of a 20 reduction in their local urban tree estate with the commitment covering a period of 3 years half of the households would be willing to pay less than nzd 105 while the other half would be willing to pay more whether residents were willing to pay was influenced by the magnitude of the requested contribution bid the perceived seriousness of the 20 loss qualification and the strongest motivation for taking care of trees when using volunteer work as a metric for the valuation 66 of the sample agreed to contribute 4 h of volunteer work and 55 of those who refused to pay the contingent bid said yes to contributing in this form half the sample was dissatisfied with the number of trees in their cities the great majority wanting more trees the respondents indicated different importance levels for a series of benefits and negative effects associated with city trees aesthetics fresh air and trees representing nature in the city and bringing wildlife into the urban environment were the most highly regarded benefits while trees causing drainage problems generated the most concern the diverse motives given for interest in city trees highlighted the difficulties associated with measuring the total economic value of changes in this urban natural capital due to the non use bequest and existence value components

the total economic value of amazonian deforestation 1978 1993 national income accounting has been criticized because of its failure to encompass the notion of sustainability several studies address this problem through green income accounting i e by adjusting conventionally measured gdp for reduction in a given country s stock of natural resources these studies generally base value on the unit net price of the resource other studies go beyond net price emphasizing a natural resource s total economic value tev that is its non marketable as well as its marketable values this paper combines the green income accounting and tev approaches and applies the new framework to brazil in order to assess the foregone economic benefits resulting from amazonian deforestation the results lend support to calls for greater policy emphasis on conservation of unique and irreplaceable ecosystems 2000 elsevier science b v all rights reserved

toward consilience between biology and economics the contribution of ecological economics abstract during its ten year history ecological economics has made a real difference in the way economists look at the natural world and in the way biologists look at the economy in this survey article we examine the contributions to the journal in terms of e o wilson s concept of consilience that is his argument that the methods and assumptions of any field of study should be consistent with the known and accepted facts in other disciplines in particular we examine the contributions of ecological economics to reconciling the economic theory of the consumer and producer with biophysical reality

an optimal greenhouse tax in an optimal growth model in the past several years economists have developed a body of research concerning optimal economic policy in response to the possibility of global warming due to greenhouse gas ghg emissions contributors include nordhaus 9 10 11 12 poterba 14 manne and richels 8 cline 1 jorgenson slesnick and wilcoxen 6 goulder 3 4 gaskins and weyant 2 in this paper we attempt to assist policy makers who face the practical problem of estimating the magnitude of the socially optimal initial greenhouse gas tax and the corresponding magnitude of emission control to do this we adapt the optimal growth framework developed by nordhaus 12 in his dice model to investigate the initial optimal tax and emissions control as well as their evolution over a long planning horizon we perform sensitivity analysis not included in his monograph

the structure of economic modeling of the potential impacts of climate change grafting gross underestimation of risk onto already narrow science models scientists describe the scale of the risks from unmanaged climate change as potentially immense however the scientific models because they omit key factors that are hard to capture precisely appear to substantially underestimate these risks many economic models add further gross underassessment of risk because the assumptions built into the economic modeling on growth damages and risks come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes a new generation of models is needed in all three of climate science impact and economics with a still stronger focus on lives and livelihoods including the risks of large scale migration and conflicts

political regimes and economic growth arguments that relate regimes to growth focus on property rights pressures for immediate consumption and the autonomy of dictators while everyone seems to agree that secure property rights foster growth it is controversial whether democracies or dictatorships better secure these rights the main mechanism by which democracy is thought to hinder growth is pressure for immediate consumption which reduces investment only states that are institutionally insulated from such pressures can resist them and democratic states are not the main argument against dictatorships is that authoritarian rulers have no interest in maximizing total output these views are summarized in turn

economic and ecological concepts for valuing ecosystem services abstract the purpose of this special issue is to elucidate concepts of value and methods of valuation that will assist in guiding human decisions vis a vis ecosystems the concept of ecosystem service value can be a useful guide when distinguishing and measuring where trade offs between society and the rest of nature are possible and where they can be made to enhance human welfare in a sustainable manner while win win opportunities for human activities within the environment may exist they also appear to be increasingly scarce in a full global ecological economic system this makes valuation all the more essential for guiding future human activity this paper provides some history background and context for many of the issues addressed by the remaining papers in this special issue its purpose is to place both economic and ecological meanings of value and their respective valuation methods in a comparative context highlighting strengths weakness and addressing questions that arise from their integration

a sketch of the economics of the greenhouse effect over the last decade scientists have studied extensively the greenhouse effect which holds that the accumulation of carbon dioxide co2 and other greenhouse gases ghgs is expected to produce global warming and other significant climatic changes over the next century see stephen schneider 1989 the present study presents an economic approach for analyzing policies to slow climate change

in markets we trust setting the boundaries of market based instruments in ecosystem services governance abstract a growing tendency to frame environmental problems as a failure to price ecosystem services has coincided with the rise of so called market based instruments mbis the aim of this introductory article to the special section in markets we trust contrasting views on the performance and legitimacy of market based instruments in global environmental governance is to promote critical reflection about the nature scope and limits of mbis in ecosystem services governance and to provide guidance on where the boundaries for the application of markets ought to be set first we examine the role that methodological assumptions and implicit normative positions play in shaping academic perception of the effectiveness and legitimacy of mbis second we examine mbis in the broader ideological context and socio political processes that have favored their development and implementation third we test claims of the literature on mbis against insights and data from case studies presented in the special section fourth we discuss the scope and limits of markets in ecosystem services governance in the light of biophysical institutional and normative boundaries we end with a summary of concluding remarks from the special section and by identifying critical tasks for the scientific and policy agenda on ecosystem services governance

sequencing and valuing public goods abstract this paper establishes several propositions concerning the importance of context in valuing public goods it first provides necessary and sufficient conditions for the value of a public good to be independent of context utility constant valuation sequences are considered where public goods are systematically made available or taken away for the case of strict hicksian substitutes willingness to pay for an increase in one of the public goods is strictly decreasing the farther out in a sequence it is valued for the destruction of public goods the reverse is true for willingness to accept compensation sequencing has opposite implications for the assessment of the benefits of providing public goods than for the assessment of the damage from destroying them

the revival of the expectations hypothesis of the us term structure of interest rates abstract us interest rate data from 1987 to 1995 show a substantial predictive power of the spread for the short rate in line with the expectations hypothesis the estimation of a mccallum policy reaction model supports our conjecture that this striking result can be attributed to the adoption of the spread as an indicator for us monetary policy since the late eighties 1997 elsevier science s a

public economics as if time matters climate change and the dynamics of policy abstract tony atkinson played a crucial role in shaping modern public economics but throughout his life challenged whether we were making the right assumptions and were building models which captured the essence of the issues under examination this paper examines questions discussed with tony concerning public policy to foster change where the pace and nature of change are critical to any serious policy assessment the primary example is climate change the paper argues that subjects such as the dynamics of innovation of potentially immense and destabilising risks and of political economy together with technicalities around non linearities and dynamic increasing returns all of which are at the heart of the challenge of climate change will require a series of focused models for their investigation attempts to build integrated assessment models iams for the analysis of climate change have been largely misplaced and omit key effects and questions of the above kind intertemporal issues and values are at the core of policy towards climate change and the paper shows that much of the intertemporal economic analysis of the issues around climate change has been misguided and has ridden roughshod over the analytical underpinnings and the underlying ethics of discounting where major decline is possible discounting is fiercely endogenous and where capital markets are imperfect and risk intense discount rates cannot be read off from markets notwithstanding the modelling difficulties and the challenging research agenda the paper argues that the urgency of the problem for example world infrastructure will double in the next 15 20 years and there are major dangers of lock in of dirty and damaging capital require strong action and we know enough about policy to begin travelling down the path of an attractive low carbon transition

a general model for co2 regulation the case of denmark abstract for both economic political and administrative reasons a mixed design of permit market bubble and tax may be preferable for co 2 regulation in the case of denmark a co 2 market should be introduced for the private manufacturing sector and an administratively set co 2 bubble should be introduced for the public electricity sector permits should then be devaluated in year 2005 by 20 a co 2 tax should be correctly set at a level of 50 in year 2005 for households the transportation sector and private firms not participating in the co 2 market this model may guide future energy policies in other countries as well

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

exploring welfare implications of resource equivalency analysis in natural resource damage assessments abstract resource equivalency analysis rea has become the dominant method for calculating natural resource damages for biological injuries from pollution incidents this methodology compares resources lost as a result of an incident to benefits that can be gained from a habitat or wildlife restoration project compensation is evaluated in terms of resource services instead of market currency recently this approach has been questioned regarding its ability to provide adequate compensation based on economic welfare principles the following paper examines these critiques and develops a model to quantify the welfare implications of using rea when some of its implicit assumptions are violated we focus on the situation where compensatory restoration projects provide services that are comparable to those lost as a result of an incident we examine simulation scenarios where the public has heterogeneous preferences for resources and where resource values change over time using the hicks kaldor criterion we find that the traditional rea provides an acceptable approximation of aggregate compensation for a reasonably wide range of economic and biological parameter combinations

contingent valuation controversies and evidence contingent valuation cv has become one of the most widely used non market valuation techniques cv s prominence is due to its flexibility and ability to estimate total value including passive use value its use and the inclusion of passive use value in benefit cost analyses and environ mental litigation are the subject of a contentious debate this paper discusses key areas of the debate over cv and the validity of passive use value we conclude that many of the alleged problems with cv can be resolved by careful study design and implementation we further conclude that claims that empirical cv findings are theoretically inconsistent are not generally supported by the literature the debate over cv however has clarified several key issues related to nonmarket valuation and can provide useful guidance both to cv practitioners and the users of cv results

environmental goods and the distribution of income the paper presents a theoretical investigation of the distributional impacts of environmental commodities it introduces an appropriate framework defines concepts for measuring benefits and examines the determinants of benefit incidence within this setup its emphasis is on methodology and on recognizing the relevant economic variables and information it turns out that in an equal preference model the magnitude of the income elasticity of marginal willingness to pay for an environmental good is the crucial variable determining progressivity it is related to a number of other elasticities which are more easily accessible to an empirical estimation

on visible choice sets and scope sensitivity abstract in this paper we argue that the burgeoning empirical debate over scope sensitivity within contingent valuation studies is fundamentally incomplete in that it has neglected a systematic examination of certain effects of study design upon observed scope sensitivity in particular we highlight the fact that in certain study designs the choice set initially offered or visible to respondents is changed in a stepwise manner as they progress through a valuation exercise while other designs involve advance disclosure regarding the full extent of the final visible choice set prior to any choices or values being elicited the issue of changes in the visible choice set is alluded to by smith j environ econom manage 22 1 71 who identifies this as a primary challenge to kahneman and knetsch s j environ econom manage 22 1 57 well known experimental results kahneman and knetsch contend that it seems highly implausible that this minor procedural change would significantly alter results p 61 but do not test this assertion we present experimental and field tests of the impact upon contingent values of varying the visible choice set through stepwise and advance disclosure these dimensions of design are interacted with changes in the order in which nested goods are presented bottom up versus top down when a stepwise disclosure procedure is adopted the observed scope sensitivity is substantially and significantly affected by the order in which goods are presented but such procedural variance is not observed within advance disclosure designs conjectures regarding the origin and implications of such findings are presented

can redd still become a market ruptured dependencies and market logics for emission reductions in brazil abstract during almost 20 years of political debate on the nature of payments for ecosystem services pes these schemes have been characterized mostly as a non market approach even though attempts to transform them into market instruments has persistently recurred in these debates one notable example is the materialization of reducing emissions from deforestation and forest degradation redd in brazil where a sustainable development discourse dominates national forest governance at the expense of a carbon commodification discourse this research paper adopts a foucauldian approach to plot the epistemological foundations of the market logics that still influence redd institutionalization in brazil to a large extent and thereby reproduce what we define as a ruptured dependence on nature more specifically we recognize ruptured dependence in the three building blocks of market instruments namely singularization monetary valuation and appropriation our analysis shows that redd institutions have retained the singularization and monetary valuation of emission reductions even though the appropriation processes have rejected the possibility of exchange and instead emphasized the national ownership of emission reductions however appropriation remains a highly politicized process that is sensitive to criticism and open to calls for alternative approaches that are closer to ruptured dependence

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

directional heterogeneity in wtp models for environmental valuation many studies in the stated preference literature on environmental valuation do not include the effects of substitutes and distance in willingness to pay wtp models in spite of the relevance of these effects in aggregation and benefit transfer heterogeneity in the availability of substitutes over space may cause multidirectional distance effects in wtp as a result disregarding this spatial heterogeneity may lead to biased estimators of the distance effect and associated wtp values cameron 2006 in this paper we demonstrate that distance decay is subject to significant directional effects which tend to be related to differences in the availability of substitutes across the study area we apply a straightforward methodology to account for such spatial heterogeneity in choice experiments and assess the effect on wtp for improvements in ecosystem services in a lake district we model distance decay effects whilst controlling for heterogeneity between users and non users and non use related wtp reasons the directional effects result in significantly different wtp estimates different market sizes reflecting the population with positive wtp and differences in total wtp up to 32

an empirical note on the term structure and interest rate stabilization policies the expectations theory of the term structure of interest rates supplemented by the rational expectations and time invariant risk premium assumption implies that the spread between the long and the short rate has in general predictive power for the short rate this implication was consistently rejected in recent studies shiller campbell and schoenholtz 1983 fama 1984 mankiw and summers 1984 with data at the short end of the maturity spectrum threeand six month treasury bills time variations of the risk premium which are probably important for the behavior of the yield on long term bonds are not an entirely satisfactory explanation for these findings in a more recent article of mankiw and miron 1986 who analyzed quarterly data for threeand six month interest rates over the period 1890 1979 an interesting new explanation for the failure of the expectations theory emerged they showed that the spread had substantial predictive power for changes in the short rate in the period before the founding of the federal reserve 1890 1914 whereas for all other periods considered 1915 1933 1934 1951 1951 1958 and 1959 1979 the spread did not help to predict the short rate thus mankiw and miron suggested that the rejection of the expectations theory with recent data is a consequence of the commitment of the federal reserve to stabilize interest rates resulting in random walk behavior of the short rate under these circumstances expected future short rates are equal to the actual short rate and variations of the spread are only brought about by changes in the risk premium in this note the short term interest rate stabilization explanation for the failure of the predictive implications of the expectations theory of the term structure is subjected to an additional empirical test using recent monthly data thereby the short end of the term structure of swiss german and u s interest rates is analyzed for the years 1974 1986 these three cases are of great interest in our context the swiss national bank and the german federal bank used the opportunity offered by the flexible exchange rate system to implement money supply targets and did not attempt to stabilize short term interest rates whereas the federal reserve was at

does food safety information impact u s meat demand a theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to u s meat consumption evidence is found for the existence of pre committed levels of consumption seasonal factors time trends and contemporaneous own and cross commodity food safety concerns the average demand response to food safety concerns is small especially in comparison to price effects and to previous estimates of health related issues this small average effect masks periods of significantly larger responses corresponding with prominent food safety events but these larger impacts are short lived with no apparent food safety lagged effects on food safety concerns in the united states have dramatically increased in the past decade with regard to incidences of contaminated meat products concerns have arisen because contaminated meat products can result in serious risk to the well being and health of consumers contamination comes from a myriad of sources including but not limited to outbreaks of listeria monocytogenes escherichia coli e coli and salmonella centers for disease control and prevention food safety problems are not isolated to the united states as other unsafe contaminates in meats have emerged across the world including highly publicized outbreaks of bovine spongiform encephalopathy bse in europe the potential impacts of publicized food safety events on consumer s demand for meat products in the united states include own effects on the demand for the contaminated meat involved as well as cross effects impacting the demand for other meats the objective of this article is to investigate whether publicized food safety concerns surrounding beef pork and poultry chicken and turkey have impacted meat consumption food safety indices are constructed separately for beef pork and poultry

ordering effects in nested top down and bottom up contingent valuation designs abstract within a contingent valuation cv survey ordering effects are defined where responses to a given question vary in a theoretically unanticipated manner according to the positioning of that question relative to others in the survey instrument this paper employs a split sample cv design to investigate the potential for such ordering effects upon stated willingness to pay for nested goods in one top down design values are first elicited for protecting the whole of an endangered area after which values for a part sub area are elicited a second bottom up treatment reverses the order of valuation tasks with the part scheme valued prior to the whole results show that whole and part valuation responses are logically ordered and determined by a consistent set of factors irrespective of question order however variance to question order was observed in both the part and whole valuations the correspondence of these results to standard and non standard preference theories is explored and the difficulties and practical issues concerning valuing nested goods are highlighted

valuing the multidimensional impacts of environmental policy theory and methods a theoretically consistent framework is developed for valuing the multidimensional impacts of environmental policy conventional benefit estimates are shown to be biased because of the presence of substitution and complementarity effects in valuing policy impacts procedures are developed for implementing a valid framework consistent with theory empirical results indicate significant substitution effects in valuing environmental conditions across different geographic regions

sequencing and the adding up property in contingent valuation of endangered species are contingent non use values economic values this paper presents tests of the theoretical validity of the contingent valuation cv method the validity of cv is especially a concern when involving environmental goods with a predominant non use value one test of theoretical validity is the adding up property that implies that a specific good should be equally valued irrespectively of it is being valued directly or built up sequentially in this cv study four independent sub samples stated willingness to pay for the same composite good or package using different sequences one sub sample valued the composite good directly while two sub samples faced built up sequences valuing first subsets of this composite good a fourth sub sample valued the composite good from a dividing out approach facing first the valuation of a larger multi package theoretically expected sequencing effects were observed the subset goods obtained higher values earlier in a sequence and the dividing out approach decreased the stated value for the composite good most importantly these cv data did pass the tests of the adding up property

learning design contingent valuation ldcv noaa guidelines preference learning and coherent arbitrariness we extend the contingent valuation cv method to test three differing conceptions of individuals preferences as either i a priori well formed or readily divined and revealed through a single dichotomous choice question as per the noaa cv guidelines k arrow r solow p r portney e e leamer r radner h schuman report of the noaa panel on contingent valuation fed reg 58 1993 4601 4614 ii learned or discovered through a process of repetition and experience j a list does market experience eliminate market anomalies q j econ 2003 41 72 c r plott rational individual behaviour in markets and social choice processes the discovered preference hypothesis in k arrow e colombatto m perleman c schmidt eds rational foundations of economic behaviour macmillan london st martin s new york 1996 pp 225 250 iii internally coherent but strongly influenced by some initial arbitrary anchor d ariely g loewenstein d prelec coherent arbitrariness stable demand curves without stable preferences q j econ 118 1 2003 73 105 findings reject both the first and last of these conceptions in favour of a model in which preferences converge towards standard expectations through a process of repetition and learning in doing so we show that such a learning design cv method overturns the stylised facts of bias and anchoring within the double bound dichotomous choice elicitation format

the expectations hypothesis term premia and the canadian term structure of interest rates in this paper monthly data are used over the period 1960 7 to 1995 12 to examine the determinants of term premia implicit in the canadian t bill term structure of interest rates in sharp contrast to u s evidence the conditional variances of canadian macroeconomic variables are found to be insignificant predictors of term premia in the canadian t bill term structure the conditional variances of u s macroeconomic variables however are found to be important determinants of canadian term premia jel classification e43 g1 l hypothese des anticipations les primes de temps et la structure temporelle des taux d interet canadiens ce memoire utilise des donnees mensuelles de juillet 1960 a decembre 1995 pour examiner les determinants des primes de temps implicites dans la structure des taux d interet pour les bons du tresor canadiens contrairement a ce que l on trouve aux etats unis il semble que les variances conditionnelles des variables macroeconomiques canadiennes ne sont pas des predicteurs utiles de ces primes cependant il appert que les variances conditonnelles des variables macroeconomiques des etats unis sont des determinants importants de ces primes

endogenous term premia and anomalies in the term structure of interest rates explaining the predictability smile abstract numerous studies have documented a predictability smile in the post war term structure of interest rates spreads between long rates and short rates predict subsequent movements in short rates provided the long horizon is less than three months or greater than two years but not for intermediate maturities proposed explanations of the smile involve interest rate smoothing by the fed time varying risk premia peso problems and measurement error we show that despite their highly restrictive nature some parameterizations of the cox ingersoll ross cir and chen scott cs models of the term structure can account for the predictability smile cir and cs parameterizations which are consistent with the smile regularity are inconsistent with other features of the data however

estimation of a two level demand system with limited dependent variables a two level demand model was derived from a strongly separable conditional indirect utility function to analyze dominican rural and urban household consumption at different income levels for samples with significant zero consumption a multivariate limited dependent variable model utilizing the concept of virtual prices was used to obtain consistent estimates of consumption parameters results show that households with higher incomes tend to be less responsive to own price and income changes in consumption of most food and nonfood commodities for demographic variates the elasticities of rice and aggregate food with respect to household composition variables are all positive with few exceptions price and income responses of household food and nonfood consumption have significant policy importance this study provides insights into the consumption behavior of rural and urban dominican households within the framework of a complete demand system three basic groups of determinants of household consumption are explored commodity prices household total expenditure and demographic variables our treatment of these fundamental issues involves the application to demand analysis of a a classical theoretical result about commodity decentralization and price aggregation and b an econometric technique to deal with limited dependent variables in the demand system framework the analysis of detailed commodities is often prohibitive because increasing the size of the demand system substantially increases the number of unknown parameters to estimate a relatively large number of parameters in this study the theoretical implications of twostage budgeting and perfect price aggregation are used to construct a two level demand model that is consistent with constrained util

why and how much are firms willing to invest in ecosystem services from tropical forests a comparison of international and costa rican firms abstract in recent years schemes for payment for ecosystem services pes have emerged in tropical countries besides public demand the private demand offers the opportunity to develop pes the goal of this paper is to investigate the potential demand by firms for four ecosystem services from tropical forests biodiversity conservation carbon sequestration scenic beauty and watershed protection those are the four granted in the forest legislation and rewarded for in the pes scheme in costa rica to explain stated willingness to invest wti we assess influential factors expectations with respect to financial and non financial benefits of investing in ecosystem services experience with forest ecosystem services firm attributes like origin sector membership and size and finally perceived behavioral control we sent a questionnaire to over 900 international and costa rican firms from different sectors the low response rate of the survey of overall 6 can be explained by in a business context rather new topic of ecosystem services from tropical forests the analysis showed that a firm s willingness to invest wti depends on the origin of the firm international firms are interested in buying certificates mainly for carbon sequestration costa rican firms for all four ecosystem services in the following order watershed protection biodiversity conservation carbon sequestration and scenic beauty indirect and non financial benefits are surprisingly important and can impede the development of ecosystem service markets at the same time the activities of intrinsically motivated green entrepreneurs in a financially oriented firm setting might be a prerequisite within a firm context for bringing such innovative topics as ecosystem services from tropical forests to the table

evaluating u s oil security and import reliance abstract we examine the literature that considers the consequences of u s reliance on imported oil we take an approach that covers many ideas about the costs arising from u s reliance on imported oil and we identify which of those ideas have broad support in the economics literature and which ideas have only limited support we also quantify the costs of u s reliance on imported oil using two approaches one is fairly narrow conforms to the economics view of externalities and yields small cost estimates the other is relatively expansive is favored by some policy analysts and yields much larger cost estimates we estimate these costs as expected u s economic losses over a time horizon from 2010 through 2035 while taking into account world oil market conditions market power probable oil supply disruptions and the oil market response to those supply disruptions

assessment of european union transition scenarios with a special focus on the issue of carbon leakage this paper uses the model gemini e3 to simulate and assess the transition scenario to 2020 framed by the european union in its energy climate directive and it raises several issues in this connection after a brief description of the model the paper presents the results of the scenarios mainly the values of the major indicators of carbon price both in the ets and in non ets sectors and the welfare cost of the eu policy under the various configurations considered while it is independent of the scenario in the ets sector in the non ets sector the value of carbon is very sensitive to the provisions of the directive and in particular the option of resorting to the flexibility mechanisms the welfare cost also varies significantly according to scenarios and its value for the entire eu is more than double in the scenario closest to the directive as compared to the least cost one the paper also addresses the very sensitive issue of carbon leakage and argues in favor of a new concept of net leakage the analysis shows that while carbon leakage may affect some specific sectors at the aggregate level it does not represent a real concern with a magnitude of at most a few percent of ghg abatement by annex b countries

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

tropical forests tipping points and the social cost of deforestation abstract recent work has suggested that tropical forest and savanna represent alternative stable states which are subject to drastic switches at tipping points in response to changes in rainfall patterns and other drivers deforestation cost studies have ignored the likelihood and possible economic impact of a forest savanna critical transition therefore underestimating the true social cost of deforestation we explore the implications of a forest savanna critical transition and propose an alternative framework for calculating the economic value of a standing tropical forest our framework is based on an average cost method as opposed to currently used marginal cost methods for the design of optimal land use policy or payments for ecosystem services we apply this framework to the calculation of the social cost of deforestation of the amazon rainforest

the term structure of interest rates and regime shifts some empirical results abstract a test of the expectations theory of the term structure in the framework of a regime switching var model for a change in the short rate and the short long spread with euro us and euro swiss franc rate data points to the importance of uncertainty about the procedures of monetary policy for the rejection of the expectations theory in the us case whereas in the swiss case a time varying term premium also seems to be relevant

term structure anomalies term premium or peso problem abstract the goal of this paper is to develop a test for the relative importance of the time varying term premium and the peso problem for rejection of the expectation hypothesis of the term structure ehts our reasoning is based on a term structure model that allows for both phenomena simultaneously if we assume that only one regime is observed ex post we can estimate all the information we need to evaluate distortions generated by both hypotheses we can also test the presence of a peso problem firstly we find that a peso problem might explain rejection of the ehts in germany and the united kingdom after the european exchange rate crisis secondly we show that this explanation appears inappropriate to explain the ehts failure in the united states