firm level ecosystem service valuation using mechanistic biogeochemical modeling and functional substitutability increasingly private firms are focusing on environmental sustainability however such entities continue to experience difficulty in operationalizing sustainable practices in management decisions for firms that own natural ecosystems part of the difficulty stems from their inability to balance the environmental value of conserving these ecosystems against potential profits that could be captured through their development to overcome this we present a new comparative framework for natural and engineered systems which allows for a rigorous valuation of ecosystem services based on functional equivalence with engineered systems this framework allows for the opportunity of such value to be represented within international accounting standards thus aligning biological ecosystem service valuation with current rigorous accepted accounting norms looking specifically at the removal of phosphorus via wetland we characterize an ecosystem service using a mass balance mechanistic biogeochemical model we then simulate the ecosystem performance under various loading conditions to determine the limit state for which the wetland can perform the service of phosphorus removal in the long term finally using functional substitutability we apply an appropriately scaled price of the engineered equivalent system to determine a market based value of the ecosystem service as a demonstration we apply this methodology to an estuary located in southern california

reducing drunken driving which policies are most effective traffic fatalities are the leading cause of accidental deaths and the leading cause of all deaths for people between the ages of 16 and 25 4 a major cause of traffic accidents is drunken driving reed 12 estimates that the annual number of deaths could be reduced by 12 000 if all drunken driving were eliminated recently increased attention has been directed toward finding ways to reduce the incidence of drunken driving this paper evaluates the relative effectiveness of several policies in terms of reduced fatalities these policies include raising the minimum legal drinking age increasing legal sanctions and enforcement and increasing the price and reducing the availability of alcoholic beverages most studies have focused on a single policy studies by cook 3 mccornac 7 and williams et al 16 examined the effect of raising the minimum legal drinking age their results indicate that auto fatalities have fallen in states where the minimum legal drinking age has been increased ross 13 and votey 15 both examined the drunken driving deterrence policies in scandanavian countries ross was unable to show that they had any effect on behavior using a more sophisticated model votey concluded that the severe deterrence policies reduced the incidence of drunken driving cook and tauchen 2 found that increasing taxes on alcoholic beverages reduced consumption and led to fewer auto fatalities and a lower incidence of cirrhosis death

quasi option value some misconceptions dispelled abstract we discuss a couple of important issues in the recent literature on quasi option value we show that the assertion that quasi option value can be negative in a model with independent learning is based on confusion between quasi option value which is always positive and the net benefit of preservation of a natural environment subject to development which is not we also explore the significance of different assumptions about the nature of learning and show that the result that quasi option value is positive is surprisingly robust

ecological economic analysis of wetlands scientific integration for management and policy abstract wetlands all over the world have been lost or are threatened in spite of various international agreements and national policies this is caused by 1 the public nature of many wetlands products and services 2 user externalities imposed on other stakeholders and 3 policy intervention failures that are due to a lack of consistency among government policies in different areas economics environment nature protection physical planning etc all three causes are related to information failures which in turn can be linked to the complexity and invisibility of spatial relationships among groundwater surface water and wetland vegetation integrated wetland research combining social and natural sciences can help in part to solve the information failure to achieve the required consistency across various government policies an integrated wetland research framework suggests that a combination of economic valuation integrated modelling stakeholder analysis and multi criteria evaluation can provide complementary insights into sustainable and welfare optimising wetland management and policy subsequently each of the various components of such integrated wetland research is reviewed and related to wetland management policy

deterrence and knowledge of the law the case of drunk driving during the past decade hundreds of new state laws have increased the certainty severity and swiftness of punishment for drunk driving these new laws can deter drunk driving only to the extent people know about them in this empirical paper the role incomplete information plays in an econometric model of drunk driving deterrence is explored little evidence is found that people know the applicable laws in their states however some evidence of rational behaviour is found given their lack of knowledge of these laws it is difficult to reconcile these results with studies that have found drunk driving deterrence effects of more severe penalties more certain penalties or even swifter penalties

do focus groups and individual interviews reveal the same information for natural resource valuation abstract focus groups and individual interviews have become accepted methods used in the initial stages of valuation research whether focus groups and individual interviews reveal similar valuation information has not been thoroughly studied the research tests the hypothesis that focus groups yield the same ecosystem service information as do individual interviews the research also explores how the focus group and individual interview data might differ the analysis shows that focus groups and individual interviews are not substitutes they yield different information about ecosystem services and resource uses

the sign and size of option value we adapt the theoretical state preference model to value nonmarket public goods under individual uncertainty about use illustrating with an assessment of willingness to pay to prevent acid rain lake damage in the northeast united states individual

assessing welfare impact of entry into power market abstract this paper calculates the welfare impact of a new entrant based on the location of entry in the korean electricity market we use two different models one is the optimal fuel mix model to estimate the effect of a new entry in the long run the other is the variable cost minimization model to assess the contribution of an existing installed private generator in the short run a specific private generator which has a cost advantage saves a substantial amount of system wide variable costs we show that the right location for a new entrant can save power generation costs significantly even if a new entrant does not have a cost advantage

the new approach to wilderness preservation through benefit cost analysis over the last 15 years economists of resources for the future led by john krutilla have been developing a new approach to wilderness preservation this paper offers a concise exposition of their approach and adds a few new steps the basic ingredient of the new approach is a perception of declining net benefits of wilderness development and rising net benefits of wilderness preservation over time these alter the entire shape of the benefit cost analysis of potential development the new steps involve reversibility postponability and recognition of multiple interest rates

traffic accidents deaths and alcohol consumption the main goal of this article is to analyse the relationship existing among prices of alcoholic beverages alcohol consumption and traffic fatalities for the spanish autonomous communities during the time interval 1998 to 2002 among the main results we highlight a positive correlation between alcohol consumption and traffic mortality rate basically governments implement two kinds of policies to reduce the traffic mortality rate one is oriented to control the supply of alcohol by increasing alcohol taxes the other is oriented to preserve traffic security increasing the number of sanctions for traffic rule infraction we find evidence that both policies exert a positive influence in the reduction of traffic fatalities there is no empirical evidence to indicate that being a novice driver increases the tendency to be involved in a mortal traffic accident

breath testing and highway fatality rates this paper presents an empirical investigation of the effect of a preliminary breath test law on highway fatality rates a preliminary breath test law reduces the procedural problems associated with obtaining evidence of drunk driving and thus increases the probability that a drunk driver will be arrested according to the theory of deterrence increasing the probability of arrest for drunk driving will reduce the occurrence of this behaviour the data set employed to test the theory is a time series from 1980 to 1985 of cross sections of the 48 contiguous states of the united states four highway fatality rates are used as measures of drunk driving the effect of the breath test law was estimated using four independent variable models and 12 dummy variable models the four independent variable models were also estimated using learner s specification test the purpose of using these alternative specifications and learner s specification test was to examine the breath test coefficients for specification bi

economic valuation of biodiversity sense or nonsense this paper critically evaluates the notion and application of economic monetary valuation of biological diversity or biodiversity for this purpose four levels of diversity are considered genes species ecosystems and functions different perspectives on biodiversity value can be characterized through a number of factors instrumental vs intrinsic values local vs global diversity life diversity vs biological resources etc a classification of biodiversity values is offered based on a system of logical relationships among biodiversity ecosystems species and human welfare suggestions are made about which economic valuation methods can address which type of biodiversity value the resulting framework is the starting point for a survey and evaluation of empirical studies at each of the four levels of diversity the contingent valuation method is by far the most used method an important reason is that the other valuation methods are unable to identify and measure passive or nonuse values of biodiversity at first sight the resulting monetary value estimates seem to give unequivocal support to the belief that biodiversity has a significant positive social value nevertheless most studies lack a uniform clear perspective on biodiversity as a distinct concept from biological resources in fact the empirical literature fails to apply economic valuation to the entire range of biodiversity benefits therefore available economic valuation estimates should generally be regarded as providing a very incomplete perspective on and at best lower bounds to the unknown value of biodiversity changes 2001 elsevier science b v all rights reserved

investment projects and natural resources economic rationality in janus role abstract the evaluation of a public project or a public policy is in general based on scientific principles and methods however such an evaluation is not simply a logical and computational exercise there are uncertainties often severe ones in the way scientific knowledge is to be used hence there are degrees of freedom available to the promoters of the project or policy and possibly to other parties involved this paper discusses what use of these degrees of freedom has been made in western europe in situations where the conservation of natural resources has been a significant issue at stake we examine how scientific requirements on one hand and on the other hand the particular views held by the promoter and by other parties involved interact and how main features of the methodology of evaluation are influenced by this interaction which in some cases takes the form of an elaborated negotiation on methodological points

towards an ecological economics of sustainability abstract persistent disagreement both as to the interpretation to be given to sustainability and as to the relation between ecological and economic sustainability has hindered the development of an ecological economics of sustainable resource use this paper identifies the main concepts of sustainability deriving from the two disciplines in order to explore the difference implied by an ecological approach to the problem it is argued that present economic and ecological approaches are largely disjoint and that they address basically different phenomena by combining the efficiency requirements of what is usually thought of as economic sustainability with the stability requirements of an ecological approach it is shown that an intertemporally efficient allocation of resources that satisfies the conditions for constant levels of consumption is not necessary to assure ecological sustainability ecological sustainability requires that the allocation of economic resources should not result in the instability of the economy environment system as a whole

valuing environmental functions tropical wetlands recent studies have suggested that tropical wetland systems may have a crucial economic role to play in development the following paper provides an overview of these benefits using the general framework of cost benefit analysis as the methodological approach to assessing wetland values an analysis of trade offs between conserving or converting tropical wetlands demonstrates that taking into account the opportunity cost of wetland loss leads to a lower level of conversion than would otherwise be the case finally the paper discusses the extensions and limitations of the production function approach as applied to valuing nonmarketed wetland benefits

do open access conditions affect the valuation of an externality estimating the welfare effects of mangrove fishery linkages in thailand mangroves are considered ecologicallyimportant due to their role as breedinggrounds and nursery habitats for off shorefisheries however mangrove deforestationthrough conversion to shrimp aquaculturethreatens this valuable function this paperdevelops a dynamic production functionapproach to analyze the influence of habitatchanges on an open access fishery that faces afinite elasticity of demand the basic modelis applied to a case study of the impacts ofmangrove deforestation on the artisanal marinedemersal and shellfish fisheries in thailand by estimating parameters through pooledtime series and cross sectional data over the1983 1993 period for the five coastal zones ofsouthern thailand the welfare impacts ofmangrove deforestation are estimated underdifferent elasticity of demand assumptions under pure open access the welfare lossesestimated for mangrove deforestation inthailand of 30 km2 annually ranged from 12 000 to 408 000 depending on theelasticity of demand

sensitivity of reserve margin to factors influencing investment behaviour in the electricity market of england and wales abstract the electricity generation and distribution industries of england and wales have recently undergone major re structuring as part of the privatization process of taking them out of the public sector on the generation side three major companies have been created which compete both with each other and with the new independent companies who are expected to enter the market trading between generators and distributors is controlled centrally by a pool system which attempts to ensure the optimal operation of the system in the short term and gives a pricing signal for longer term investment this pricing signal depends upon an a priori loss of load probability this paper is intended to provide insights into how the investment in capacity for generation could evolve according to various regulatory conditions economic assumptions degrees of competition and the strategic behaviour of the separate companies using a system dynamics approach a simulation model of investment is developed to generate insights into the volatility of the reserve margin variations in the loss of load probability and the various market share scenarios the degree of uncertainty in the demand the amount of information exchange between competitors and the degree of foresight in planning are considered as well as different financial or market share objectives for companies

investment incentives in the korean electricity market abstract this paper develops a model based analysis of the effects of various capacity incentive systems on new investment in the korean electricity market the restructuring process in korea allocated power generation to six firms competing within a wholesale market albeit strictly on a cost basis because of this cost based pool capacity payments were also introduced to encourage new investment however it is an open question whether the current fixed capacity payment scheme is enough to secure resource adequacy and consideration is being given to alternative mechanisms such as the use of lolp using a detailed market simulation model based on system dynamics we compare these approaches in terms of how they may influence the investors decisions and thereby determine the system reserve margin the simulation results suggest that there may be serious problems in staying with the current fixed capacity payments in order to achieve resource adequacy in contrast an lolp based capacity mechanism may in the longer term increase the reserve margin compared with a fixed capacity payment more generally this paper indicates how crucial the effective modeling of the investment behavior of the independent power producers is for adequate policy support even if they only constitute a fringe in a substantially centrally influenced market

do drunk drivers pay their way a note on optimal penalties for drunk driving this paper uses a simple framework to describe optimal penalties for drunk driving and reviews available data to judge current policies against this standard the analysis suggests that policies should be designed so that the penalties paid by drunk drivers equal the value of the increased risks drunk drivers impose on others current penalties appear to be too lenient implying that current levels of drunk driving are too high

the resource adequacy scheme in the korean electricity market abstract in south korea the incentive scheme for generators to add new power generation is based on the system marginal price smp and the capacity payment cp the infra marginal generators receive an extra margin due to the high smp level and the new infra marginal generators need to be built to achieve the optimal fuel mix however the metropolitan zone needs more marginal generators due to the transmission congestion and environmental regulations but the marginal generator in the metropolitan zone does not have adequate profits for the new investment under the current cp this paper suggests the appropriate investment incentive scheme for different zones the introduction of forward capacity markets for different regions creates higher capacity market prices in the metropolitan zone than those in the southern zone the introduction of forward capacity market also induces a new lng generator investment in the metropolitan zone while only new infra marginal generators need to be added in the southern zone

simultaneity modeling analysis of the environmental kuznets curve hypothesis the environmental kuznets curve ekc hypothesis has been recognized in the environmental economics literature since the 1990 s various statistical tests have been used on time series cross section and panel data related to single and groups of countries to validate this hypothesis in the literature the validation has always been conducted by using a single equation however since both the environment and income variables are endogenous the estimation of a single equation model when simultaneity exists produces inconsistent and biased estimates therefore we formulate simultaneous two equation models to investigate the ekc hypothesis for fifty six countries using annual panel data from 1990 to 2012 with the end year is determined by data availability for the panel to make the panel data analysis more homogeneous we investigate this issue for a three income based panels namely high middle and low income panels given several explanatory variables our results indicate that there exists a bidirectional causality between economic growth and pollution emissions in the overall panels we also find that the relationship is nonlinear and has an inverted u shape for all the considered panels policy implications are provided

valuing the environment as input review of applications to mangrove fishery linkages the following paper reviews recent developments in the methodology for valuing the role of wetlands in supporting economic activity the main focus will be on mangroves serving as a breeding ground and nursery habitat in support of coastal and marine fisheries as this particular ecological function of a mangrove system means that it is effectively an unpriced environmental input into fisheries then it is possible to value this contribution through applying the production function approach the first half of the paper overviews the procedure for valuing the environment as an input applied to the case of a wetland supporting a fishery both the static ellis fisher freeman approach and the dynamic approach developed by barbier and strand incorporating the intertemporal bioeconomic fishing problem are reviewed the second half of the paper discusses briefly two recent case studies of mangrove fishery valuation an application in south thailand which is based on the static ellis fisher freeman model and an application in campeche mexico which is based on the dynamic approach 2000 elsevier science b v all rights reserved

the optimal fuel mix and redistribution of social surplus in the korean power market this paper investigates the difference between the optimal fuel mix incorporating a pre installed generation capacity constraint and the actual fuel mix in the korean power market since the restructuring of the market the fuel mix has been determined partly by investors and partly by the basic plan for long term electricity supply and demand bpe both the system marginal price smp and the capacity payment cp which has been based on the fixed cost of a specific gas turbine generator were intended to provide an investment incentive in the market however they did not bring about an optimal fuel mix in korea under the circumstances of a shortage of base load generators these generators may garner excessive profits due to a high smp level however the adjustment scheme of profit between kepco and gencos left scant profit for generators this paper suggests that a contract is needed to create the appropriate profit and tax levels for these base load generators the redistribution of profit improves equality between consumers and generators and the proper margin creates incentives for base load technology investment in korea

literature survey on the relationships between energy environment and economic growth abstract the aim of this study is to exhibit an exhaustive survey which is related to the great flight of the literature of energy environment growth nexus at the individual and regional scale studies covering the period from 1978 to 2014 the survey takes into consideration the sample country region etc periods covering econometric strategies and conclusions our survey is based on the causality direction among i the energy use variables electricity nuclear renewable and non renewable and output growth ii between economic growth and environment and between the three variables at the same time globally these surveys provide paradoxical and not conclusive results which energy consumption can boost economic growth through the productivity enhancement and it can boost also the environmental damages through the enhancement of pollutant emissions our survey sheds more the lights on the energy environment growth literature by giving an extensive listing 1978 2014 of these causal linkages among the energy use variables environment and economic growth for both individual and collective cases there is a unanimous consensus about the importance of dealing with such dynamic relationship which is seems to be a cornerstone element in setting any ambition strategies energy ecological and economics

electricity market design for generator revenue sufficiency with increased variable generation we present a computationally efficient mixed integer program mip that determines optimal generator expansion decisions and hourly unit commitment and dispatch in a power system the impact of increasing wind power capacity on the optimal generation mix and generator profitability is analyzed for a test case that approximates the electricity market in texas ercot we analyze three market policies that may support resource adequacy operating reserve demand curves ordc fixed reserve scarcity prices frsp and fixed capacity payments cp optimal expansion plans are comparable between the ordc and frsp implementations while capacity payments may result in additional new capacity the frsp policy leads to frequent reserves scarcity events and corresponding price spikes while the ordc implementation results in more continuous energy prices average energy prices decrease with increasing wind penetration under all policies as do revenues for baseload and wind generators intermediate and peak load plants benefit from higher reserve prices and are less exposed to reduced energy prices all else equal an ordc approach may be preferred to frsp as it results in similar expansion and revenues with less extreme energy prices a fixed cp leads to additional new flexible ngct units but lower profits for other technologies

development and government policies of the shrimp farming industry in thailand in relation to mangrove ecosystems abstract intensive shrimp farming arrived in thailand during the 1980s and developed virtually unregulated until 1987 subsidised by the government it quickly became an important export industry and thailand has been the world s largest producer of tiger shrimp since 1991 however the development of the shrimp farming industry in thailand over the last 20 years in relation to its use of mangrove ecosystems is an example of sequential exploitation of natural resources witnessed through the shift in farm development from one region to another this sequential exploitation has caused widespread degradation of mangrove ecosystems and the benefits of the industry may be less than perceived as a result of subsidies and environmental and social impacts this study follows the development of shrimp farming in thailand from the 1940s to 1997 and studies national legislation and associated government policy as examples of driving forces behind this development from our findings it appears that the development of legislation has not followed the same pace as the development of the industry neither temporally nor in content nor implementation and contradictory policies have arisen

economics and the debate about preservation of species crop varieties and genetic diversity the paper reviews and outlines criteria that have been suggested for determining whether or not to save a species for extinction priorities as set out in the world conservation strategy cost benefit analysis and the safe minimum standard approach are given particular consideration the different criteria also are compared assuming that there is an absolute upper constraint on the amount of resources available for the conservation of species there is some discussion of whether the reduction in available crop varieties is adding to or reducing the instability of crop yields it is claimed that relative variability appears to be falling but there may be an increasing risk of non sustainability the importance of the burden of proof in the conservation versus non conservation debate is stressed and it is suggested that recent economic thought has swung more towards the view that the burden of proof should rest on those seeking to carry out activities which may extinguish a species

the crowding out of complex social goods the valuation of ecosystem services to inform natural resource management and development has gained acceptance in many arenas yet contemporary economic valuation is constrained to the appraisal of simple goods that generate benefits that accrue to individuals neglecting complex goods that generate benefits that accrue to society more broadly methodological barriers to the valuation of complex social goods have led to their frequent omission from natural resource management deliberations the prevailing valuation paradigm that focuses on simple individual goods may erode conservation efforts by crowding out the institutions and behaviours that support socially constructed ecosystem service values erosion of these values ultimately harms the environment and society as a whole the institutionalisation of appropriate methods for estimating the value of complex social goods alongside existing methods for valuing simple individual goods within international conservation development and policy making discourses is therefore an important evolution for sustainable natural resource management