cost benefit assessment of energy efficiency investments accounting for future resources savings and risks in the australian residential sector this article focuses on the impact of the discount rate on cost benefit assessment of investment options for residential building efficiency an integrated thermal modeling life cycle costing approach is applied to an extensive sample of dominant house designs for australian conditions the relative significance of predicted thermal performance and the applied discount rate on the present value of energy savings from alternative investment scenarios is investigated costs and benefits are also evaluated at the economy wide scale including carbon pricing considerations and for a test case household faced with alternative investment options at the point of construction the influence of the applied discount rate on produced cost benefit calculations is investigated as is the interaction between critical cost benefit input parameters findings support that the discounting framework is the primary driver of difference in estimates about costs and benefits of higher standards of efficiency in the residential sector results demonstrate that agreement on a low discount rate based on sustainability principals would prioritise those projects with significant environmental benefits

measures of agricultural support policies in transition economies 1994 1997 in the pre reform period agriculture was heavily subsidized in most central and eastern european countries ceec s around 1989 most ceec s began to open up their markets liberalize prices and reduce subsidies and the level of support provided to agriculture declined drastically while not questioning the direction of economic reforms there was concern that the decline in profitability in farning would slow down the impetus for farm restructuring in particular the drive for privatization of land as demanded by potential new farmers however after pursuing rather liberal agricultural policies at the beginning of the transition period some ceec s in recent years have reintroduced higher levels of support stefan tangerman 1996 in this paper based on estimates of various support indicators for the period beginning roughly in 1994 i will address some of the more important questions regarding agricultural support what has been the impact of trade and price policy interventions on the net income of farmers and government budgets how level has the playing field been since the reintroduction of support does the current economic environment provide an appropriate and sound basis for adjustment toward a more competitive agricultural sector this analysis is part of a comparative study by the world bank which covers bulgaria poland romania ukraine and russia in progress plus germany and turkey two reference cases geographically located at the border of the ceec s for each country employing the same methodology the study considers approximately eight commodities which are representative of the country s major import competing and export products

optimizing the level of renewable electric r d expenditures using real options analysis abstract one of the primary objectives of the united states federal non hydro renewable electric r d program is to promote the development of technologies that have the potential to provide consumers with stable and secure energy supplies in order to quantify the benefits provided by continued federal renewable electric r d this paper uses real option pricing techniques to estimate the value of renewable electric technologies in the face of uncertain fossil fuel prices within the real options analysis framework the current value of expected future supply from renewable electric technologies net of federal r d expenditures is estimated to be 30 6 billion of this value 86 can be attributed to past federal r d efforts and 14 can be attributed to future federal r d efforts assuming continued federal r d funding at 300 million yr in addition real options analysis shows that the value of renewable electric technologies increases as current and future r d funding levels increase this indicates that the current level of federal renewable electric r d funding is sub optimal

the experience curve option value and the energy paradox abstract this paper develops a model to explain the energy paradox the inclination of households and firms to require very high internal rates of return in order to make energy saving investments the model abstracts from many features of such investments to focus on their irreversibility the uncertainty of their future payoff streams and the investor s anticipation of future technological advance in this setting the decision to invest in energy saving technology can be delayed providing option value in addition delay allows the potential investor to cash in on future experience curve effects with the passage of time firms gain practical knowledge in producing and installing the energy saving technology enabling them to reduce the technology s up front cost per unit of energy saved we incorporate these fundamentals into a stochastic model where the investment s discounted benefits follow geometric brownian motion to demonstrate the model s capabilities we generate simulation results for photovoltaic systems that highlight the experience curve effect as a fundamental reason why households and firms delay making energy saving investments until internal rates of return exceed values of 50 and higher consistent with observations in the economics literature we also explore altruistic motivations for energy conservation and the model s implications for both additionality and the design of energy conservation policy

on the transmission of world agricultural prices two questions are asked about the relationship between domestic prices and world prices of agricultural commodities are variations in world prices transmitted to domestic prices domestic prices are regressed on world prices in various forms taking into account the possible effects of exchange rates and inflation the empirical analysis is based on data from the food and agriculture organization of the united nations for 58 countries from 1968 78 and for the countries of the european community from 1961 85 the results show that most of the variations in world prices are transmitted and that they constitute the dominant component in the variations of domestic prices

energy efficiency vs economic efficiency new zealand electricity sector reform in the context of the national energy policy objective abstract in this article i review the diverse commentaries on new zealand s ongoing electricity sector reform process within the context of the government s energy policy objective in doing so my purpose is to highlight the interactions between the concepts of energy efficiency and economic efficiency in particular i ask how do the various commentators on reform define these concepts what indicators do they use to measure them and what level of each do they prescribe as appropriate my main objective is not to decide whether any commentator is right or wrong rather i seek to identify the distinct world views or paradigms underlying the commentaries with respect to both energy efficiency and economic efficiency i conclude that economic efficiency is consistent with a supply side paradigm valuing economic growth whereas those who value energy efficiency over economic efficiency subscribe to a demand side paradigm recognising the limits to growth such a paradigm derives from the ethic of sustainability i close by posing the as yet unanswered question are these paradigms mutually exclusive

calculating levels of protection is it always appropriate to use world reference prices based on current trading status abstract protection measures such as the nominal protection coefficient npc the effective protection coefficient epc the producer subsidy equivalent pse and the consumer subsidy equivalent cse are conventionally calculated using world reference prices based on current trading status under certain conditions the conventional approach can lead to incorrect estimation of the degree and sometimes even the direction of protection this paper spells out the conditions under which use of world reference prices based on current trading status is incorrect and presents data for wheat in pakistan to illustrate how failure to consider these conditions can lead to misleading policy recommendations

producer subsidy equivalents for russian agriculture estimation and interpretation in this paper we present estimates of producer subsidy equivalents pses for russian agriculture over the 1992 94 period the estimated values are highly negative indicating that russian agriculture has been heavily taxed two types of taxation have been at work first government trade and price policies at the regional as well as the federal level have operated to keep domestic producer prices below world prices second deficient russian physical and institutional infrastructure has resulted in high domestic transaction costs for russian agricultural output since in competing with goods on the world market russian producers must bear all the costs of getting their output to final users the high transaction costs in an economic sense also tax domestic production the pse methodology was created to measure the effect on agricultural prices and incomes of government policies targeted specifically at agriculture to be consistent with standard methodology one should subtract out from the initial price gap estimates for russian agricultural output that part of the price differential caused by deficient domestic infrastructure an alternative approach though is based on recognition that the deficient infrastructure was in

demographic change and policy responses implications for the global economy the fertility declines associated with the final phase of the global demographic transition have led to slower population growth and accelerated ageing in developed countries and in several advanced developing countries a global demographic and economic model is used to assess the implications of these changes for population sizes age gender distributions labour force growth and their implications for economic performance a baseline projection that incorporates declining fertility is compared with a hypothetical constant population growth scenario the results show that slower population growth and ageing reduces average saving rates in industrial regions yet global investment demand is also slowed and saving rates rise in developing regions so there is no net tightening of financial markets increased aged labour force participation considered one solution to the resulting rise in aged dependency in advanced regions is found to redistribute investment in favour of the industrialised regions and hence to accelerate their per capita income growth while conferring on the other regions compensatory terms of trade improvements the alternative of replacement migration is found to require inconceivably large population movements it also impairs real per capita growth in destination regions but by least in western europe where the terms of trade are improved by the immigration

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

residential bioenergy heating a study of consumer perceptions of improved woodstoves abstract consumers choices play a key role for the development of biomass heating in the residential sector the city of oslo has granted subsidies to households who change to new improved low emission woodstoves the purpose of this study is to expand the knowledge about users experiences and attitudes to residential biomass heating an adapted model of the theory of planned behavior was used to model households inclination to continue using their woodstoves for heating more than 800 questionnaires were collected from households that recently had invested in an improved woodstove the respondents were satisfied with the new woodstoves the respondents also considered themselves competent to use and maintain the stove and few had problems acquiring fuelwood further analyses showed that the intention to continue to use the new woodstove depends on economic benefits heating performance perceived time and effort to operate the stove environmental effects of heating as well as perceived subjective norm the results imply that when marketing a modern technology for bioenergy heating both public authorities and producers should consider issues related to the users perception of subjective norm such as perceived status of using bioenergy or environmental concerns when designing campaigns to promote the use of woodstoves

openness to trade in manufactures in the oecd abstract how open are the advanced economies to trade with each other in this paper openness is calculated relative to the predictions of the monopolistic competition trade model using data on manufacturing trade and production in the oecd in 1985 the paper finds that 1 japan imports much less than other large oecd countries while the european countries have larger import volumes than does the us 2 japan and the us engage in less intra industry trade than the rest of the oecd and 3 the eu countries are less open to imports from japan and the us than those countries are open to imports from the eu

making enduring choices uncertainty and public policy abstract this paper provides an experimental test of the theory of investment under uncertainty and applies the theory to a group of policy decisions investment under uncertainty describes a class of problems characterized by uncertainty that resolves itself over time sunk costs that cannot be fully recovered and the ability of the decision maker to wait without loss of strategic advantage it also implies a bad news principle under which decision makers are motivated by expected costs but not expected benefits the theory is illustrated as a two period model for which the decision maker can either invest in the first period and receive a known current return plus an uncertain future return or defer until the second period when uncertainty is resolved by foregoing current period benefits a cost that is sometimes referred to as an option value is incurred parameter values are specified and an experimental test the results of which closely track the predictions of the theory is described three cases the structuring of contingent valuation questionnaires the operalization of the precautionary principle in risk analysis and the development of public policy to stimulate private investments as for energy saving products are used to illustrate potential public policy applications

use of the producer subsidy equivalent as a measure of support to agriculture in transition economies measurements of total support or assistance to agriculture using the producer subsidy equivalent pse have become a standard tool of policy analysts in the last decade from its initial use by josling at the food and agriculture organization fao josling fao the pse grew in popularity in parallel with the gatt uruguay round agricultural trade negotiations failure in previous gatt rounds to bring agriculture adequately within gatt rules and disciplines had been attributed in particular to difficulties in capturing the effects of the multiplicity of domestic measures and nontariff barriers to trade in agricultural products grogan pp 297 306 a common yardstick capturing the effects of all these policy measures was needed the organization for economic cooperation and development oecd developed the methodology and applied it progressively to all oecd countries and recently to economies in transition see oecd 1994 1995c and 1995d

analysing agricultural policy reforms under transition in bulgaria abstract the elaboration of an appropriate incentive system including measures of agricultural price and trade policy has important consequences for bulgarian agriculture this paper offers a brief picture of the process of reform towards the establishment of a market economy in bulgaria as well as of the main developments in its agricultural sector an analysis is then presented of the impact of alternative agricultural price and trade policy scenarios for the period up to 2002 the results show that the impact of price and trade policies is modest when compared to that of technological change and the increase in incomes adoption of the cap will stimulate production decrease demand and have strong adverse effects on consumers and taxpayers and wider negative effects on the competitiveness of the food industry thus the issue of extending financial support for structural policies rather than granting direct aid requires further investigation

energy paradox and political intervention a stochastic model for the case of electrical equipments abstract this paper develops a model that explains the delay of decisions to adopt profitable energy saving investments this problem is known as the energy paradox the model rationalizes the profitability requirements raised by the irreversibility the uncertainty and the decrease of costs as a result of learning by doing in this context the wait gives investors more visibility and more lower investment costs which gives them an option value the representative agent has an interest to postpone its energy saving decision until future benefits increase and equalize its required option value formally we internalize these explanatory factors in a stochastic model where the updated energy saving benefits follows a geometric brownian motion to affirm the capacity of the model we generate simulation results for two equipments for electrical uses beyond that we extend the model to simulate the effects of energy policy instruments to promote adoption of such equipments simulations prove that the taxation of energy prices is likely to be more effective than the subsidy for energy saving equipments it is also found that the combination of these instruments amplifies the adoption of energy saving equipments and generates very favorable economic and environmental externalities

how useful is the pse in determining agricultural support the support of the agricultural sector in developed countries plays a major role in the international policy agenda the producer support estimate pse is one of the best known measures which has been developed by oecd and is used all over the globe in the pse all types of support are aggregated and one of the main components 70 at oecd level is the market price support mps here we show by means of characteristic examples that the mps has no clear relation to basic economic measures determining support for producers as a consequence of policy intervention the mps overestimates the consequences of tariffs and export subsidies and underestimates the consequences of quota systems in determining producer support misperception of the size and directions of support may affect policy decision making wrongly the paper indicates that weighted average producer prices corrected for quantity restrictions may be more useful than the reference prices and quantities used by oecd

producer subsidy equivalents and evaluation of support to russian agricultural producers since many of the conditions taken for granted in mature market economies cannot be assumed for transition economies such as russia the validity of producer subsidy equivalents pse measures is questionable the authors calculate pses for russia being careful in the selection of appropriate farm prices and reference prices and conduct a sensitivity analysis to indicate how the results could be influenced by changes in key assumptions they also provide appropriate interpretations of pse estimations for major agricultural commodities

regional income effects and renewable fuels increased usage of renewable energy sources in danish rural areas and its impact on regional incomes co2 emission is a worldwide problem and in the attempt to reduce these emissions renewable energy sources may be considered serious alternatives to the present usage of fossil fuels as part of a research programme financed by the danish energy agency data concerning the different heating technologies based on oil and wood fuels have been collected private and social costs are estimated and these economic data are used when analysing regional income effects of increased consumption of fuels e g wood locally produced the impacts on income and tax revenues are calculated from multiplier expressions constructed with rights to the measurement of local effects

energy efficiency economics and policy energy efficiency and conservation are major factors in the reduction of the environmental impact of the energy sector particularly with regard to climate change energy efficiency also contributes to reducing external dependence and vulnerabilities in the energy domain in this paper we discuss the factors that influence energy efficiency and conservation decisions and the most appropriate policies for their promotion although not all public policies seem justified we argue that specific policies for promoting energy conservation may be required preferably based on economic instruments or on the provision of information to consumers

revisiting the techno economic analysis process for building mounted grid connected solar photovoltaic systems part two application part one in this two part paper identified monte carlo analysis as an improved approach over traditional deterministic techno economic methods for solar pv prosumers in deregulated markets in this

exchange rate effects on inputs and outputs in canadian agriculture in a seminal piece of work schuh demonstrates using a single market partial equilibrium model that exchange rates have a large impact on the price received for farm products he argued that the overvalued u s dollar reduced export demand and the domestic price of u s grains since then much of the work on estimating the impact of exchange rate changes on agriculture has implicitly assumed that inputs to the agricultural sector come from the nontraded sector we argue this assumption can result in an error in the estimation of the effects of exchange rates in an examination of the passthrough of changes in the us cdn exchange rate we find the data from 1975 to 1989 are consistent with the hypothesis of a complete passthrough of exchange rates for many important variable inputs to canadian agricultural production this analysis indicates that while exchange rates may have had significant impacts on the return to fixed factors and farm income they have had little effect on grain production in the case of livestock feeding in canada exchange rate devaluations may actually reduce production and reduce the return to fixed factors because inputs especially grain are more tradeable than outputs finally we examine the potential welfare impact on nontradeables such as land from changes in the exchange rate theoretical model

do consumers discount the future correctly a market based valuation of residential fuel switching abstract dsm and energy efficiency options are generally evaluated using engineering oriented discounted cash flow procedures which value all cost and benefit streams using a single arbitrary discount rate usually the firm s weighted average cost of capital wacc the wacc based approach ignores financial risk and hence leads to unreliable results in a recent paper in this journal hassett and metcalf depart from this tradition they reflect financial risk by simulating the total variability of returns from energy saving investments their findings indicate that dsm projects are potentially risky suggesting that the net benefits must be discounted at significantly higher rates thus lowering their present values this paper presents a market based evaluation of a particular dsm option residential fuel switching using the capital asset pricing model capm under the capm approach a risk adjusted market based discount rate is estimated for each cost stream fuel maintenance and avoided outlays for electricity the market based results which reflect the systematic risk of each cost stream suggest that fuel switching is probably not cost effective because it is considerably more risky than indicated by a wacc based analysis this supports hassett and metcalf s conclusion that consumers who reject dsm projects are not necessarily acting irrationally

exchange rate alignment and producer support estimates pses for india this article examines the effects of exchange rate alignment during 1985 2002 on agricultural producer support estimates pses for india based on several time series techniques the equilibrium exchange rate of the indian rupee and the corresponding misalignment of the actual rate are estimated and applied to recent pse calculations our results show that the exchange rate was substantially misaligned before a financial crisis and macroeconomic reform in the early 1990s with subsequent indirect effects on the pses we find a relatively high pass through of exchange rate movements to domestic agricultural prices so that removal of the exchange rate misalignment would have improved incentives to indian farmers during this period more recently this indirect exchange rate effect is smaller than the direct effect in the pses indicating the dominance of sectoral specific policies over economy wide policies

decomposing changes in agricultural price gaps an application to russia the article develops a method for decomposing changes in agricultural price gaps defined as the difference between a commodity s domestic producer and border prices we use oecd s procedure for decomposing changes in the market price support part of producer support estimates as the starting point for our decomposition method and our method provides a basis for critiquing oecd s decomposition approach the transmission of changes in border prices world prices and the exchange rate to domestic prices is a key element in the decomposition the method is demonstrated using russian agricultural price gaps the results support the argument that for russian agriculture during the transition period the main cause of changes in price gaps has been incomplete transmission of changes in the exchange rate to domestic prices and where the weak transmission results mainly not from policy intervention but rather from deficient market conditions in particular poor market infrastructure the policy implication is that underdeveloped infrastructure has strongly limited the benefits to the russian economy from agricultural trade liberalization

the volume of trade in differentiated intermediate goods theory and evidence this paper develops a model of trade in differentiated intermediate goods and shows how the structure of the importing country s production will influence gross bilateral import volumes a regression equation directly implied by the model is estimated using disaggregated bilateral trade data for the oecd countries in 1985 the data reject the model a more general model suggested by the theory establishes strong links between a country s factor endowments and its gross trade volume this model is dominated statistically by a fixed effects model and does not substantially alter the conclusions of earlier empirical studies about openness to trade in manufactured goods copyright 1995 by mit press

the surge in capital inflows to developing countries an analytical overview after being excluded from world capital markets during the debt crisis many developing countries have experienced large capital inflows during the past five years the challenges that these inflows pose for domestic policy in recipient countries have generated a substantial literature this article presents an overview of that literature describing the characteristics of the new inflows analyzing the policy issues they raise assessing their causes and likely sustainability and evaluating potential policy responses the desirable policy response is tied to characteristics of the flows themselves as well as to the characteristics of the recipient economy

international comparisons of pricing to market behavior this paper measures the degree of price discrimination across export destinations that is associated with exchange rate changes using u s u k german and japanese industry level data given the industries sampled more price discrimination across destinations is observed in the u k german and japanese data for industries that match across source countries however behavior is very similar across source countries furthermore destination specific price adjustment on exports to the united states from germany and japan is similar to price adjustment observed on shipments to other destinations most variation in the data appears to be related to industry copyright 1993 by american economic association