cross hedging and forward contract pricing of electricity we consider the problem of an electric power marketer offering a fixed price forward contract to provide electricity that it purchases from a potentially volatile and unpredictable fledgling spot energy market one option for the risk averse marketer who wants to hedge against the spot price volatility is to engage in cross hedging to reduce the contract s profit variance and to determine the forward contract price as a risk adjusted price the sum of a baseline price and a risk premium we show how the marketer can estimate the spot price relationship between two wholesale energy markets for the purpose of cross hedging as well as the optimal hedge and the forward contract s baseline price and risk premium

support systems for the diffusion of renewable energy technologies an investor perspective concern over climate change impacts and the projected depletion of fossil fuels has urged more governments to adopt policies that stimulate the diffusion of renewable energy technologies ret with an increasingly diverse suite of support instruments the question emerges as to which instruments or combinations are able to achieve faster more substantial diffusion results although various support instruments were extensively addressed in policy studies there is still no consensus this is partly because many policy studies take a policy maker approach in comparing support instruments leaving relationships between policy design and policy results as a black box this paper proposes an investor oriented perspective to analyze the diffusion potential of support systems for ret the main argument is that it is not the type of support instrument but rather its risk profitability characteristics that influence investor behavior and the rate of diffusion the two instruments most frequently discussed and compared are the feed in tariff and the quota model the analysis in this paper concludes that policy design is crucial while often feed in tariffs are applauded and quota system feared feed in tariffs may also bring about disappointing diffusion results when poorly designed while quota systems may be also conceived as attractive instruments for independent power producers

ecosystem services from eye opening metaphor to complexity blinder abstract what started as a humble metaphor to help us think about our relation to nature has become integral to how we are addressing the future of humanity and the course of biological evolution the metaphor of nature as a stock that provides a flow of services is insufficient for the difficulties we are in or the task ahead indeed combined with the mistaken presumption that we can analyze a global problem within a partial equilibrium economic framework and reach a new economy project by project without major institutional change the simplicity of the stock flow framework blinds us to the complexity of the human predicament the ecosystem services approach can be a part of a larger solution but its dominance in our characterization of our situation and the solution is blinding us to the ecological economic and political complexities of the challenges we actually face

econometric developments in agricultural and resource economics the first 100 years this article reviews the major contributions of agricultural and resource economists in the area of econometrics over the past 100 years early on a number of agricultural economists were in on the ground floor in terms of developing new econometric methods over time as the economics profession became more empirically oriented agricultural and resource economists increasingly assumed the role of early adopters of new econometric methods even so agricultural and resource economists continue to make useful modifications to econometric techniques in order to adapt the methods to the unique nature of the problems and applications that we study

stochastic convenience yield and the pricing of oil contingent claims this paper develops and empirically tests a two factor model for pricing financial and real assets contingent on the price of oil the factors are the spot price of oil and the instantaneous convenience yield the parameters of the model are estimated using weekly oil futures contract prices from january 1984 to november 1988 and the model s performance is assessed out of sample by valuing futures contracts over the period november 1988 to may 1989 finally the model is applied to determine the present values of one barrel of oil deliverable in one to ten years time

rethinking ecosystem services to better address and navigate cultural values ecosystem service approaches have become a prominent basis for planning and management cultural services and non use values are included in all major typologies and present some of the most compelling reasons for conserving ecosystems though many barriers exist to their explicit characterization the values that conform least well to economic assumptions variously lumped together with as cultural services have proven elusive in part because valuation is complicated by the properties of intangibility and incommensurability which has in turn led to their exclusion from economic valuation we argue that the effectiveness of the ecosystem services framework in decision making is thwarted by i conflation of services values and benefits and ii failure to appropriately treat diverse kinds of values we address this challenge by 1 distinguishing eight dimensions of values which have implications for appropriate valuation and decision making 2 demonstrating the interconnected nature of benefits and services and so the ubiquity of intangible values 3 discussing the implications of these propositions for ecosystem services research and 4 outlining briefly a research agenda to enable decision making that is ecologically appropriate and socially just because many ecosystem services co produce cultural benefits full characterization of services must address non material values through methods from diverse social sciences

predicting turning points through the integration of multiple models a new method for forming composite turning point or other qualitative forecasts is proposed rather than forming composite forecasts by the standard bayesian approach with weights proportional to each model s posterior odds weights are assigned to the individual models in proportion to the probability of each model s having the correct turning point prediction these probabilities are generated by logit models estimated with data on the models past turning point forecasts an empirical application to gross national product gross domestic product forecasting of 18 organization for economic cooperation and development countries demonstrates the potential benefits of the procedure

valuation of commodity based swing options in the energy markets in particular the electricity and natural gas markets many contracts incorporate flexibility of delivery options known as swing or take or pay options subject to daily as well as periodic constraints these contracts permit the option holder to repeatedly exercise the right to receive greater or smaller amounts of energy we extract market information from forward prices and volatilities and build a pricing framework for swing options based on a one factor mean reverting stochastic process for energy prices that explicitly incorporates seasonal effects we present a numerical scheme for the valuation of swing options calibrated for the case of natural gas

bond pricing and the term structure of interest rates a new methodology for contingent claims valuation this paper presents a unifying theory for valuing contingent claims under a stochastic term structure of interest rates the methodology based on the equivalent martingale measure technique takes as given an initial forward rate curve and a family of potential stochastic processee for its subsequent movements a no arbitrage condition restricts this family of processes yielding valuation formulae for interest rate sensitive contingent claims which do not explicitly depend on the market prices of risk examples are provided to illustrate the key results in relation to the term structure of interest rates arbitrage pricing theory has two purposes the first is to price all zero coupon default free bonds of varying maturities from a finite number of economic fundamentals called state variables the second is to price all interest rate sensitive contingent claims taking as given the prices of the zero coupon bonds this paper presents a general theory and a unifying framework for understanding arbitrage pricing theory in this context of which all existing arbitrage pricing models are special cases in particular vasicek 1977 brennan and schwartz 1979 langetieg 1980 ball and torous 1983 ho and lee 1986 schaefer and schwartz 1987 and artzner and delbaen 1988 the primary contribution of this paper however is a new methodology for solving the second problem i e the pricing of interest rate sensitive contingent claims given the prices of all zero coupon bonds the methodology is new because i it imposes its stochastic structure directly on the evolution of the forward rate curve ii it does not require an inversion of the term structure to eliminate the market prices of risk from contingent claim values and iii it has a stochastic spot rate process with multiple stochastic factors influencing the term structure the model can be used to consistently price and hedge all contingent claims american or european on the term structure and it is derived from necessary and more importantly sufficient conditions for the absence of arbitrage the arbitrage pricing models of vasicek 1977 brennan and schwartz 1979 langetieg 1980 and artzner and delbaen 1988 all require an iformerly titled bond pricing and the term structure of interest rates a new methodology

macroeconomic forecasting using pooled international data it has long been recognized that national economies are economically interdependent see e g burns and mitchell 1946 for evidence of comovements of business activity in several countries and zarnowitz 1985 for a summary of recent evidence recognition of such interdependence raises the question can such interdependence be exploited econometrically to produce improved forecasts of countries macroeconomic variables such as rates of growth of output and so forth this is the problem that we address in this article using annual and quarterly data for a sample of european economic community eec countries and the united states

from rational actor to efficient complexity manager exorcising the ghost of homo economicus with a unified synthesis of cognition research it is now commonplace to note that economics canonical model of humans as rational self interested utility maximizers homo economicus is both descriptively misleading and often insufficiently predictive however certain outdated assumptions tied to homo economicus persist often influencing discourse and research design even in sustainability oriented fields we argue this ghost of homo economicus endures because the diversity of findings that confound the canonical model has surfaced across multiple behavioral and cognitive sciences each with its own terminology and focus area as such a unified accessible synthesis of this new information has yet to emerge in this paper we review recent insights from across the behavioral and cognitive sciences and propose an efficient complexity manager ecm model homo efficens as the best synthesizing option the crux of this model is that our species works within biological limits to efficiently filter massive environmental complexity this is achieved largely through analogical or case based reasoning we explain this synthesized model using a series of accessible metaphors finally we speculate on how this model may enrich future sustainable development research insofar as it points to fruitful units of analysis can stimulate methodological innovation and provide a more explicit theoretical foundation for the field

a framework for the practical application of the concepts of critical natural capital and strong sustainability this paper develops a methodology for identifying that natural capital called critical natural capital cnc the maintenance of which is essential for environmental sustainability by consideration of the characteristics of natural capital of the environmental functions that these characteristics enable natural capital to perform and of the importance of these functions to humans and the biosphere it shows how sustainability standards in respect of these environmental functions may be derived the difference between the current situation and these standards is termed the sustainability gap the methodology that emerges from bringing these ideas together into a single analytical framework enables policy makers to identify the extent of current unsustainability the principal causes of it the elements and processes of natural capital the cnc which need to be maintained or restored to close the sustainability gap and the costs of so doing the framework should therefore be of use in identifying priorities and policies for moving towards environmental sustainability

bayesian composite qualitative forecasting hog prices again a new method for forming composite qualitative forecasts is presented a set of qualitative forecasts is evaluated using auxiliary logit models to predict the probability of each forecast s correctness individual model forecasts are then combined on the basis of normalized values of these probabilities this method is demonstrated with three sets of forecasts on the direction of change in hog prices up or down the application shows that without any information on the manner in which the individual forecasts are generated this method can form a composite forecast that is superior according to a variety of metrics for evaluating qualitative forecasts

the impact of wind generation on wholesale electricity prices in the hydro rich pacific northwest extant literature documents that wind generation can reduce wholesale electricity market prices by displacing conventional generation but how large is the wholesale price effect of wind generation in an electricity market dominated by hydroelectric generation we explore this question by analyzing the impact of wind generation on wholesale electricity prices in the pacific northwest region of the united states this hydro rich system tends to be energy limited rather than capacity constrained with its marginal generation during the hydro runoff season often a hydro unit instead of a natural gas fired unit we find that increased wind generation reduces wholesale market prices by a small but statistically significant amount while a hydro rich system can integrate wind generation at a lower cost than a thermal dominated region the direct economic benefits to end users from greater investment in wind power may be negligible

value of an option to purchase electric power the case of uncertain consumption abstract large manufacturers and corporations often purchase options on power to protect themselves against unanticipated price increases this paper analyzes the impact of uncertainty in power consumption by a corporation on the value of an option to purchase electric power because there is no economically viable method to store power these options are exercised to satisfy immediate consumption needs only the amount exercised may differ from the maximum amount contracted which in turn alters the payoffs that accrue to the option contract we apply a monte carlo methodology to show that consumption uncertainty may substantively lower the price of an option contract under different conditions

modeling and pricing of block flexible electricity contracts this paper presents a model for block flexible electricity contracts bfec and focuses on pricing the bfec based on the principle of no arbitrage energy is traded in blocks according to its time duration at different block prices which is called block trading the bfec requires the buyer or the seller to schedule its trading amount and the certain block of power at each time interval the block trading needs to divide the power into several blocks the prices of each power block are obtained from market clearing price by using the autoregressive model ar n as stochastic block price model an optimal scheduling strategy can be achieved by stochastic dynamic programming the price of bfec is determined by the variables and schedule of the bfec contracts with different choices of block are studied and the simulations illustrate the block flexible electricity contracts can improve power market efficiency

using bayesian techniques for data pooling in regional payroll forecasting this article adapts to the regional level a multicountry technique recently used by garcia ferrer highfield palm and zellner 1987 and extended by zellner and hong 1987 to forecast the growth rates in gross national product across nine countries this forecasting methodology is applied to the regional level by modeling payroll formation in seven ohio metropolitan areas we compare the forecasting performance of these procedures with that of a ridge estimator and find that the ridge estimator produces forecasts equal to or better than those from the newly proposed estimators we conclude that the ridge estimator which does not reference the pooled data information introduced by the newly proposed techniques may serve as a benchmark against which to judge the relative importance of this kind of information in improving forecasts

this is what the leading indicators lead we propose an optimal filter to transform the conference board composite leading index cli into recession probabilities in the us economy we also analyse the cli s accuracy at anticipating us output growth we compare the predictive performance of linear var extensions of smooth transition regression and switching regimes probit non parametric models and conclude that a combination of the switching regimes and non parametric forecasts is the best strategy at predicting both the nber business cycle schedule and gdp growth this confirms the usefulness of cli even in a real time analysis copyright 2002 john wiley sons ltd

choices without prices without apologies valuing is usually regarded as a process of compressing information about attributes into a single metric armed with this reduced form of compact information the consumer can consider a particular object with a particular price attached or implied and make an informed decision but the process of valuing is less straightforward than we ordinarily suppose when environmental goods and services become the object of information compaction it is possible that important information is lost we comment on the choice problem germane to environmental goods and services and challenge the presumption that environmental choices made without explicit pricing are inferior to those in which hypothetical valuation studies are undertaken

universal health insurance in the clinton plan coverage as a tax financed public good the financing arrangements embodied in the clinton health reform plan involve some important differences in the way in which public goods are usually financed the subsidies to small low wage firms mandated to provide benefits distort markets in both labor and products and offer incentives for the creation of small firms in addition the financing scheme implicitly envisions a head tax on families at modest income levels but offers a possible rationale for it nevertheless the main reason for many of the financing features appears to be an attempt to hold down the apparent budgetary cost of universal coverage

valuation of commodity futures and options under stochastic convenience yields interest rates and jump diffusions in the spot this paper investigates the effects of stochastic convenience yields stochastic interest rates and jumps in the spot price on the pricing of commodity futures forwards and futures options numerical examples show that one factor prices differ materially from the stochastic convenience yield two factor prices when convenience yield is considerably above its long term average the extension to a three factor model with stochastic interest rates leads to a different futures price but the forward price is unchanged the extension ofthe three factor model to include jumps in the spot price process does not affect forward or futures prices but it can have an impact on options prices the model is applied to price the present value of future cash flows from a real asset

monetary valuation of ecosystem services it matters to get the timeline right in the abundant literature dealing with the monetary valuation or monetization of ecosystem services mes with very few exceptions the concept is presented as having emerged in 1997 in fact there is a long history starting in the late fifties but largely ignored of sustained attempts to assign monetary values to nature s services these early efforts encountered many conceptual and methodological roadblocks which could not be resolved and led a number of researchers to argue that monetary valuation was not a fruitful approach it is in that context that mes was hailed by some in 1997 as a promising way to integrate environmental goods and services into the logic of economic markets knowledge of the full timeline casts a very different light in particular on the difficulties currently encountered in the practice of mes far from being the expected growing pains of a young discipline these difficulties turn out to be long standing problems that have eluded solution over the last half century and appear intrinsically unresolvable this perspective suggests that at this point it is advisable to look at alternatives to mes for the integration of nature into economic decisions

optimal procurement strategies for online spot markets abstract spot markets have emerged for a broad range of commodities and companies have started to use them in addition to their traditional long term procurement contracts forward contracts in comparison to forward contracts spot markets offer products at essentially negligible lead time but typically command a higher expected price for this added flexibility while also exhibiting substantial price uncertainty in our research we analyze the resulting procurement challenge and quantify the benefits of using spot markets from a supply chain perspective we develop and solve mathematical models that determine the optimal order quantity to purchase via forward contracts and the optimal quantity to purchase via spot markets we analyze the most general situation where commodities can be both bought and sold via a spot market and derive closed form results for this case we compare the obtained results to the reference scenario of pure contract sourcing and we include results for situations where the use of spot markets is restricted to either buying or selling only our approaches can be used by decision makers to determine optimal procurement strategies based on key parameters such as demand and spot price volatilities correlation between demand and spot prices and risk aversion the results of our analysis demonstrate that significant profit improvements can be achieved if a moderate fraction of the commodity demand is procured via spot markets the results also show that companies who use spot markets can offer a higher expected service level but that they might experience a higher variability in profits than companies who do not use spot markets we illustrate our analytical results with numerical examples throughout the paper

stochastic factor model for electricity spot price the case of the nordic market this paper presents a stochastic factor based approach to mid term modeling of spot prices in deregulated electricity markets the fundamentals affecting the spot price are modeled independently and a market equilibrium model combines them to form spot price main advantage of the model is the transparency of the generated prices because each underlying factor and the dynamics between factors can be modeled and studied in detail paper shows realistic numerical examples on the forerunner scandinavian electricity market the model is used to price an exotic electricity derivative

electricity market reform failures uk norway alberta and california an analysis of electricity market reforms already taken place in the uk norway alberta canada and california usa leads to our overall conclusion that the introduction of a competitive generation market of itself has failed to deliver reliable service at low and stable prices the market reform failures are attributed to market power abuse by few dominant sellers especially at times of transmission congestion poor market design that invites strategic bidding by suppliers the lack of customer response to price spikes capacity shortage caused by demand growth not matched by new capacity and thin trading of forward and futures contracts that are critical for price discovery and risk management the paper then explains why an electricity market reform can easily fail to deliver the promised gains of better service at lower and more stable prices the policy implication is that an electric market reform can be extremely risky and may lead to a disastrous outcome thus it is imprudent to implement such a reform in countries with limited sites for newgeneration and no indigenous fuels e g israel and hong kong these countries should therefore consider introducing performance based regulation that can immediately benefit electricity consumers in terms of lower prices more stable prices improved reliability more choices while encouraging the electric sector to pursue efficient operation and investment r 2003 elsevier science ltd all rights reserved

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

the history of ecosystem services in economic theory and practice from early notions to markets and payment schemes article i nfo this paper reviews the historic development of the conceptualization of ecosystem services and examines critical landmarks in economic theory and practice with regard to the incorporation of ecosystem services into markets and payment schemes the review presented here suggests that the trend towards monetization and commodification of ecosystem services is partly the result of a slow move from the original economic conception of nature s benefits as use values in classical economics to their conceptualization in terms of exchange values in neoclassical economics the theory and practice of current ecosystem services science are examined inthelight ofthis historicaldevelopment from thisreview we conclude thatthefocus onmonetary valuation and payment schemes has contributed to attract political support for conservation but also to commodify a growing number of ecosystem services and to reproduce the neoclassical economics paradigm and the market logic to tackle environmental problems

the quantification and valuation of ecosystem services article i nfo article history received 7 august 2010 accepted 16 october 2010 this paper explores differences between economic and ecological criteria for identifying measuring and evaluating ecosystem services it argues that economic stakeholders user groups generally do well in identifying these services and assigning prices to them these prices arise spontaneously in and serve to coordinate market activity related to the environment the relevant ecological information which markets gather and apply tends to be dispersed contingent particular local transitory and embedded in institutions and practices ecologists and other scientists in contrast often seek to understand how ecosystems work and which populations and processes provide ecosystem services the knowledge science seeks unlike the information markets gather tends to be centralized collaborative collective and consensus based science pursues concepts and principles that are timeless and general rather than ephemeral and site specific the paper contrasts the dispersed and decentralized information organized by markets with the collective and centralized knowledge characteristic of science the paper argues that the conceptual distance between market based and science based methods of assembling information and applying knowledge defeats efforts to determine the value of ecosystem services in any integrated sense

no arbitrage conditions for storable commodities and the modeling of futures term structures abstract one distinguishable feature of storable commodities is that they relate to two markets cash market and storage market this paper proves that if no arbitrage exists in the storage cash dual markets the commodity convenience yield has to be non negative however classical reduced form models for futures term structures could allow serious arbitrages due to the high volatility of the convenience yield to avoid negative convenience yield this paper proposes a semi affine arbitrage free model which prices futures analytically and fits futures term structures reasonably well importantly our model prices commodity related contingent claims such as calendar spread options quite differently with classical models

did a local distribution company procure prudently during the california electricity crisis abstract to manage cost risk prudent procurement of electric power requires that some portion of a buyer s energy demand be met through long term contracting under cost of service regulation or performance based regulation a local distribution company ldc should be allowed to fully recover all prudently incurred power procurement costs however the regulatory test of prudence is an ex post review with the threat of disallowance this paper presents an economic analysis of procurement prudence involving a small ldc bear valley electric service bves which serves a resort area in southern california the key findings are a high and volatile prices and rolling blackouts characterized the market environment faced by the owner of bves southern california water company scwc at its signing of a 5 year fixed price contract b scwc was a price taker with no incentive to act imprudently c the contract was obtained via a competitive bidding process d the contract price was comparable to the benchmark price of contemporaneous contracts e the fixed price contract was economic when compared to available alternatives and f despite a e a negotiated settlement with the state regulator and a large user resulted in substantial disallowance the policy implication is that a regulator should approve a prudent procurement plan proposed by an ldc to remove the unreasonable risk of an ex post review if the ldc strictly adheres to the plan the resulting electricity purchases are per se prudent and should entitle the ldc to full cost recovery

pricing of options on commodity futures with stochastic term structures of convenience yields and interest rates we develop a model to value options on commodity futures in the presence of stochastic interest rates as well as stochastic convenience yields in the development of the model we distinguish between forward and future convenience yields a distinction that has not been recognized in the literature assuming normality of continuously compounded forward interest rates and convenience yields and log normality of the spot price of the underlying commodity we obtain closed form solutions generalizing the black scholes merton s formulas we provide numerical examples with realistic parameter values showing that both the effect of introducing stochastic convenience yields into the model and the effect of having a short time lag between the maturity of a european call option and the underlying futures contract have significant impact on the option prices

investment and operating choice oil and natural gas futures prices and drilling activity abstract we present evidence that changes in oil and natural gas field investment measured by drilling rig use respond positively to changes in the futures prices of oil and natural gas consistent with predictions based upon value maximizing behavior these results hold for world regions dominated by private independent oil companies but not national oil companies in those cases where futures price changes are identified as drivers the role of spot prices is either absent or weak the results are robust to several alternative specifications including controls for changes in rig productivity

mean reversion in equilibrium asset prices evidence from the futures term structure we use the term structure of futures prices to test whether investors anticipate mean reversion in spot asset prices the empirical results indicate mean reversion in each market we examine for agricultural commodities and crude oil the magnitude of the estimated mean reversion is large for example point estimates indicate that 44 percent of a typical spot oil price shock is expected to be reversed over the subsequent eight months for metals the degree of mean reversion is substantially less but still statistically significant we detect only weak evidence of mean reversion in financial asset prices in this study we provide evidence of mean reversion in the prices of several real and financial assets rather than examining evidence of ex post reversion using time series of asset prices we use price data from futures contracts with varying delivery horizons to test whether investors expect asset prices to revert this approach offers two advantages first since futures prices are readily available for many markets our procedure can be implemented for many assets including those for which reliable spot price data is elusive second there is little ambiguity as to the source of any mean reversion detected using our method subject only to the maintained assumption that the no arbitrage cost of carry condition holds our test detects mean reversion that is expected to occur in equilibrium but has no power to detect mean reversion resulting from noise or inefficiencies our methodology focuses on relations between price levels and the slope of the futures term structure defined as the change across delivery dates in the futures prices observed on a given trading date an inverse relation between prices and the futures term slope constitutes evidence that investors expect mean reversion in spot prices to illustrate initially assume there are no

the relation between forward prices and futures prices abstract this paper consolidates the results of some recent work on the relation between forward prices and futures prices it develops a number of propositions characterizing the two prices these propositions contain several testable implications about the difference between forward and futures prices many of the propositions show that equilibrium forward and futures prices are equal to the values of particular assets even though they are not in themselves asset prices the paper then illustrates these results in the context of two valuation models and discusses the effects of taxes and other institutional factors

structured pluralism in ecological economics a reply to peter soderbaum s commentary abstract peter soderbaum argues in his commentary concerning my article on sustainability economics remig 2015 for more open and radical ecological economics i agree with that statement however i reject soderbaum s interpretation that my arguments foster mainstreamed ecological economics or dictatorship in my critique of sustainability economics i raised several issues that have remained unspecified and that potentially lead to unsustainable development patterns once put into practice soderbaum does not reply to these conceptual challenges of sustainability economics in this commentary i argue that structured pluralism dow 2004 is a constituent element of ecological economics i welcome peter soderbaum s proposal for a discussion about the definition of economics and suggest to rely on ronald coase s proposal to define economics as a science that studies the working of the economic system i conclude that sustainability economics in its current form is closer to neoclassical than ecological economics

a critical assessment of the hong kong government s proposed post 2008 regulatory regime for local electricity utilities abstract in december 2005 the hong kong government issued a consultation paper on future development of the electricity markets in hong kong stage ii consultation proposing a post 2008 regulatory regime upon the expiration of the existing regulatory contract between the hong kong government and each of the two local electricity utilities we assess the proposal using the criteria of safe reliable and environmentally friendly service at the lowest rates that will allow the utilities reasonable returns on their investments we caution that if fully adopted the highly risky proposal may lead to less reliable service without the compensating benefits to the environment

pricing rainfall futures at the cme abstract many business people such as farmers and financial investors are affected by indirect losses caused by scarce or abundant rainfall because of the high potential of insuring rainfall risk the chicago mercantile exchange cme began trading rainfall derivatives in 2011 compared to temperature derivatives however pricing rainfall derivatives is more difficult in this article we propose to model rainfall indices via a flexible type of distribution namely the normal inverse gaussian distribution which captures asymmetries and heavy tail behaviour the prices of rainfall futures are computed by employing the esscher transform a well known tool in actuarial science this approach is flexible enough to price any rainfall contract and to adjust theoretical prices to market prices by using the calibrated market price of risk the empirical analysis is conducted with us precipitation data and cme futures data providing first results on the market price of risk for rainfall derivatives

are there environmental limits to cost benefit analysis this paper considers the problem areas found in applying cost benefit analysis cba to projects involving environmental costs or benefits this is particularly relevant given recent moves by the uk government to include environmental valuations in cba exercises and in other related appraisal activities following the publication of the pearce report the paper argues that a major problem lies in placing monetary values on non market goods the paper also addresses the problems of i differences between citizen and consumer values ii complexity of ecosystems iii irreversibility and uniqueness and iv intergenerational equity and discounting the extent to which cba is an institution open to capture is also discussed

contingent valuation from dubious to hopeless abstract approximately 20 years ago peter diamond and i wrote an article for this journal analyzing contingent valuation methods at that time peter s view was that contingent valuation was hopele

electricity spot price dynamics beyond financial models we reveal properties of electricity spot prices that cannot be captured by the statistical models commonly used to model financial asset prices that are increasingly used to model electricity prices using more than eight years of half hourly spot price data from the new zealand electricity market we find that the half hourly trading periods fall naturally into five groups corresponding to the overnight off peak the morning peak daytime off peak evening peak and evening off peak the prices in different trading periods within each group are highly correlated with each other yet the correlations between prices in different groups are lower models adopted from the modeling of security prices that are currently applied to electricity spot prices are incapable of capturing this behavior we use a periodic autoregression to model prices instead showing that shocks in the peak periods are larger and less persistent than those in off peak periods and that they often reappear in the following peak period in contrast shocks in the off peak periods are smaller more persistent and die out perhaps temporarily during the peak periods current approaches to modeling spot prices cannot capture this behavior either