commodity prices policy target or information variable note the relationship between growth of the monetary aggregates and growth of nominal gnp has become less dependable in the 1980s deposit deregulation and large fluctuations in interest rates have produced sharp changes in the income velocity of money these velocity shifts have at times caused the federal reserve to miss or modify its money growth ranges because of the undependable relationship between money growth and economic activity some policymakers and economic analysts have argued that the federal reserve should pay more attention to commodity price fluctuations this paper examines the proper role for commodity prices in the formation of monetary policy

the pricing of durable exhaustible resources partial or total durability characterizes a large class of exhaustible resources hotelling s r percent rule will apply to a durable resource produced in a competitive market but will not apply if the resource is produced in a monopolistic market however the r percent rule does not mean that price is steadily rising it is shown that in general the competitive market price will fall initially as the stock in circulation increases and later will rise as the stock decreases and eventually depreciates toward zero after production ceases accounting for durability may thus help explain the u shaped long term price profiles observed for many resources 11 references 3 figures

cointegration in a macroeconomic system abstract this paper represents an exploratory study that investigates the vector autoregressive properties of a time series system containing six main indicators of the austrian economy gross domestic product gdp private consumption investment gdp deflator interest rate wages interest focuses on cointegrating structures in the system i e on linear combinations of some trending variates that generate stationary series johansen s 1987 procedure identifies three relations of this kind it is also tried to give an economic interpretation to these relations more extensively a variety of sensitivity experiments are performed which make somehow original use of the technique of canonical correlations contrary to the sensitivity experiments a critical assessment of the identified structure by medium term forecasting until 1999 sheds considerable doubt on its correctness at most one or two cointegrating relations may help to increase forecasting precision relative to traditional vector autoregression which do not use the idea of cointegration at all on the other hand using all three identified relations seems to impose excess stationarity on the system which is not replicated by actual data behavior

spatial targeting of payments for environmental services a tool for boosting conservation benefits abstract payments for environmental services pes have become an increasingly popular market based instrument to translate external non market environmental services into financial incentives for landowners to preserve the ecosystems that provide the services however lack of spatial differentiation in the targeting mechanism may lead to efficiency losses addressing this challenge we construct an applied site selection tool which takes into account three variables that vary in space environmental services provided risks of losing those services and participation costs using data from costa rica s nicoya peninsula we empirically test the tool s potential to increase the financial efficiency of the forest focused pes program in place results show that given a fixed budget efficiency increases radically if per hectare payments are aligned to landowners heterogeneity in participation costs involving opportunity transaction and direct costs of protection respectively selecting sites based on environmental service potential also moderately increases efficiency overall additionality could in the best case be doubled but remains generally limited due to current low deforestation risks prevailing in costa rica to take advantage of the high efficiency potentials of flexible payments we propose inverse auction systems as a cost effective approach for the determination of micro level participation costs

modelling the link between commodity prices and exchange rates the tale of daily data this paper examines daily data on exchange rates and the prices of three commodities traded on the winnipeg commodity exchange the temporal patterns of commodity prices and exchange rates are shown to be similar daily data are significantly non normal with garch models capturing the processes generating the data commodity prices and exchange rates are examined for cointegration using recent tests proposed by johansen and juselius 1990 currency depreciation is shown to granger cause commodity price inflation this information might be useful to central bankers concerned with reducing general price inflation through targeting commodity price inflation it also suggests that macro events have important effects on commodity markets in canada

a private property rights regime to replenish a groundwater aquifer groundwater management is often reactive and in some cases the groundwater stock groundwater table of an aquifer may fall below its optimal steady state level before any thought is given to management this paper examines a private property rights regime to restore a groundwater resource to its optimal steady state results from a stochastic dynamic programming model of madera county california show that the private property rights regime recovers about 95 percent of the potential gain from groundwater management

adapting auctions for the provision of ecosystem services at the landscape scale abstract auctions or competitive tenders can overcome information asymmetries to efficiently allocate limited funding for ecosystem services most auctions focus on ecosystem services on individual properties to maximise the total amount provided however for many services it is not just the total quantity but their location in the landscape relative to other sites that matters for example biodiversity conservation may be much more effective if conserved sites are connected adapting auctions to address ecosystem services at the landscape scale requires an auction mechanism which can promote coordination while maintaining competition multi round auctions in which bidding is spread over a number of rounds with information provided between rounds on the location of other bids in the landscape offer an approach to cost effectively deliver landscape scale ecosystem services experimental economic testing shows these auctions deliver the most cost effective environmental outcomes when the number of rounds is unknown in advance which minimises rent seeking behaviour it also shows that a form of bid improvement rule facilitates coordination and reduces rent seeking where the biophysical science is well developed such auctions should be relatively straightforward to implement and participate in and have the potential to provide significantly better outcomes than standard one shot tenders

incentive based policy design for pollution control and biodiversity conservation a review this paper provides a succinct review of the main developments in the literature on incentive based policy mechanisms in the contexts of pollution control and biodiversity conservation dating from the early beginnings of the science in the 1960s a focal point in the review is on the design features of these policy mechanisms key developments in policy design were originally established in controlling externalities arising from pollution and have since been extended to policy design tailored towards biodiversity conservation special emphasis is given to the spatial characteristics of the environmental problems underlying both pollution control and biodiversity conservation the paper concludes by drawing some lessons and setting out elements of a future research agenda in both policy domains

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

commodity price changes and the predictability of economic policy uncertainty in this study we forecast economic policy uncertainty epu using input on 23 commodity price changes we reveal the significant predictability of epu using three forecast combinations this indicates that commodity price changes can be taken as a leading indicator of epu

towards a fair constructive and consistent criticism of all valuation languages comment on kallis et al 2013 we provide critical notes to the paper by kallis et al 2013 on monetary valuation we evaluate the four criteria they propose for assessing valuation studies we argue that no clear distinction is made between monetary valuation and pricing instruments the selected criteria are more relevant to assessing policy than monetary valuation the examples provided are not representative of the diversity of valuation studies encountered in the literature moreover no clear examples are provided of where valuation and associated cost benefit analysis of environmental policy go wrong we plea for a more fair constructive and consistent criticism of all valuation languages and offer relevant issues for consideration

a conservation industry for sustaining natural capital and ecosystem services in agricultural landscapes conservation investment in agricultural landscapes has evolved to take a more market based or business approach however current levels of conservation investment are not likely to mitigate degradation to natural capital and ecosystem services we propose the further evolution of a conservation industry to generate substantially increased investment in conservation in agricultural landscapes particularly from the private sector a mature conservation industry is envisaged as comprising of investors producers and service providers who produce conservation products and services exchanged via market transactions a number of requirements for a viable and effective conservation industry are identified including institutional infrastructure conservation market institutions and regulatory systems information provision quantifying benefits business models and accounting and auditing standards and facilitation entrepreneurship incubation and capacity building a conservation industry requires careful design and planning in order to operate effectively whilst it is not without risk a conservation industry has the potential to increase participation and investment in conservation actions and enhance the sustainability of agricultural landscapes

dollar movements and inflation a cointegration analysis many studies have concluded that changes in us dollar values affect us prices however since exchange rates may reflect underlying economic conditions this result may be spurious if those conditions are ignored recent advances in time series analysis permitted investigation of both the short and long term interactions between the us price level and the yen dollar exchange rate taking into account the effects of changes in domestic economic activity such as income interest rates and monetary policy examination of these interactions helps to determine to what extent the yen dollar exchange rate impacts the domestic price level the finding is that there is no long term relation between the two variables in addition the results suggest that in the short run monetary authorities respond to changes in the consumer price index and japanese exchange rates however the price level does not respond to change in the exchange rate

pay the farmer or buy the land cost effectiveness of payments for ecosystem services versus land purchases or easements in central kenya abstract payments for ecosystem services pes have emerged as a popular conservation tool yet evaluation alongside other direct conservation strategies remains piecemeal we prospectively compared cost effectiveness of pes to land purchases or easements lpe in central kenya we spatially predicted opportunity costs and land prices using household survey and literature data and sampled conservation management costs from four regional conservation organizations we simulated a fixed budget spatial ecological economic site selection process for conservation intervention pes or lpe over 30 years we included effects of land markets property value fluctuations rising agricultural productivity and climate change depending on the scenario the lpe strategy led to larger reserves by 26 610 better representation of mammal species ranges by 47 112 and lower unit costs by 26 48 adding a yearly egalitarian social development payment to the lpe strategy did not increase costs beyond the basic pes model our findings were robust to discount rate choice but cost savings of lpe only materialized after about a decade furthermore kenyan law restricts foreign land ownership and the use of land easements thus simpler institutional requirements make pes a more immediate if less effective property based tool

the pricing of durable exhaustible resources comment in its simplest form hotelling s 1931 r percent rule states that in a competitive market with no extraction costs the price of an exhaustible resource will grow at the rate of interest for instance if price grows at a rate slower than the rate of interest it is in the interest of each firm to sell its entire stock immediately the hypothesized price path is obviously not an equilibrium even if there are extraction costs and firms are not identical it remains true that price net of marginal cost rises at the rate of interest the proposition generalizes to monopolized resources along the equilibrium path of extraction net marginal revenue grows at the rate of interest in a recent article in this journal levhari and pindyck 1981 henceforth l p show the r percent rule extends to durable exhaustible resources in a competitive market but they conclude that it does not hold in a monopoly market this is a surprising result following the hotelling logic should it not be possible for the monopolist to rearrange production from low net marginal revenue dates to high net marginal revenue dates and raise its present value the primary purpose of this comment is to show that hotelling s rule does in fact hold this is shown in section ii our result is compared with that of l p in section iii the conflict is shown to arise from a disagreement over the relevant marginal revenue in continuous time increasing the flow of production of a durable good at a particular point in time has no effect on the sales price at that or any other point in time hence the rate of change in the flow of revenue at that particular point in time is the sales price this is the definition of marginal revenue l p use however durables are different from nondurables in that a perturbation in the production trajectory over some length of time will affect the entire sales price trajectory in choosing its

targeting conservation investments in heterogeneous landscapes a distance function approach and application to watershed management to achieve an environmental objective at least cost decision makers must integrate information about spatially variable biophysical and economic conditions although the biophysical attributes that contribute to an environmental outcome are often known the way in which these attributes interact to produce the outcome is often unknown we introduce a nonparametric conservation targeting approach that relies on distance functions to cost efficiently allocate conservation funds we apply the approach empirically to the case of conservation contracting for water quality objectives the contract portfolios derived from the application have many desirable properties including intuitive appeal and robust performance across plausible parametric scoring measures

can financial incentives change farmers motivations an agrarian system approach to development pathways at the nicaraguan agricultural frontier abstract this article offers a conceptual methodological approach to assess how new institutional frameworks such as pes payments for ecosystem services interact with motivations for land use change at the individual and collective level increasing empirical evidence suggests that the effects of payments on inducing long term behavioural change can vary substantially depending on how they are integrated in territorial dynamics we show how individual motivation is the result of collective societal pathways that generate particular opportunities and constraints as well as guiding ideas and habits that work within these pathways through an illustrative case study at the agricultural frontier in nicaragua we show how an agrarian system approach offers a more nuanced understanding of the dynamic interactions on the ground and allows us to better connect farmers individual motivations to collective development pathways in that territory our case study also demonstrates how a local pes intervention is unlikely to lastingly alter the production system logic of farmers or stimulate long term pro environmental behaviour unless accompanied by other types of policies

heterogeneous users and willingness to pay in an ongoing payment for watershed protection initiative in the colombian andes abstract flat fees in payment for environmental services pes schemes promote administrative ease and are perceived as egalitarian however when environmental service es buyers are heterogeneous in their income and water consumption levels this scheme may not be optimal as total payments might become too low and services under supplied this paper estimates willingness to pay wtp higher fees from hydrological service buyers in an ongoing pes initiative in an andean watershed in colombia where small flat user payments have been introduced es users fall into two highly heterogeneous categories smallholder peasants and recreational house owners we perform a contingent valuation analysis in a representative sample of 218 households for improved water services es buyers on average are willing to pay monthly about us 1 premium over current flat pes rate users heterogeneity however affects significantly this outcome while recreational house owners are willing to pay monthly on average us 1 61 more than the current fee smallholders only us 0 41 spatial variables such as distance to the water distribution point and to the town center importantly influence wtp results may help designing user driven pes schemes in line with efficiency and equity objectives

china s sloping land conversion program institutional innovation or business as usual abstract china s sloping land conversion program slcp is the largest land retirement reforestation program in the developing world having the goal of converting 14 67 million hectares of cropland to forests by 2010 4 4 million of which is on land with slopes greater than 25 and an additional soft goal of afforesting a roughly equal area of wasteland by 2010 pending successful completion it could represent a 10 20 increase in china s national forest area and a 10 decrease in current cultivated area in contrast to china s other forest sector policies slcp uses a public payment scheme that directly engages millions of rural households as core agents of project implementation and has the stated principals of volunteerism thus insofar as current or future de facto program implementation involves decentralized voluntary grassroots participation slcp represents an important departure from business as usual in how china manages its forest resources this work draws upon current available research of the program and uses a 2003 household and village level survey conducted by the center for chinese agricultural policy cas to examine program design implementation and outcomes to date results indicate that significant problems in design and implementation exist with these including shortfalls in subsidies delivered lack of respect of the principals of volunteerism and insufficient technical support and budgeting for local implementation costs more fundamentally some program goals appear to be based on common misperceptions regarding the linkages between forests and watershed services overall slcp contains both innovative elements volunteerism and the direct engagement of farmers as well as components that hark back to policies and mindsets of decades past the program s top down simplified contract structure lack of sufficient consultation with local communities and rural households and campaign style mobilization the paper concludes by providing four main suggestions to improve the program 1 increase local community input in design and implementation and ensure that households have full autonomy in participation choice 2 improve technical support and budgeting for local administrative costs and capacity building 3 clarify the environmental services targeted and verify the measures needed to acquire these services and 4 integrate slcp into an overall package of complementary policies aimed at the rural sector

cartel stability in an exhaustible resource model a simple oligopolistic common pool exhaustible resource game is considered by analysing punishment strategies including optimal punishments it is possible to determine which cartel agreements are implementable in a non cooperative play of the game joint profit maximizing allocations are sustainable for sufficiently low discounting but in general it is shown that no folk theorem exists for this model in particular for sufficiently high elasticities of demand it is shown that optimal punishments are not sufficiently severe to enforce most stationary symmetric extraction paths thus confirming the hypothesis that sufficient market power is needed for a cartel to be stable a simple common property exhaustible resource model in a discrete time infinite horizon framework will be considered by looking at punishments levelled against firms that deviate from an implicitly agreed extraction path it is possible to examine the extent to which different allocations can be supported as non cooperative equilibria we shall pay particular attention to the question of whether punishments can be severe enough to sustain implicit agreements that maximize joint profits and to the idea pindyck 1979 that cartel stability depends crucially upon market power this non cooperative approach to the question of cartel stability has been used by porter 1983 in a repeated oligopoly model with imperfect information see also green and porter 1984 while we assume perfect observability here the model is compli cated by the existence of a state variable in the form of the resource stock moreover we shall apply the idea of optimal punishments in this dynamic model abreu et al 1986 1990 have looked at general properties of the equilibrium set in the green porter model what we find is that by considering a more general strategy space than that conventionally studied cooperative extraction rates are sustainable in equilibrium for low enough discount rates in contrast to the over extraction results often obtained moreover in this model the predictions concerning the range of possible sustainable equilibria as the discount rate approaches zero are sharp while the cooperative solution belongs to the set of equilibria for low discount rates constant symmetric extraction paths below the maximum possible rate fail to be sustainable in the limit if the elasticity of demand is sufficiently high thus for low discount rates only extraction rates close to the cooperative rate are sustainable together with disagreement equilibria which involve very high extraction rates these results are in sharp contrast to those obtained from repeated games where in the limit the range of equilibria is very large the difference is explained by the existence of a state variable in the form of a declining stock of the resource these results are also in contrast to what can happen in our model when the demand elasticity is lower all constant symmetric extraction paths may be sustainable for low enough

credit based payments for ecosystem services evidence from a choice experiment in ecuador the original conceptualization of payments for ecosystem services pes promoted direct payments to motivate the provision of environmental public goods but market imperfections and behavioral considerations can mean that pes that reduce market constraints are preferred the main issue with the latter is how to include conditionality we propose credit based pes cb pes as an incentive that links an environmental condition with the reduction of a key market constraint through a choice experiment in ecuador cb pes was found to be a promising form of pes with multiple desirable qualities of an incentive as cited in the behavioral economics and pes literatures

optimal cartel trigger price strategies abstract a dynamical model of industry equilibrium is described in which a cartel deters deviations from collusive output levels by threatening to produce at cournot quantities for a period of fixed duration whenever the market price falls below some trigger price in this model firms can observe only their own production level and a common market price the market demand curve is assumed to have a stochastic component so that an unexpectedly low price may signal either deviations from collusive output levels or a downward demand shock

when to pay adjusting the timing of payments in pes design to the needs of poor land users abstract a neglected issue in the design of payments for ecosystem services pes is the timing of payments to ecosystem service providers over the course of the year we hypothesise that timing should matter to poor land users with limited options to save money in regions dominated by subsistence farming seasonal fluctuations of food supply and peaks in expenses during the year due to cultural events such as circumcisions and funeral ceremonies that occur in specific months if land users value payments differently at different time points throughout the year the provision of ecosystem services can be increased for the given financial resources if payments are made at a point in time when land users need those most we conducted a choice experiment in the mahafaly plateau in southwestern madagascar an area which meets the aforementioned criteria to test the importance of the time of receipt of payments we found that respondents are willing to accept less money if they receive it in months of food shortage unlike if they receive it at the time of cultural events we conclude that the cost effectiveness of pes in regions with the above mentioned characteristics can be increased by selecting the appropriate timing to pay ecosystem service providers

what stopped the inflation unemployment or commodity prices the main object of this paper is to argue that most of the deceleration of inflation in the oecd countries in general including britain that took place between i980 and i982 should be attributed not to the direct impact of higher unemployment on the labour market but to the fall in commodity i e primary product prices from i980 to i982 following their very sharp rise accompanying the second oil shock between i978 and i980 this led to a dramatic turn round of about 50 60 in the prices of primary products imported into the oecd countries from the rest of the world and from other oecd countries which in turn can account for the deceleration of about 20 25 in the import prices for the average industrialised country and our econometric estimates show that the pace of wage inflation is closely correlated with import prices by contrast our estimates for a variety of model specifications and choice of data do not show statistically significant correlations between aggregate unemployment and wage inflation we have not attempted to establish statistically that the turn round in commodity prices was caused mainly by the strength and duration of the posti979 recession in the industrialised countries as a whole but like most commentators we assume that this is the case given this assumption therefore our results imply that the recession in the industrialised world did not as is widely believed slow down the inflation by acting directly on the labour market e g by crushing the unions or bringing a new breath of realism into wage negotiations instead it worked by inducing a collapse of commodity prices or in the case of oil inducing a slight fall by comparison with the preceding sharp rise insofar as our results are valid there are various obvious implications for some central topical economic debates first if there is no stable direct relationship between unemployment within any country and its own rate of wage inflation then there would be no nairu and no clearly identifiable phillips curve as some other investigators have found hence debates as to whether and how far individual economies have unemployment rates above or below their nairus and so on are irrelevant in the conclusions we summarise what seem to be the main policy implications for individual countries but secondly insofar as levels of demand in the industrialised countries taken as a whole influence commodity prices which feed back on wage inflation via

common trends commodity prices and consumer prices abstract a multivariate cointegration analysis of monthly data for consumer prices in the usa west germany japan on a commodity price index as well as the dm and yen exchange rate indicates that these six variables are driven by one common trend

how not to pay field experimental evidence on the design of redd payments abstract payments for ecosystem services pes can use many design features we investigate the impact of payment conditionality types i e different specifications when to pay and when not to pay for pes on deforestation and agricultural production in a lab in the field experiment our experiment also tests variations in contract period and payment volatility we designed a highly visual simulation game to characterize the decision situation of a cattle rancher in brazil the player can expand extensive pasture by deforestation or intensify existing pasture the model includes both a land and a capital constraint we applied the game in an economic framed lab in the field experiment in tocantins brazil payments conditional on forest carbon stock lead to slow but steady deforestation while payments conditional on forest carbon stock change suppressed deforestation more strongly but payments conditional on stock increase cattle production while payments conditional on stock change have no effect on production thus depending on the level of leakage either type of conditionality can be more cost effective in reducing global carbon emissions contracts with limited periods lead to strong deforestation after the end of the payment period payment volatility had no significant effect

conditional cash transfers and payments for environmental services a conceptual framework for explaining and judging differences in outcomes we develop a conceptual framework elucidating the main determinants of the impact of conditional cash transfer cct and payments for environmental services pes programs using a simple multi agent model and evaluations of existing programs we show that 1 the share of the population who would meet the program s conditions in the absence of payments is a powerful predictor of program efficiency and that 2 program efficiency is eroded by selection bias people who already meet conditions self select into the programs at higher rates than others we then discuss possibilities for increasing efficiency and criteria for evaluating and choosing between ccts pes or other policy instruments

common pool equities an arbitrage based non cooperative solution to the common pool resource problem abstract it is proposed that a new type of property right termed a common pool equity can solve the common pool resource problem this equity may be presented to any firm that extracts from the resource for a share in profits it is shown that a profit arbitrage condition ensures that the market and socially efficient solutions correspond whenever market power is absent the cost externalities are fully internalized

evaluating the performance of benefit transfer an empirical inquiry abstract benefit transfers are used by public agencies needing information on costs and benefits of policy decisions although scientific debate regarding the validity of benefit transfer is ongoing this article develops a methodology to evaluate the performance of direct benefit transfer and benefit function transfer and applies the methodology to two pairs of similar non market amenities empirical results indicate that benefit function transfer is more robust than transfer of average site benefits our results suggest that the circumstances under which benefit function transfer provides valid policy relevant information may be limited and that errors from applying benefit transfer can be quite large even across seemingly similar amenities

payments for environmental services in costa rica costa rica pioneered the use of the payments for environmental services pes approach in developing countries by establishing a formal country wide program of payments the psa program the psa program has worked hard to develop mechanisms to charge the users of environmental services for the services they receive it has made substantial progress in charging water users and more limited progress in charging biodiversity and carbon sequestration users because of the way it makes payments to service providers using approaches largely inherited from earlier programs however the psa program has considerable room for improvement in the efficiency with which it generates environmental services with experience many of these weaknesses are being gradually corrected as the psa program evolves towards a much more targeted and differentiated program an important lesson is the need to be flexible and to adapt to lessons learned and to changing circumstances

direct conservation payments in the brazilian amazon scope and equity implications abstract this article looks into the scope and equity implications of applying payments for environmental services pes as a redd implementation mechanism in the brazilian amazon we establish a set of economic and institutional preconditions for pes to become a feasible and cost effective conservation mechanism we proceed with a macro scale spatial analysis and overlay of opportunity costs deforestation patterns carbon services and land tenure in order to assess where these conditions hold we then screen how the benefits of potential pes schemes might be distributed across different socioeconomic groups of service providers in different land tenure categories our economic quantitative analysis though sensitive to documented assumptions suggests that under current carbon prices the economic preconditions are in place to pay for avoided deforestation in over half of threatened forests over the next decade unfortunately the same optimism does not apply to institutional preconditions land grabbing insecure tenure overlapping claims and lacking information on private tenure constitute real medium term impediments to pes if payments were to accrue to current landholders regardless of current tenure insecurities large landowners who account for about 80 of all deforestation would reap the highest benefits though per capita benefits other tenure categories are also high schemes that closely align payments with opportunity costs are preferable for cost effectiveness and not necessarily more inequitable in outcomes essentially pes systems cannot substitute command and control measures the former depend on the latter for basic governance systems to secure effective rights of exclusion which land stewards essentially need in order to become reliable service providers

inefficiency of credible strategies in oligopolistic resource markets with uncertainty abstract the implications of different information patterns for firms in oligopolistic resource markets are considered the traditional open loop nash equilibrium with static information sets is one of many possible nash equilibria and is not suitable for stochastic environments when shocks to resource growth are serially uncorrelated there are no gains from conditioning the harvest on past stock levels and the feedback or credible nash equilibrium is the appropriate nash equilibrium concept this credible equilibrium assumes that firms have knowledge of current stocks of reserves which typically leads to more rapid extraction of the resource and possibly extinction since the open loop nash equilibrium is efficient when demand is iso elastic and extraction costs are zero it is clear that an increase in information can be detrimental to firms in the industry

paying for the hydrological services of mexico s forests analysis negotiations and results abstract mexico faces both high deforestation and severe water scarcity the payment for hydrological environmental services psah program was designed to complement other policy responses to the crisis at the interface of these problems through the psah the mexican federal government pays participating forest owners for the benefits of watershed protection and aquifer recharge in areas where commercial forestry is not currently competitive funding comes from fees charged to water users from which nearly us 18 million are earmarked for payments of environmental services applicants are selected according to several criteria that include indicators of the value of water scarcity in the region this paper describes the process of policy design of the psah the main actors involved in the program its operating rules and provides a preliminary evaluation one of the main findings is that many of the program s payments have been in areas with low deforestation risk selection criteria need to be modified to better target the areas where benefits to water users are highest and behavior modification has the least cost otherwise the program main gains will be distributive but without bringing a pareto improvement in overall welfare

groundwater use under incomplete information abstract this paper introduces a game theoretic model of groundwater extraction in a two cell aquifer under incomplete information a novel assumption is that individual users have incomplete knowledge of the speed of lateral flows in the aquifer although a user is aware that his neighbor s water use has some influence on his future water stock he is uncertain about the degree of this impact we find that the lack of information may either increase or decrease the rate of water use and welfare in a two period framework the relevant characteristic is the ratio of the periodic marginal benefits of water use depending on whether this ratio is convex or concave the average speed with which the aquifer is depleted decreases or increases when users learn more about the local hydrologic properties of groundwater in principle welfare may decrease even in cases when the groundwater allocation is closer to the efficient groundwater allocation

can payments for environmental services help reduce poverty an exploration of the issues and the evidence to date from latin america summary this paper examines the main ways in which payments for environmental services pes might affect poverty pes may reduce poverty mainly by making payments to poor natural resource managers in upper watersheds the extent of the impact depends on how many pes participants are in fact poor on the poors ability to participate and on the amounts paid although pes programs are not designed for poverty reduction there can be important synergies when program design is well thought out and local conditions are favorable possible adverse effects can occur where property rights are insecure or if pes programs encourage less labor intensive practices 2004 elsevier ltd all rights reserved

on the oligopolistic extraction of non renewable common pool resources in recent literature the extraction of common pool resources ha s been discussed under the aspect of whether or not they can be used efficiently when a finite number of agents has access to the resource the objective of this paper is the derivation of a necessary equilibrium condition in a simple model this condition has severe consequences for existence propositions in papers of m c kemp and n v long 1980 j mcmillan and h w sinn 1984 and j f reinganum and n l stokey 1985 copyright 1986 by the review of economic studies limited

the structure of a contract and the theory of a non exclusive resource the process of arriving at a useful concept of analysis is not only slow and painful but also may go astray and attain nothing useful someone begins with one example or observation followed by a theory which is intuitively plausible a theoretical term associated with a vague concept is coined examples of a seemingly different type emerge which call for another theory the process goes on as examples and theories continue to accumulate the different categories under the same heading of analysis serve only to confuse and each associated theory becomes ad hoc such has been the fate of the concept of externality a more useful approach i think is via contractual conditions the example chosen for illustration is marine fisheries where the fishing right is taken

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

the informational role of commodity prices in formulating monetary policy a reexamination abstract this paper reexamines the issue of whether commodity prices provide useful information for formulating monetary policy through the application of a recent development in time series methodology developed by toda and yamamoto j econometrics 66 1995 225 250 we found that commodity prices signal the future direction of the economy

option implied expectations in commodity markets and monetary policy abstract in this paper we estimate the dynamic interactions between option implied variance and skewness in agricultural commodity markets and monetary policy using a structural vector autoregressive svar framework we find that an expansionary contractionary monetary policy upwardly downwardly revises commodity markets expectations about the price and volatility path of agricultural products on the other hand our empirical analysis reveals that monetary policy does not have a systematic and timely response to sudden changes in option implied expectations of commodity investors in addition we provide empirical evidence showing the robust forecasting power of agricultural option implied information on monetary policy with r 2 values reaching almost 52

appropriation of common access natural resources through exploration the relevance of the open loop concept in this paper the open loop equilibrium is rehabilitated as a sensible concept for analyzing common property situations in a model of natur al resource exploration in which the sole motivation to explore prior to extraction arises from a strategic incentive to preempt competito rs a consistency rule to the exploration game is applied under which the commonality of reserves is preserved even if strategies are open loop under this rule the so often claimed efficiency of the common property open loop equilibrium is lost copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

taking stock a comparative analysis of payments for environmental services programs in developed and developing countries abstract payments for environmental services pes are an innovative approach to conservation that has been applied increasingly often in both developed and developing countries to date however few efforts have been made to systematically compare pes experiences drawing on the wealth of case studies in this special issue we synthesize the information presented according to case characteristics with respect to design costs environmental effectiveness and other outcomes pes programs often differ substantially one from the other some of the differences reflect adaptation of the basic concept to very different ecological socioeconomic or institutional conditions others reflect poor design due either to mistakes or to the need to accommodate political pressures we find significant differences between user financed pes programs in which funding comes from the users of the es being provided and government financed programs in which funding comes from a third party the user financed programs in our sample were better targeted more closely tailored to local conditions and needs had better monitoring and a greater willingness to enforce conditionality and had far fewer confounding side objectives than government financed programs we finish by outlining some perspectives on how both user and government financed pes programs could be made more effective and cost efficient

alternative indicators for predicting the probability of declining inflation evidence from the us the performance of inflation indicators for predicting the probability of inflation falling inside constant and moving targets is considered with a probit model using us data given the federal reserve system s emphasis on achieving price stability particular attention is given to the target that future inflation will be below recent inflation in contrast with earlier years the unemployment and capacity utilisation rates do not perform well in forecasting the direction of inflation in the mid and late 1990s we suggest that extending the keynesian phillips curve analysis to consider changes in labour market conditions technological advance and worker skills and openness will increase understanding of these issues

the effectiveness of payments for environmental services we adopt a theory based approach to synthesize research on the effectiveness of payments for environmental services in achieving environmental objectives and socio economic co benefits in varying contexts our theory of change builds on established conceptual models of impact pathways and highlights the role of 1 contextual dimensions e g political institutional and socio economic conditions spatial heterogeneity in environmental service values and provision costs and interactions with pre existing policies and 2 scheme design e g payment type and level contract length targeting and differentiation of payments in determining environmental and socio economic outcomes to shed light on the overall effectiveness of payment schemes and its determinants we review counterfactual based empirical evaluations comparative analyses of case studies and meta analyses our review suggests that program effectiveness often lags behind the expectations of early theorists however we also find that theory has advanced sufficiently to identify common reasons for why payment schemes fail or succeed moreover payment schemes are often rolled out along with other policy instruments in so called policy mixes advances in theory and evaluation research are needed to improve our understanding of how such policy mixes interact with the targeted social ecological systems 2017

commodity prices money surprises and fed credibilit strict monetarist theory in an extreme form holds that excessive money growth or the expectation of future money growth shows up immediately in the rapid inflation of goods prices however it is widely argued that for most goods prices are in fact sticky in the short run and reflect money growth only in the long run if one seeks a sensitive market measure of the perceived looseiless or tightness of monetary policy one must look elsewhere than at the general price level interest rates being determined in quickly adjusting financial markets are free to respond immediately to expectations regarding monetary policy in 1981 and 1982 every friday at 4 10 p m eastern standard time the federal reserve board would announce the money stock for the week ending nine days previously if the announced money stock was different from what the market had been expecting interest rates generally jumped in the same direction clearly they were responding to revisions of the expected future path of the money stock but nominal interest rates are an ambiguous indicator of expectations on the one hand an announced increase in the money stock may be received by the market as indicating a higher

oligopoly extraction of a common property natural resource the importance of the period of commitment in dynamic games the theory of noncooperative dynamic games has provided an extremely powerful framework for studying many of the classic questions in industrial organization for example questions about resource extraction advertising research and development investment in new capacity and barriers to entry where interactions over time among few firms are involved however an important methodological issue arises when economic competition over time is modeled as a dynamic game the issue is the appropriate formulation of the players strategy spaces

targeting redd an empirical analysis of carbon sequestration in indonesia summary the implementation of redd requires knowledge of the willingness to accept land use change contracts and its application over large areas this paper uses primary data from indonesia to contrast two approaches to the elicitation of the supply curve for carbon an auction and an analysis of opportunity costs the analysis shows that there are important differences between the two approaches for a wide range of prices an analysis of bidding behavior shows that location and individual preferences time and risk preferences but not opportunity costs play a significant role in this decision the implications for targeting are discussed

agri environmental schemes adverse selection information structure and delegation this work analyzes alternative designs of agri environmental schemes and how different incentive mechanisms impact on their overall efficiency it focuses on spatial targeting and delegation in an asymmetric information context first the optimal contract under adverse selection is modeled this model underlines the trade off between information rents and allocative efficiency the impact of spatial targeting is then addressed disaggregated information structures increase the optimal efforts asked of the farmers it may also involve higher information rents and may reduce the net contributions of some farmers finally the consequences of delegating authority within the principal agent relationship are investigated the results illustrate that spatial targeting and delegation when combined have asymmetric impacts on farmers payoffs

aligning public good environmental stewardship with the landscape scale adapting mbis for private land conservation policy market based instruments mbis are rapidly becoming a dominant characteristic of the policy landscape for private land conservation in australia and elsewhere price based mbis are considered attractive to landholders who are provided with financial payments for the delivery of defined ecological outcomes on their land and for policy making where ecological return on investment can be measured quantitatively consequently mbis are commonly used to promote competitive individualized approaches to improve ecological values framed around the property scale we are concerned that there is a tension between the property centric focus of price based mbi programs and the need for environmental management policy and practice to reflect landscape scale social ecological processes targeting mbi programs at individual properties could risk generating insufficient public good conservation benefits if those programs fail to reflect the relationship between landscape scale processes and property scale conservation efforts to remedy the neglect of the landscape scale in private land conservation mbi policy we develop a definition of stewardship that directly connects landscape scale ecological function to the public good dimension of stewardship we apply this over arching definition to demonstrate how mbi programs can deliver on the goal of landscape scale conservation and to suggest when mbis might not be well suited to achieving private land conservation objectives