debt for nature swaps overview and discussion of key issues abstract debt for nature swaps involve the purchase of a developing country s debt at a discounted value in the secondary debt market and cancelling the debt in return for environment related action on the part of the debtor nation the present debt situation of many dcs possessing tropical forests is seen as an opportunity to trade off bad debts against habitat preservation as long as the amounts at stake are marginal relative to a country s debt burden arrangements such as debt for nature swaps may prove beneficial because the opportunity costs of the freed funds are very low once such swaps take place on a larger scale however additionality may no longer be that obvious to the debtor government perhaps the most important contribution of aggressive promotion of such swaps will be awakening of policy and decision makers to the many consequences of accelerating environmental degradation of many unique and fragile tropical habitats along with an increased awareness of the increasing opportunity cost of diminishing renewable resources such an awakening may in turn lead to a changed political climate for environmental management in general and an increased scope for international cooperation

banking costs generalized functional forms and estimation of economies of scale and scope recently researchers have claimed that the primitive cobb douglas production technology captures banking cost functions adequately these findings rule out scope economies and u shaped cost curves the rejection of the generalized flexible form postulated by the above authors is a necessary but not a sufficient condition to justify a cobb douglas specification using restricted generalized functional forms the authors find that the composite output cobb douglas specification is an inadequate description of banking cost technology translog specifications with multiple products capture the data best suggesting the presence of both scope and scale economies copyright 1989 by ohio state university press

endogenous lifetime and economic growth abstract endogenous mortality is introduced in a two period overlapping generations model probability of surviving from the first period to the next depends upon health capital that is augmented through public investment high mortality societies do not grow fast since shorter lifespans discourage savings development traps are possible productivity differences across nations result in persistent differences in capital output ratios and relatively larger gaps in income and mortality high mortality also reduces returns on education where risks are undiversifiable when human capital drives economic growth countries differing in health capital do not converge to similar living standards threshold effects may also result

environmental tax policy and intergenerational distribution abstract we study the effects of environmental taxation within the context of an overlapping generations model the quality of the environment is modelled as a durable consumption good introduction of the environmental tax harms old existing generations and benefits young existing generations as well as all future generations increasing the tax in a pareto improving manner is easier the higher the pre existing tax the reverse holds if tax policy is decided by majority rule a suitably designed bond policy can be used to redistribute the efficiency gains due to the internalisation of environmental externalities across the generations

third world debt and tropical deforestation abstract the deforestation and degradation of tropical forests are taking place at an extremely rapid pace according to the food and agriculture organization fao the estimated annual rate of tropical deforestation during the 1981 1985 period was 113 846 square kilometers or 0 6 of the 1981 total forested area the implications of the loss of these forests are staggering myers n 1989 deforestation rates in tropical forests and their climatic implications friends of the earth london tropical forests are extremely rich ecosystems which support a disproportionately large share of the world s plant and animal species forests play a crucial role in both nutrient and hydrological cycling and may provide sustainable economic benefits through managed harvesting of timber and the collection of non timber products such as fruits nuts and rubber also deforestation is a significant source of global warming through its effects on the global carbon cycle this paper focuses on the relationship between debt and deforestation examining conceptual and empirical arguments that debt is a source of deforestation pressure our study develops a behavioral model which suggests that debt can lead to myopic behavior leading to deforestation rates that may not be optimal in the long run but are necessary in the short run to meet current constraints then country by country data on debt deforestation and other variables are analyzed with regression analysis it is shown that debt is significantly correlated with deforestation under a wide variety of assumptions and specifications our results indicate that debt is an important factor in the deforestation of tropical countries there are certainly other sources of deforestation both micro and macroeconomic which may vary significantly from country to country however we focus on debt because of its dominant role in the economies of developing countries and because of the increased use of debt for nature swaps the link between debt and deforestation that is suggested in this paper implies that debt for nature swaps may have a dual effect on deforestation first the contractual agreement is designed to preserve forests as part of the swap second the reduction in debt may itself reduce the pressure to deforest although this indirect effect is small our research provides evidence that reducing debt reduces deforestation which may be an argument to offer deforesting third world countries some form of debt relief and to utilize more fully debt for nature swaps as a tool for preserving environmental quality

environmental quality public debt and economic development this article analyzes the consequences on capital accumulation and environmental quality of environmental policies financed by public debt a public sector of pollution abatement is financed by a tax or by public debt we show that if the initial capital stock is high enough the economy monotonically converges to a long run steady state on the contrary when the initial capital stock is low the economy is relegated to an environmental poverty trap we also explore the implications of public policies on the trap and on the long run stable steady state in particular we find that government should decrease debt and increase pollution abatement to promote capital accumulation and environmental quality at the stable long run steady state finally a welfare analysis shows that there exists a level of public debt that allows a long run steady state to be optimal

reconsidering the impact of the environment on long run growth when pollution influences health and agents have a finite lifetime using an overlapping generation model a la blanchard 1985 j polit econ 93 223 247 with human capital accumulation we demonstrate that the influence of the environment on optimal growth in the long run may be explained by the detrimental effect of pollution on life expectancy we also show that in such a case greener preferences are growth and welfare improving in the long run even if the ability of the agents to learn is independent of pollution and utility is additively separable finally we establish that a minimum environmental policy is required to obtain a sustainable equilibrium in the market economy and that it is possible to implement a win win environmental policy

environmental valuation under sustainable development environmentalism has evolved since the 1960 s from a concern with the preservation of wilderness in the american experience to a concern over pollution of human habitat throughout the industrialized world northern anxiety spread to the loss of tropical rainforests and biodiversity in the south where environmentalism evolved further in an encounter with indigenous interpretations conditions and priorities by the late 1980 s climate change emerged as a central issue in a now global discourse on the relationship between environment and development the principle of sustainable development that current needs are to be met as fully as possible while ensuring that the life opportunities of future generations are undiminished relative to present is now widely accepted this paper illustrates that incorporating environmental values per se in decision making will not bring about sustainability unless each generation is committed to transferring to the next sufficient natural resources and capital assets to make development sustainable 11 refs 3 figs

modelling cost structure the bell system revisited this paper analyses a recent public policy decision and the crucial role played by the choice of the functional form the break up of the bell system is indeed a classic case of anti trust settlement and constitutes one of the most prominent and controversial applications of microeconomics to public policy it is argued that demanding multi output cost properties such as economies of scope for this is the considerable robustness problem displayed by the tranlog cost functional form the reason for this is the considerable able to robustness problem displayed by the translog cost function which is the source underlying many of the expert disagreements it is suggested that the non robustness is due to what ils termed the flip flop property and it is shown that the available empirical evidence from the pre divestiture bell system supports this argument to obtain robust results we propose that the analysis is constrained to the proper region of the cost function we propose that the analysis is con

scale and scope economies in the multi product banking firm abstract the multi product nature of the banking firm is examined utilizing the translog cost function this analysis indicates that contrary to conventional wisdom natural monopoly scale economies and product specific decreasing costs are not robust characterizations of the banking industry there is however evidence that the cost function is characterized by economies of scope the implications of these results are discussed and extensions of this approach suggested

the role of fixed costs and cost complementarities in determining scope economies and the cost of narrow banking proposals narrow banking proposals would separate insured deposits from most types of bank lending using data from large u s banks the authors examine the extent to which narrow banking proposals are likely to result in increased production costs production costs will rise for nonjoint provision of deposit and loan services if there are cost complementarities in producing the two outputs jointly or if joint production enables banks to spread their fixed costs more effectively unlike standard cost function approaches the authors methods allow them to estimate the fixed cost and cost complementarity effects separately they find the net production cost consequences of narrow banking to be negligible copyright 1993 by university of chicago press

environmental degradation longevity and the dynamics of economic development i construct a two period overlapping generations model in which longevity is positively affected by public spending on health services and negatively affected by pollution it is shown that the parameters which determine the extent of environmental degradation i e emission rate and pollution abatement may also represent additional factors affecting the dynamics of the economy the likelihood of multiple non trivial steady state equilibria and the emergence of poverty traps the distribution of public spending between public health care and pollution abatement that maximizes equilibrium income is also derived this distribution of spending minimizes the threshold which the economy needs to surpass in order to avoid a poverty trap while under certain circumstances it can maximize equilibrium welfare as well

a multiproduct cost study of savings and loans this paper investigates the cost structure of savings and loans most studies of financial institutions have failed to take into account the multiproduct nature of these institutions using the multiproduct approach the existence of subadditivity multiproduct global and product specific economies of scale and scope and substitutability between inputs is investigated a translogarithmic cost function is estimated using 1982 data on california savings and loans restrictive functional forms also estimated are rejected standard errors for the statistics calculated are estimated and various statistical tests are conducted previous authors have not calculated standard errors for these statistics no evidence of subadditivity in the industry is found in order to investigate the impact of deregulation on the financial services industry it is necessary to know the cost structure of the industry optimal firm size and product mix can be determined once the structure is known the presence of scale economies would imply that smaller firms or entering firms that operate at a small scale would be at a cost disadvantage compared with larger established firms a finding of economies of scope i e economies of joint production would imply that firms that were specialized would be at a cost disadvantage and that regulations that restrict the outputs a firm is allowed to produce may lead to inefficient production

an empirical study of joint production and scale economies in commercial banking this paper utilizes the translog cost function to test the proposition that the bank productionfunction is characterized by jointness the cross section analysis for the years 1973 through 1978 indicates that bank production is in fact characterized by jointness this result calls into question the findings and implications of studies that utilize the assumption of non jointness in production since virtually all of the major bank cost studies employ the assumption of nonjointness the second part of our analysis examines scale economies for the banking firm while allowing for jointness in production our estimates indicate that scale economies characterize bank production at only small bank sizes and that the cost structure of large banks is characterized by diseconomies of scale

changes in the cost of intermediation the case of savings and loans the minimum cost output configuration for a firm may change as the result of a variety of factors including changes in market structure in this paper we test this structural change hypothesis with savings and loan data we find support for the hypothesis that separable constant returns to scale production functions characterize the average savings and loan in our sample in 1983 this is in contrast to the cost complementarities found in 1978 we argue that this result may be the result of regulatory changes that allowed savings and loans to alter their production mix to fully capture the benefits of joint production it seems reasonable to assume that the cost minimizing configuration of a multiproduct firm is potentially subject to nonstationarity during periods of structural change in input and or output markets the late 1970s and early 1980s represent such a period of turbulence for many markets in the financial services industry volatile interest rates combined with technological and regulatory changes may have caused firms in this industry to alter their output mixes in an effort to capture cost complementarities from joint production the purpose of this paper is to test this hypothesis of structural change in the savings and loan industry using both a translog and minflex laurent translog mlt specification of the production function we have chosen to investigate savings and loans s ls during the late 1970s and early 1980s for two reasons first s ls provide an ideal vehicle for testing our hypothesis because they were restricted almost exclusively to mortgages and securities as outputs before the passage of the depository institutions deregulation and monetary control act of 1980 and the garn st germain act of 1982 moreover there were also market changes with respect to both the pricing and mix of inputs i e deposits our second rationale involves the fact that there is a large and growing body of literature in the area of what is now called the

a composite cost function for multiproduct firms with an application to economies of scope in banking the composite cost function the authors propose combines a quadratic output structure with a log quadratic input price structure and is well suited for examining economies of scope subadditivity and other important properties of multiproduct firms to compare the composite model with an appropriate set of alternative functional forms they develop a parsimonious but general specification that nests the standard translog cost function the generalized translog cost function a separable quadratic cost function and the composite cost function an application to economies of scope in banking confirms the advantages of the composite model copyright 1992 by mit press

efficiency in the savings and loan industry abstract the stochastic econometric cost frontier approach is modified to investigate efficiency in mutual and stock s ls using 1991 data on u s s ls this methodology allows both the cost frontier and error structures to differ between s ls of these two ownership forms a likelihood ratio test indicates that the data support this unrestricted model which implies efficient mutual and stock s ls use different production technologies various measures of inefficiency show that on average stock s ls are less efficient than mutual s ls the second part of the article relates the inefficiency measures to several correlates

market evaluation of hybrid wind storage power systems in case of balancing responsibilities abstract this study investigates the economics of a wind power farm with a long term market perspective considering high shares of wind energy constraints set on the energy variability and the removal of support schemes such as feed in tariffs the contractual agreement with a compressed air energy storage facility caes would create a hybrid wind storage system that would allow a wind power operator to reduce the intermittency of its output and to provide flexibility to the system the study gives a market value to the wind power at a project level of several gigawatts capacity located in france by using a technical and economic optimization model results indicate the cost of balancing the intermittency for the wind operator and show that under baseline conditions the hybrid wind storage system would have negative profits despite price arbitrage operations and ancillary services provided to the system alternative tests show that the economics can improve when the influence of the wind power on the spot price is accounted for the study is focused on the long term market situation in france which is characterized by increased balancing needs an ageing infrastructure uncertainties in carbon and gas prices and increased power imports

resolving intergenerational conflict over the environment under the pareto criterion abstract climate change policies create intergenerational winners and losers because the costs come first and the benefits later in such cases kaldor hicks cost benefit analysis seeks potential pareto improvements by showing the hypothetical potential for the winners to compensate the losers via lump sum transfers in their absence once a costly climate policy is actually implemented it unleashes distortions and general equilibrium effects rendering unclear whether kaldor hicks potential improvements lead to actual improvements we study policies which once implemented would pass the pareto test that no generation subsequent to policy action be made worse off than before we develop a stylized climate economy model in which production by the current generation generates pollution which damages production for future generations over time the business as usual bau economy gets increasingly polluted consumption falls and generational welfare levels decline a government introduces costly pollution abatement and finances it via distorting taxes and the sale of debt green bonds pollution levels start to decline generating downstream welfare gains which may be taxed without hurting anyone in a pareto sense to help finance the policy and pay off the debt along the transition every generation faces less pollution consumes more and is happier than if life had continued in the bau world

economies of scale and economies of scope in multiproduct financial institutions further evidence from credit unions recently murray and white 1983 have analyzed economies of scale economies of production due to output expansion and economies of scope economies due to joint production of output for credit unions of british columbia by explicitly recognizing the multiproduct nature of the credit union unfortunately their analysis of scale and scope economies is limited in view of recent advances in the theory of the multiproduct firm for example in multiproduct firms there exist two economies of scale economies arising from overall production activity and economies arising from the production of a particular product or a product set estimates of scale economies obtained by murray and white hereafter mw are overall scale economies but no discussion of product specific scale economies is provided in their analysis further mw employ the cost complementarity concept as a measure of economies of scope however cost complementarity is a local not global test for the existence of economies of scope in addition it is necessary to distinguish overall scope economies from product specific scope economies this paper reexamines the issue of economies of scale and scope in credit unions extending the model developed by mw and providing some new empirical evidence section 1 extends the model developed by mw to reexamine the issue of scale and scope in multiproduct credit unions section 2 contains a description of empirical results section 3 completes the paper with a conclusion

branching restrictions and banking costs abstract previous research of banking costs has been limited by the choice of the functional form irregularities in the estimated cost functions and a failure to rigorously examine the difference between banks in branching states and banks in unit banking states this paper addresses these shortcomings banks are modelled as three input three output cost minimizing firms a three equation system is estimated using 1985 functional cost analysis data the findings indicate that banks in unit banking states experience diseconomies of scale banks in branching states experience diseconomies of scale at the bank level but economies of scale at the branch level we also find evidence of economies of scope for branch state banks but not for unit state banks

life expectancy and the environment we present an olg model in which life expectancy and environmental quality dynamics are jointly determined agents may invest in environmental care depending on how much they expect to live in turn environmental conditions affect life expectancy as a result our model produces a positive correlation between longevity and environmental quality both in the long run and along the transition path eventually multiple equilibria may also arise some countries might be caught in a low life expectancy low environmental quality trap this outcome is consistent with stylized facts relating life expectancy and environmental performance measures we also discuss the welfare and policy implications of the inter generational externalities generated by individual choices finally we show that our results are robust to the introduction of growth dynamics based on physical or human capital accumulation c 2009 elsevier b v all rights reserved

intergenerational altruism and the environment we construct an overlapping generations model of pollution externality in which individuals are altruistically linked to their offspring as in barro 1974 it is shown that steady state consumption may be a decreasing function of the intergenerational degree of altruism despite individuals altruism the competitive equilibrium is not optimal we thus study the social optimum and show that it can be decentralized

the structure of an environmental transaction the debt for nature swap the structure and occurrence of debt for nature swaps are examined empirically contracts executing debt for nature swaps are studied to assess the role of transaction costs in determining how these agreements are structured the emerging contract form is a product of weak enforcement of legal claims to environmental resources in developing countries high costs for delineating and monitoring environmental outcomes and nominal government ownership of the resources involved the occurrence of swaps in individual countries is significantly related to host country attributes including the presence of tropical land and threatened species democratic political institutions and large debt burdens

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

self enforcing intergenerational social contracts for pareto improving pollution mitigation we consider in an overlapping generations model with an environmental externality a scheme of contracts between any two successive generations under each contract agents of the young generation invest a share of their labor income in pollution mitigation in exchange for a transfer in the second period of their lives the transfer is financed in a pay as you go manner by the next young generation different from previous work we assume that the transfer is granted as a subsidy to capital income rather than lump sum we show that the existence of a contract which is pareto improving over the situation without contract for any two generations requires a sufficiently high level of income in a steady state with social contracts in each period the pollution stock is lower compared to a steady state without contracts analytical and numerical analysis of the dynamics under nash bargaining suggests that under reasonable conditions also steady state income and welfare are higher delaying the implementation of a social contract for too long or imposing a contract with too low mitigation can be costly net income may inevitably fall below the threshold in finite time so that pareto improving mitigation is no longer possible and the economy converges to a steady state with high pollution stock and low income and welfare in the second part of the paper we study a game theoretic setup taking into account that credibly committing to a contract might not be possible we show that with transfers granted as a subsidy to capital income there exist mitigation transfer schemes which are both pareto improving and give no generation an incentive to deviate from any of its contracts even in a dynamically efficient economy social contracts coexist with private savings