Carbon Markets: Past, Present, and Future

Carbon markets are substantial and they are expanding. There are many lessons from experiences over the past eight years: fewer free allowances, better management of market-sensitive information, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policymakers overseeing carbon markets must confront how to measure the comparability of efforts among markets and relative to a variety of other policy approaches.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Carbon markets: Past, present, and future

© 2014 by Annual Reviews.Carbon markets are substantial and expanding. There are many lessons from experience over the past 9 years: fewer free allowances, careful moderation of low and high prices, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This architecture sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policy makers must confront how to measure both the comparability of efforts among markets and the comparability between markets and a variety of other policy approaches.

A multivariate generalized ARCH approach to modeling risk premia in forward foreign exchange rate markets

Assuming that daily spot exchange rates follow a martingale process, we derive the implied time series process for the vector of 30-day forward rate forecast errors from using weekly data. The conditional second moment matrix of this vector is modelled as a multivariate generalized ARCH process. The estimated model is used to test the hypothesis that the risk premium is a linear function of the conditional variances and covariances as suggested by the standard asset pricing theory literature. Little supportt is found for this theory; instead lagged changes in the forward rate appear to be correlated with the 'risk premium.'. © 1990.

Young caregivers in the end-of-life setting: a population-based profile of an emerging group.

PURPOSE: Little is known about young caregivers of people with advanced life-limiting illness. Better understanding of the needs and characteristics of these young caregivers can inform development of palliative care and other support services. METHODS: A population-based analysis of caregivers was performed from piloted questions included in the 2001-2007 face-to-face annual health surveys of 23,706 South Australians on the death of a loved one, caregiving provided, and characteristics of the deceased individual and caregiver. The survey was representative of the population by age, gender, and region of residence. FINDINGS: Most active care was provided by older, close family members, but large numbers of young people (ages 15-29) also provided assistance to individuals with advanced life-limiting illness. They comprised 14.4% of those undertaking "hands-on" care on a daily or intermittent basis, whom we grouped together as active caregivers. Almost as many young males as females participate in active caregiving (men represent 46%); most provide care while being employed, including 38% who work full-time. Over half of those engaged in hands-on care indicated the experience to be worse or much worse than expected, with young people more frequently reporting dissatisfaction thereof. Young caregivers also exhibited an increased perception of the need for assistance with grief. CONCLUSION: Young people can be integral to end-of-life care, and represent a significant cohort of active caregivers with unique needs and experiences. They may have a more negative experience as caregivers, and increased needs for grief counseling services compared to other age cohorts of caregivers.

Valuing ecosystem services from wetlands restoration in the Mississippi Alluvial Valley

This study assesses the value of restoring forested wetlands via the U.S. government's Wetlands Reserve Program (WRP) in the Mississippi Alluvial Valley by quantifying and monetizing ecosystem services. The three focal services are greenhouse gas (GHG) mitigation, nitrogen mitigation, and waterfowl recreation. Site- and region-level measurements of these ecosystem services are combined with process models to quantify their production on agricultural land, which serves as the baseline, and on restored wetlands. We adjust and transform these measures into per-hectare, valuation-ready units and monetize them with prices from emerging ecosystem markets and the environmental economics literature. By valuing three of the many ecosystem services produced, we generate lower bound estimates for the total ecosystem value of the wetlands restoration. Social welfare value is found to be between $1435 and $1486/ha/year, with GHG mitigation valued in the range of $171 to $222, nitrogen mitigation at $1248, and waterfowl recreation at $16. Limited to existing markets, the estimate for annual market value is merely $70/ha, but when fully accounting for potential markets, this estimate rises to $1035/ha. The estimated social value surpasses the public expenditure or social cost of wetlands restoration in only 1 year, indicating that the return on public investment is very attractive for the WRP. Moreover, the potential market value is substantially greater than landowner opportunity costs, showing that payments to private landowners to restore wetlands could also be profitable for individual landowners. © 2009 Elsevier B.V.

Asset pricing in created markets

We investigate the applicability of the present-value asset pricing model to fishing quota markets by applying instrumental variable panel data estimation techniques to 15 years of market transactions from New Zealand's individual transferable quota (ITQ) market. In addition to the influence of current fishing rents, we explore the effect of market interest rates, risk, and expected changes in future rents on quota asset prices. The results indicate that quota asset prices are positively related to declines in interest rates, lower levels of risk, expected increases in future fish prices, and expected cost reductions from rationalization under the quota system. © 2007 American Agricultural Economics Association.

An evaluation of remifentanil-sevoflurane response surface models in patients emerging from anesthesia: model improvement using effect-site sevoflurane concentrations.

INTRODUCTION: We previously reported models that characterized the synergistic interaction between remifentanil and sevoflurane in blunting responses to verbal and painful stimuli. This preliminary study evaluated the ability of these models to predict a return of responsiveness during emergence from anesthesia and a response to tibial pressure when patients required analgesics in the recovery room. We hypothesized that model predictions would be consistent with observed responses. We also hypothesized that under non-steady-state conditions, accounting for the lag time between sevoflurane effect-site concentration (Ce) and end-tidal (ET) concentration would improve predictions. METHODS: Twenty patients received a sevoflurane, remifentanil, and fentanyl anesthetic. Two model predictions of responsiveness were recorded at emergence: an ET-based and a Ce-based prediction. Similarly, 2 predictions of a response to noxious stimuli were recorded when patients first required analgesics in the recovery room. Model predictions were compared with observations with graphical and temporal analyses. RESULTS: While patients were anesthetized, model predictions indicated a high likelihood that patients would be unresponsive (> or = 99%). However, after termination of the anesthetic, models exhibited a wide range of predictions at emergence (1%-97%). Although wide, the Ce-based predictions of responsiveness were better distributed over a percentage ranking of observations than the ET-based predictions. For the ET-based model, 45% of the patients awoke within 2 min of the 50% model predicted probability of unresponsiveness and 65% awoke within 4 min. For the Ce-based model, 45% of the patients awoke within 1 min of the 50% model predicted probability of unresponsiveness and 85% awoke within 3.2 min. Predictions of a response to a painful stimulus in the recovery room were similar for the Ce- and ET-based models. DISCUSSION: Results confirmed, in part, our study hypothesis; accounting for the lag time between Ce and ET sevoflurane concentrations improved model predictions of responsiveness but had no effect on predicting a response to a noxious stimulus in the recovery room. These models may be useful in predicting events of clinical interest but large-scale evaluations with numerous patients are needed to better characterize model performance.

Fishing quota markets

In 1986, New Zealand responded to the open-access problem by establishing the world's largest individual transferable quota (ITQ) system. Using a 15-year panel dataset from New Zealand that covers 33 species and more than 150 markets for fishing quotas, we assess trends in market activity, price dispersion, and the fundamentals determining quota prices. We find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased. We also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices, ecological variability, and market interest rates. Controlling for these factors, our results show a greater increase in quota prices for fish stocks that faced significant reductions, consistent with increased profitability due to rationalization. Overall, this suggests that these markets are operating reasonably well, implying that ITQs can be effective instruments for efficient fisheries management. © 2004 Elsevier Inc. All rights reserved.

Global value Chains, rising power firms and economic and social upgrading

© Emerald Group Publishing Limited.Purpose – The purpose of this paper is to introduce the global value chain (GVC) approach to understand the relationship between multinational enterprises (MNEs) and the changing patterns of global trade, investment and production, and its impact on economic and social upgrading. It aims to illuminate how GVCs can advance our understanding about MNEs and rising power (RP) firms and their impact on economic and social upgrading in fragmented and dispersed global production systems. Design/methodology/approach – The paper reviews theGVCliterature focusing on two conceptual elements of the GVC approach, governance and upgrading, and highlights three key recent developments in GVCs: concentration, regionalization and synergistic governance. Findings – The paper underscores the complicated role of GVCs in shaping economic and social upgrading for emerging economies, RP firms and developing country firms in general. Rising geographic and organizational concentration in GVCs leads to the uneven distribution of upgrading opportunities in favor of RP firms, and yet economic upgrading may be elusive even for the most established suppliers because of power asymmetry with global buyers. Shifting end markets and the regionalization of value chains can benefit RP firms by presenting alternative markets for upgrading. Yet, without further upgrading, such benefits may be achieved at the expense of social downgrading. Finally, the ineffectiveness of private standards to achieve social upgrading has led to calls for synergistic governance through the cooperation of private, public and social actors, both global and local. Originality/value – The paper illuminates how the GVC approach and its key concepts can contribute to the critical international business and RP firms literature by examining the latest dynamics in GVCs and their impacts on economic and social development in developing countries.