Valuing drinking water provision as an ecosystem service in the neuse river basin

The valuation of ecosystem services such as drinking water provision is of growing national and international interest. The cost of drinking water provision is directly linked to the quality of its raw water input, which is itself affected by upstream land use patterns. This analysis employs the benefit transfer method to quantify the economic benefits of water quality improvements for drinking water production in the Neuse River Basin in North Carolina. Two benefit transfer approaches, value transfer and function transfer, are implemented by combining the results of four previously published studies with data collected from eight Neuse Basin water treatment plants. The mean net present value of the cost reduction estimates for the entire Neuse Basin ranged from $2.7 million to $16.6 million for a 30% improvement in water quality over a 30-year period. The value-transfer approach tended to produce larger expected benefits than the function-transfer approach, but both approaches produced similar results despite the differences in their methodologies, time frames, study sites, and assumptions. © 2010 ASCE.

A soft robust model for optimization under ambiguity

In this paper, we propose a framework for robust optimization that relaxes the standard notion of robustness by allowing the decision maker to vary the protection level in a smooth way across the uncertainty set. We apply our approach to the problem of maximizing the expected value of a payoff function when the underlying distribution is ambiguous and therefore robustness is relevant. Our primary objective is to develop this framework and relate it to the standard notion of robustness, which deals with only a single guarantee across one uncertainty set. First, we show that our approach connects closely to the theory of convex risk measures. We show that the complexity of this approach is equivalent to that of solving a small number of standard robust problems. We then investigate the conservatism benefits and downside probability guarantees implied by this approach and compare to the standard robust approach. Finally, we illustrate theme thodology on an asset allocation example consisting of historical market data over a 25-year investment horizon and find in every case we explore that relaxing standard robustness with soft robustness yields a seemingly favorable risk-return trade-off: each case results in a higher out-of-sample expected return for a relatively minor degradation of out-of-sample downside performance. © 2010 INFORMS.

The impact of structured support groups for pregnant South African women recently diagnosed HIV positive.

The authors of this study evaluated a structured 10-session psychosocial support group intervention for newly HIV-diagnosed pregnant South African women. Participants were expected to display increases in HIV disclosure, self-esteem, active coping and positive social support, and decreases in depression, avoidant coping, and negative social support. Three hundred sixty-one pregnant HIV-infected women were recruited from four antenatal clinics in Tshwane townships from April 2005 to September 2006. Using a quasi-experimental design, assessments were conducted at baseline and two and eight months post-intervention. A series of random effects regression analyses were conducted, with the three assessment points treated as a random effect of time. At both follow-ups, the rate of disclosure in the intervention group was significantly higher than that of the comparison group (p<0.001). Compared to the comparison group at the first follow-up, the intervention group displayed higher levels of active coping (t=2.68, p<0.05) and lower levels of avoidant coping (t=-2.02, p<0.05), and those who attended at least half of the intervention sessions exhibited improved self-esteem (t=2.11, p<0.05). Group interventions tailored for newly HIV positive pregnant women, implemented in resource-limited settings, may accelerate the process of adjusting to one's HIV status, but may not have sustainable benefits over time.

Entry and competition in generic biologics

Patents for several blockbuster biological products are expected to expire soon. The Food and Drug Administration is examining whether biologies can and should be treated like pharmaceuticals with regard to generics. In contrast with pharmaceuticals, which are manufactured through chemical synthesis, biologies are manufactured through fermentation, a process that is more variable and costly. Regulators might require extensive clinical testing of generic biologies to demonstrate equivalence to the branded product. The focus of the debate on generic biologies has been on legal and health concerns, but there are important economic implications. We combine a theoretical model of generic biologies with regression estimates from generic pharmaceuticals to estimate market entry and prices in the generic biologic market. We find that generic biologies will have high fixed costs from clinical testing and from manufacturing, so there will be less entry than would be expected for generic pharmaceuticals. With fewer generic competitors, generic biologies will be relatively close in price to branded biologies. Policy makers should be prudent in estimating financial benefits of generic biologies for consumers and payers. We also examine possible government strategies to promote generic competition. Copyright © 2007 John Wiley & Sons, Ltd.

Discounting the Benefits of Climate Change Policies Using Uncertain Rates

Evaluating environmental policies, such as the mitigation of greenhouse gases, frequently requires balancing near-term mitigation costs against long-term environmental benefits. Conventional approaches to valuing such investments hold interest rates constant, but the authors contend that there is a real degree of uncertainty in future interest rates. This leads to a higher valuation of future benefits relative to conventional methods that ignore interest rate uncertainty.

Victims of infanticide and conspecific bite wounding in a female-dominant primate: a long-term study.

The aggression animals receive from conspecifics varies between individuals across their lifetime. As poignantly evidenced by infanticide, for example, aggression can have dramatic fitness consequences. Nevertheless, we understand little about the sources of variation in received aggression, particularly in females. Using a female-dominant species renowned for aggressivity in both sexes, we tested for potential social, demographic, and genetic patterns in the frequency with which animals were wounded by conspecifics. Our study included 243 captive, ring-tailed lemurs (Lemur catta), followed from infancy to adulthood over a 35-year time span. We extracted injury, social, and life-history information from colony records and calculated neutral heterozygosity for a subset of animals, as an estimate of genetic diversity. Focusing on victims rather than aggressors, we used General Linear Models to explain bite-wound patterns at different life stages. In infancy, maternal age best predicted wounds received, as infants born to young mothers were the most frequent infanticide victims. In adulthood, sex best predicted wounds received, as males were three times more likely than females to be seriously injured. No relation emerged between wounds received and the other variables studied. Beyond the generally expected costs of adult male intrasexual aggression, we suggest possible additive costs associated with female-dominant societies - those suffered by young mothers engaged in aggressive disputes and those suffered by adult males aggressively targeted by both sexes. We propose that infanticide in lemurs may be a costly by-product of aggressively mediated, female social dominance. Accordingly, the benefits of female behavioral 'masculinization' accrued to females through priority of access to resources, may be partially offset by early costs in reproductive success. Understanding the factors that influence lifetime patterns of conspecific wounding is critical to evaluating the fitness costs associated with social living; however, these costs may vary substantially between societies.

Discounting the distant future: How much do uncertain rates increase valuations?

We demonstrate that when the future path of the discount rate is uncertain and highly correlated, the distant future should be discounted at significantly lower rates than suggested by the current rate. We then use two centuries of US interest rate data to quantify this effect. Using both random walk and mean-reverting models, we compute the "certainty-equivalent rate" that summarizes the effect of uncertainty and measures the appropriate forward rate of discount in the future. Under the random walk model we find that the certainty-equivalent rate falls continuously from 4% to 2% after 100 years, 1% after 200 years, and 0.5% after 300 years. At horizons of 400 years, the discounted value increases by a factor of over 40,000 relative to conventional discounting. Applied to climate change mitigation, we find that incorporating discount rate uncertainty almost doubles the expected present value of mitigation benefits. © 2003 Elsevier Science (USA). All rights reserved.