The market valuation of environmental capital expenditures by pulp and paper companies

The objective of this study is to examine the market valuation of environmental capital expenditure investment related to pollution abatement in the pulp and paper industry. The total environmental capital expenditure of $8.7 billion by our sample firms during 1989-2000 supports the focus on this industry. In order to be capitalized, an asset should be associated with future economic benefits. The existing environmental literature suggests that investors condition their evaluation of the future economic benefits arising from environmental capital expenditure on an assessment of the firms' environmental performance. This literature predicts the emergence of two environmental stereotypes: low-polluting firms that overcomply with existing environmental regulations, and high-polluting firms that just meet minimal environmental requirements. Our valuation evidence indicates that there are incremental economic benefits associated with environmental capital expenditure investment by low-polluting firms but not high-polluting firms. We also find that investors use environmental performance information to assess unbooked environmental liabilities, which we interpret to represent the future abatement spending obligations of high-polluting firms in the pulp and paper industry. We estimate average unbooked liabilities of $560 million for high-polluting firms, or 16.6 percent of market capitalization.

Financial and economic performance of long-rotation hardwood plantation investments in Queensland, Australia

In Queensland, Australia, there is presently a high level of interest in long-rotation hardwood plantation investments for sawlog production, despite the consensus in Australian literature that such investments are not financially viable. Continuing genetics, silviculture and processing research, and increasing awareness about the ecosystem services generated by plantations, are anticipated to make future plantings profitable and socio-economically desirable in many parts of Queensland. Financial and economic models of hardwood plantations in Queensland are developed to test this hypothesis. The economic model accounts for carbon sequestration, salinity amelioration and other ecosystem service values of hardwood plantations. A carbon model estimates the value of carbon sequestered, while salinity and other ecosystem service values are estimated by the benefit transfer method. Where high growth rates (20-25 m(3) ha(-1) year(-1)) are achievable, long-rotation hardwood plantations are profitable in Queensland Hardwood Regions 1, 3 and 7 when rural land values are less than $2300/ha. Under optimistic assumptions, hardwood plantations growing at a rate of 15 in 3 ha-1 year 1 are financially viable in Hardwood Regions 2, 4 and 8, provided land values are less than $1600/ha. The major implication of the economic analysis is that long-rotation hardwood plantation forestry is socio-economically justified in most Hardwood Regions, even though financial returns from timber production may be negative. (c) 2003 Elsevier B.V. All rights reserved.

Effects of high temperature on the growth and composition of sugarcane internodes

Sugarcane grown in the Ord River district of Western Australia has lower sucrose content than expected from earlier trials and experience in other irrigated districts. High temperatures have been hypothesised as a possible cause. The effects of high temperature (above 32 degrees C) on growth and carbon partitioning were investigated. A temperature regime of (25-38 degrees C) was compared with (23-33 degrees C). In one experiment, 7-month-old plants of cvv. Q117 and Q158 were subjected to the treatments for 2 months. In another experiment, the plants were allowed to regrow (ratoon) for 6 months. In both experiments, the higher temperature resulted in more, shorter internodes and higher moisture content. Most internodes from plants in the higher temperature treatment had lower sucrose content than internodes from the lower temperature. On a dry mass basis the internodes from the plants in the higher temperature had proportionately more fibre and hexoses but lower sucrose. Combined with an increased number of nodes in a stem of similar or shorter length this would result in higher stalk fibre and lower sucrose content. The data provided evidence that sugarcane partitions less carbon to stored sucrose when grown under high compared with low temperatures. The two cultivars partitioned carbon between soluble (sugars) and insoluble (fibre) fractions to different degrees. These experiments also indicate that the current models describing leaf appearance and perhaps sugarcane growth at temperatures above 32 degrees C, in general, need revision.