Interlinkages and forecasting made possible by the use of the DECOIN analytical tool kit

This technical report is a document prepared as a deliverable [D4.3 Report of the Interlinkages and forecasting prototype tool] of a EU project – DECOIN Project No. 044428 - FP6-2005-SSP-5A. The text is divided into 4 sections: (1) this short introductory section explains the purpose of the report; (2) the second section provides a general discussion of a systemic problem found in existing quantitative analysis of sustainability. It addresses the epistemological implications of complexity, which entails the need of dealing with the existence of Multiple-Scales and non-equivalent narratives (multiple dimensions/attributes) to be used to define sustainability issues. There is an unavoidable tension between a “steady-state view” (= the perception of what is going on now – reflecting a PAST --& PRESENT view of the reality) versus an “evolutionary view” (= the unknown transformation that we have to expect in the process of becoming of the observed reality and in the observer – reflecting a PRESENT --& FUTURE view of the reality). The section ends by listing the implications of these points on the choice of integrated packages of sustainability indicators; (3) the third section illustrates the potentiality of the DECOIN toolkit for the study of sustainability trade-offs and linkages across indicators using quantitative examples taken from cases study of another EU project (SMILE). In particular, this section starts by addressing the existence of internal constraints to sustainability (economic versus social aspects). The narrative chosen for this discussion focuses on the dark side of ageing and immigration on the economic viability of social systems. Then the section continues by exploring external constraints to sustainability (economic development vs the environment). The narrative chosen for this discussion focuses on the dark side of current strategy of economic development based on externalization and the “bubbles-disease”; (4) the last section presents a critical appraisal of the quality of energy data found in energy statistics. It starts with a discussion of the general goal of statistical accounting. Then it introduces the concept of multipurpose grammars. The second part uses the experience made in the activities of the DECOIN project to answer the question: how useful are EUROSTAT energy statistics? The answer starts with an analysis of basic epistemological problems associated with accounting of energy. This discussion leads to the acknowledgment of an important epistemological problem: the unavoidable bifurcations in the mechanism of accounting needed to generate energy statistics. By using numerical example the text deals with the following issues: (i) the pitfalls of the actual system of accounting in energy statistics; (ii) a critical appraisal of the actual system of accounting in BP statistics; (iii) a critical appraisal of the actual system of accounting in Eurostat statistics. The section ends by proposing an innovative method to represent energy statistics which can result more useful for those willing develop sustainability indicators.

Assessing the quality of alternative energy sources: Energy Return On the Investment (EROI), the metabolic pattern of societies and energy statistics

This paper presents an initial challenge to tackle the every so "tricky" points encountered when dealing with energy accounting, and thereafter illustrates how such a system of accounting can be used when assessing for the metabolic changes in societies. The paper is divided in four main sections. The first three, present a general discussion on the main issues encountered when conducting energy analyses. The last section, subsequently, combines this heuristic approach to the actual formalization of it, in quantitative terms, for the analysis of possible energy scenarios. Section one covers the broader issue of how to account for the relevant categories used when accounting for Joules of energy; emphasizing on the clear distinction between Primary Energy Sources (PES) (which are the physical exploited entities that are used to derive useable energy forms (energy carriers)) and Energy Carriers (EC) (the actual useful energy that is transmitted for the appropriate end uses within a society). Section two sheds light on the concept of Energy Return on Investment (EROI). Here, it is emphasized that, there must already be a certain amount of energy carriers available to be able to extract/exploit Primary Energy Sources to thereafter generate a net supply of energy carriers. It is pointed out that this current trend of intense energy supply has only been possible to the great use and dependence on fossil energy. Section three follows up on the discussion of EROI, indicating that a single numeric indicator such as an output/input ratio is not sufficient in assessing for the performance of energetic systems. Rather an integrated approach that incorporates (i) how big the net supply of Joules of EC can be, given an amount of extracted PES (the external constraints); (ii) how much EC needs to be invested to extract an amount of PES; and (iii) the power level that it takes for both processes to succeed, is underlined. Section four, ultimately, puts the theoretical concepts at play, assessing for how the metabolic performances of societies can be accounted for within this analytical framework.

Tourism and urban transport: holding demand pressure under supply constraints

Scholars and local planners are increasingly interested in tourism contribution to economic and social development. To this regard, several European cities lead the world rankings on tourist arrivals, and their governments have promoted tourism activity. Mobility is an essential service for tourists visiting large cities, since it is a crucial factor for their comfort. In addition, it facilitates the spread of benefits across the city. The aim of this study is to determine whether city planners respond to this additional urban transport demand pressure by extending supply services. We use an international database of European cities. Our results confirm that tourism intensity is a demand enhancing factor on urban transport. Contrarily, cities do not seem to address this pressure by increasing service supply. This suggests that tourism exerts a positive externality on public transport since it provides additional funding for these services, but it imposes as well external costs on resident users because of congestion given supply constraints.

Small firms, growth and financial constraints

This paper analyses the impact of different sources of finance on the growth of firms. Using panel data from Spanish manufacturing firms for the period 2000-2006, we investigate the effects of internal and external finances on firm growth. In particular, we examine three dimensions of these financial sources: a) the performance of the firms’ capital structure in accordance with firm size; b) the effects of internal and external financial sources on growth performance; c) the combined effect of equity, external debt and cash flow on firm growth. We find that low-growth firms are sensitive to cash flow and short-term bank debt, while high-growth firms are more sensitive to long-term debt. Furthermore, equity capital seems to reduce barriers to external finance. Our main conclusion is that during the start-up phase, firms are unable to increase their financial leverage and so their capital structure fails to promote correct investment strategies. However, as their equity capital increases, alternative financial mechanisms, in particular long-term debt, become available, which have a positive impact on firm growth.

Financial constraints and the failure of innovation projects

Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints.

Financial constraints and the failure of innovation projects

Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints. Keywords: barriers to innovation, failure of innovation projects, financial constraints JEL Classifications: O31, D21

Internal promotion versus external recruitment: evidence in industrial plants

An analysis is carried out in a sample of 738 industrial plants of the determining factors in the use of internal promotion of blue-collar workers to middle managers and skilled technicians as against their external recruitment. The use of internal promotion is positively correlated with variables indicative of the efforts made by plants to measure employees' skills, and to a lesser extent, with the level of specificity of investments in human capital made by blue-collar workers. Contrary to what was expected, variables related with the use and efficiency of other incentive systems have no significant influence on the increased or decreased use of internal promotion. These results are initial evidence that internal promotions are used to protect and favour specific investments, especially those made by firms in order to discover their workers' skills.

External sources of innovation and industry-university interaction:evidence from Spanish firms

This paper is about the firm innovation process and the cooperation of the innovative firms with other firms and public institutions. A special attention is paid to the cooperation with universities. We use the Technological Innovation Survey (TIS) from the Instituto Nacional de Estadística (Spain) in order to obtain data for 4,159 innovative firms. Our results show that firm's cooperation activities are closely linked to the characteristics of the industry and the firm as well as to the origin of public funds for R&D activities. Key words: Innovation, universities, Spanish economy. JEL code: O31, I20, L60

Does bounded rationality lead to individual heterogeneity? The impact of the experimentation process and of memory constraints

In this paper we explore the effect of bounded rationality on the convergence of individual behavior toward equilibrium. In the context of a Cournot game with a unique and symmetric Nash equilibrium, firms are modeled as adaptive economic agents through a genetic algorithm. Computational experiments show that (1) there is remarkable heterogeneity across identical but boundedly rational agents; (2) such individual heterogeneity is not simply a consequence of the random elements contained in the genetic algorithm; (3) the more rational agents are in terms of memory abilities and pre-play evaluation of strategies, the less heterogeneous they are in their actions. At the limit case of full rationality, the outcome converges to the standard result of uniform individual behavior.

Voting by committees under constraints

We consider social choice problems where a society must choose a subset from a set of objects. Specifically, we characterize the families of strategy-proof voting procedures when not all possible subsets of objects are feasible, and voters' preferences are separable or additively representable.

Alleviating abiotic and biotic soil constraints by combining Arbuscular Mycorrhizal Fungi with banana and plantain micropropagation systems

The objectives of Participant 4 were: - Establishment and maintenance of a representative collection of AM fungal species in vivo on trap plant cultures. - Study of the effects of early mycorrhizal inoculation in the growth and health of in vitro plantlets and their subsequent behaviour in the nursery. - Effect of the mycorrhization of in vitro produced bananas and plantains on plant growth and health, under biotic stress conditions (nematode and fungi)

Wealth constraints, skill prices or networks: what determines emigrant selection?

The productive characteristics of migrating individuals, emigrant selection, affect welfare. The empirical estimation of the degree of selection suffers from a lack of complete and nationally representative data. This paper uses a new and better dataset to address both issues: the ENET (Mexican Labor Survey), which identifies emigrants right before they leave and allows a direct comparison to non-migrants. This dataset presents a relevant dichotomy: it shows on average negative selection for Mexican emigrants to the United States for the period 2000-2004 together with positive selection in Mexican emigration out of rural Mexico to the United States in the same period. Three theories that could explain this dichotomy are tested. Whereas higher skill prices in Mexico than in the US are enough to explain negative selection in urban Mexico, its combination with network effects and wealth constraints is required to account for positive selection in rural Mexico.

Analog Modelling of N-S anticlines of the External Sierras (Jaca basin, Southern Pyrenees)

Report for the scientific sojourn carried out at the Uppsala Universitet, Sweden, from April to July the 2007. Two series of analogue models are used to explore ductile-frictional contrasts of the basal décollement in the development of oblique and transverse structures simultaneously to thin-skinned shortening. These models simulate the evolution of the Central External Sierras (Southern Pyrenees, Spain), which constitute the frontal emerging part of the southernmost Pyrenean thrust sheet. They are characterized by the presence of transverse N-S to NW-SE anticlines, which are perpendicular to the Pyrenean structural trend and developed in the hangingwall of the Santo Domingo thrust system, detaching on an unevenly distributed Triassic materials (evaporitic-dolomitic interfingerings). Model setup performs a décollement made by three patches of silicone neighbouring pure brittle sand. Model series A test the thickness ratio between overburden and décollement. Model series B test the width of frictional detachment areas. Model results show how deformation reaches further in areas detached on ductile layer whereas frictional décollement areas assimilate the strain by means of an additional uplift. This replicates the structural style of Central External Sierras: higher structural relief of N-S anticlines with regard to orogen-parallel structures, absence of a representative ductile décollement in the core, tilting towards the orogen and foreland-side closure not thrusted by the frontal emerging South-Pyrenean thrust.

Traffic forecasts under uncertainty and capacity constraints

Traffic forecasts provide essential input for the appraisal of transport investment projects. However, according to recent empirical evidence, long-term predictions are subject to high levels of uncertainty. This paper quantifies uncertainty in traffic forecasts for the tolled motorway network in Spain. Uncertainty is quantified in the form of a confidence interval for the traffic forecast that includes both model uncertainty and input uncertainty. We apply a stochastic simulation process based on bootstrapping techniques. Furthermore, the paper proposes a new methodology to account for capacity constraints in long-term traffic forecasts. Specifically, we suggest a dynamic model in which the speed of adjustment is related to the ratio between the actual traffic flow and the maximum capacity of the motorway. This methodology is applied to a specific public policy that consists of suppressing the toll on a certain motorway section before the concession expires.

The Role of supply constraints in multiplier analysis

Multiplier analysis based upon the information contained in Leontief's inverse is undoubtedly part of the core of the input-output methodology and numerous applications an extensions have been developed that exploit its informational content. Nonetheless there are some implicit theoretical assumptions whose implications have perhaps not been fully assessed. This is the case of the 'excess capacity' assumption. Because of this assumption resources are available as needed to adjust production to new equilibrium states. In real world applications, however, new resources are scarce and costly. Supply constraints kick in and hence resource allocation needs to take them into account to really assess the effect of government policies. Using a closed general equilibrium model that incorporates supply constraints, we perform some simple numerical exercises and proceed to derive a 'constrained' multiplier matrix that can be compared with the standard 'unrestricted' multiplier matrix. Results show that the effectiveness of expenditure policies hinges critically on whether or not supply constraints are considered.