Changes in the Mediterranean climate during the Holocene: insights from global and regional climate modelling

Palaeoproxy records alone are seldom sufficient to provide a full assessment of regional palaeoclimates. To better understand the possible changes in the Mediterranean climate during the Holocene, a series of palaeoclimate integrations for periods spanning the last 12 000 years have been performed and their results diagnosed. These simulations use the HadSM3 global climate model, which is then dynamically downscaled to approximately 50 km using a consistent regional climate model (HadRM3). Changes in the model’s seasonal-mean surface air temperatures and precipitation are discussed at both global and regional scales, along with the physical mechanisms underlying the changes. It is shown that the global model reproduces many of the large-scale features of the mid-Holocene climate (consistent with previous studies) and that the results suggest that many areas within the Mediterranean region were wetter during winter with a stronger seasonal cycle of surface air temperatures during the early Holocene. This precipitation signal in the regional model is strongest in the in the northeast Mediterranean (near Turkey), consistent with low-level wind patterns and earlier palaeosyntheses. It is, however, suggested that further work is required to fully understand the changes in the winter circulation patterns over the Mediterranean region.

The relative importance sector and regional factors in Italy

The benefits of sector and regional diversification have been well documented in the literature but have not previously been investigated in Italy. In addition, previous studies have used geographically defined regions, rather than economically functional areas, when performing the analysis even though most would argue that it is the economic structure of the area that will lead to differences in demand and hence property performance. This study therefore uses economically defined regions of Italy to test the relative benefits of regional diversification versus sector diversification within the Italian real estate portfolio. To examine this issue we use constrained cross-section regressions the on the sector and regional affiliation of 14 cities in Italy to extract the “pure” return effects of the different factors using annual data over the period 1989 to 2003. In contrast, to previous studies we find that regional factors effects in Italy have a much greater influence on property returns than sector-specific effects, which is probably a direct result of using the extremely diverse economic regions of Italy rather than arbitrary geographically locations. Be that as it may, the results strongly suggest that that diversification across the regions of Italy used here is likely to offer larger risk reduction benefits than a sector diversification strategy within a region. In other words, fund managers in Italy must monitor the regional composition of their portfolios more closely than its sector allocation. Additionally, the results supports that contemporary position that ‘regional areas’ based on economic function, provide greater diversification benefits rather than areas defined by geographical location.

The cyclical behaviour of sector and regional diversification benefits: 1987-2002

This paper investigates the time series behaviour of the relative benefits of sector and regional diversification strategies, using the notion of cross-sectional dispersion introduced by Solnik and Roulet (2000). Using monthly data over the period 1987:1 to 2002:12, four sector and four regional classifications are examined in the UK. The results indicate that sector and regional dispersion indices are highly time varying and so dwarf any lower frequency cyclical components that may be present. Nonetheless, periods of high dispersion are closely followed by periods of low dispersion, suggestive of cyclical behaviour of sector and regional diversification benefits. Then, using the HP-filter we isolated the cyclical component of the various dispersion indices and found that the sector dispersion indices are generally above the regional dispersion indices. This implies that a sector diversification strategy is likely to offer greater risk reduction benefits than a regional diversification approach. Nonetheless, we find that in some periods, certain regional diversification strategies are of equal or greater benefit than certain sector approaches. The results also appear to be quite sensitive to the classifications of sectors and regions. Hence, the appropriate definition of sectors and regions can have important implications for sector and regional diversification strategies.

Changes in the relative importance of sector and regional factors: 1987-2002

A stylised fact in the real estate portfolio diversification literature is that sector (property-type) effects are relatively more important than regional (geographical) factors in determining property returns. Thus, for those portfolio managers who follow a top-down approach to portfolio management, they should first choose in which sectors to invest and then select the best properties in each market. However, the question arises as to whether the dominance of the sector effects relative to regional effects is constant. If not property fund managers will need to take account of regional effects in developing their portfolio strategy. Using monthly data over the period 1987:1 to 2002:12 for a sample of over 1000 properties the results show that the sector-specific factors dominate the regional-specific factors for the vast majority of the time. Nonetheless, there are periods when the regional factors are of equal or greater importance than the sector effects. In particular, the sector effects tend to dominate during volatile periods of the real estate cycle; however, during calmer periods the sector and regional effects are of equal importance. These findings suggest that the sector effects are still the most important aspect in the development of an active portfolio strategy.

Sector and regional factors in real estate returns

This paper presents a simple method to measure the effect of sector and regional factors in real estate returns, and thus provides a quantitative framework for analysing the relative impact of these two diversification categories to real estate portfolio selection. Using data on Retail, Office and Industrial properties spread across 326 real estate locations in the UK, over the period 1981 to 1995, the results show that the performance of real estate is largely sector-driven. A result in line with previous work. Which implies that the sector composition of the real estate fund should be the first level of analysis in constructing and managing the real estate portfolio. As a consequence real estate fund managers need to pay more attention to the sector allocation of their portfolios than the regional spread.

Changes in the relative importance of sector and regional Factors: 1987-2002

A stylised fact in the real estate portfolio diversification literature is that sector (property-type) effects are relatively more important than regional (geographical) factors in determining property returns. Thus, for those portfolio managers who follow a top-down approach to portfolio management, they should first choose in which sectors to invest and then select the best properties in each market. However, the question arises as to whether the dominance of the sector effects relative to regional effects is constant. If not property fund managers will need to take account of regional effects in developing their portfolio strategy. We find the results show that the sector-specific factors dominate the regional-specific factors for the vast majority of the time. Nonetheless, there are periods when the regional factors are of equal or greater importance than the sector effects. In particular, the sector effects tend to dominate during volatile periods of the real estate cycle; however, during calmer periods the sector and regional effects are of equal importance. These findings suggest that the sector effects are still the most important aspect in the development of an active portfolio strategy.

Solar influence on global and regional climates

The literature relevant to how solar variability influences climate is vast—but much has been based on inadequate statistics and non-robust procedures. The common pitfalls are outlined in this review. The best estimates of the solar influence on the global mean air surface temperature show relatively small effects, compared with the response to anthropogenic changes (and broadly in line with their respective radiative forcings). However, the situation is more interesting when one looks at regional and season variations around the global means. In particular, recent research indicates that winters in Eurasia may have some dependence on the Sun, with more cold winters occurring when the solar activity is low. Advances in modelling ‘‘top-down’’ mechanisms, whereby stratospheric changes influence the underlying troposphere, offer promising explanations of the observed phenomena. In contrast, the suggested modulation of low-altitude clouds by galactic cosmic rays provides an increasingly inadequate explanation of observations.

Why the home region matters: location and regional multinationals

Much of the literature in international business analysing the multinational enterprise uses the country as the relevant environmental parameter. This paper presents both theoretical and empirical evidence to demonstrate that country-level analysis now needs to be augmented by analysis at the ‘regional’ level of the broad triad markets of Europe, North America and the Asia Pacific. The great majority of the world's 500 largest firms concentrate their activities within their home region of the triad. This study uses variance component analysis and finds that this home region effect outperforms the country effect. Together, the regional and industry effects explain most of the geographic expansion of multinational enterprises (MNEs), whereas country, firm and year effects are very minor. The new data and variance component analysis on the activities of large MNEs reported here suggest that new thinking is required about the importance of large regions of the triad as the relevant unit of analysis for business strategy to supplement the conventional focus on the country.

Global and regional temperature-change potentials for near-term climate forcers

We examine the climate effects of the emissions of near-term climate forcers (NTCFs) from 4 continental regions (East Asia, Europe, North America and South Asia) using radiative forcing from the task force on hemispheric transport of air pollution source-receptor global chemical transport model simulations. These simulations model the transport of 3 aerosol species (sulphate, particulate organic matter and black carbon) and 4 ozone precursors (methane, nitric oxides (NOx), volatile organic compounds and carbon monoxide). From the equilibrium radiative forcing results we calculate global climate metrics, global warming potentials (GWPs) and global temperature change potentials (GTPs) and show how these depend on emission region, and can vary as functions of time. For the aerosol species, the GWP(100) values are −37±12, −46±20, and 350±200 for SO2, POM and BC respectively for the direct effects only. The corresponding GTP(100) values are −5.2±2.4, −6.5±3.5, and 50±33. This analysis is further extended by examining the temperature-change impacts in 4 latitude bands. This shows that the latitudinal pattern of the temperature response to emissions of the NTCFs does not directly follow the pattern of the diagnosed radiative forcing. For instance temperatures in the Arctic latitudes are particularly sensitive to NTCF emissions in the northern mid-latitudes. At the 100-yr time horizon the ARTPs show NOx emissions can have a warming effect in the northern mid and high latitudes, but cooling in the tropics and Southern Hemisphere. The northern mid-latitude temperature response to northern mid-latitude emissions of most NTCFs is approximately twice as large as would be implied by the global average.