Depreciation, income distribution and the UK REIT

Purpose – The purpose of this paper is to consider prospects for UK REITs, which were introduced on 1 January 2007. It specifically focuses on the potential influence of depreciation and expenditure on income and distributions. Design/methodology/approach – First, the ways in which depreciation can affect vehicle earnings and value are discussed. This is then set in the context of the specific rules and features of REITs. An analysis using property income and expenditure data from the Investment Property Databank (IPD) then assesses what gross and net income for a UK REIT might have been like for the period 1984-2003. Findings – A UK REIT must distribute at least 90 per cent of net income from its property rental business. Expenditure therefore plays a significant part in determining what funds remain for distribution. Over 1984-2003, expenditure has absorbed 20 per cent of gross income and been a source of earnings volatility, which would have been exacerbated by gearing. Practical implications – Expenditure must take place to help UK REITs maintain and renew their real estate portfolios. In view of this, investors should moderate expectations of a high and stable income return, although it may well still be so relative to alternative investments. Originality/value – Previous literature on depreciation has not quantified amounts spent on portfolios to keep depreciation at those rates. Nor, to our knowledge, has its ideas been placed in the indirect investor context.

Achieving production and conservation simultaneously in tropicalagricultural landscapes

Increasing population size and demand for food in the developing world is driving the intensification ofagriculture, often threatening the biodiversity within the farmland itself and in the surrounding land-scape. This paper quantifies bird and tree species richness, tree carbon and farmer’s gross income, andinteractions between these four variables, across an agricultural gradient in central Uganda. We showedthat higher cultivation intensities in farmed landscapes resulted in increased income but also a declinein species richness of birds and trees, and reductions in tree carbon storage. These declines were particu-larly marked with a shift from high intensity smallholder mixed cropping to plantation style agriculture.This was especially evident for birds where significant declines only occurred in plantations. Small scalefarming will likely continue to be a key source of cash income for the rural populations, and ensuring‘sustained agricultural growth’ within such systems while minimising negative impacts on biodiversityand other key ecosystem services will be a major future challenge.

The role of sky conditions on gross primary production in a mixed deciduous forest

The role of different sky conditions on diffuse PAR fraction (ϕ), air temperature (Ta), vapor pressure deficit (vpd) and GPP in a deciduous forest is investigated using eddy covariance observations of CO2 fluxes and radiometer and ceilometer observations of sky and PAR conditions on hourly and growing season timescales. Maximum GPP response occurred under moderate to high PAR and ϕ and low vpd. Light response models using a rectangular hyperbola showed a positive linear relation between ϕ and effective quantum efficiency (α = 0.023ϕ + 0.012, r2 = 0.994). Since PAR and ϕ are negatively correlated, there is a tradeoff between the greater use efficiency of diffuse light and lower vpd and the associated decrease in total PAR available for photosynthesis. To a lesser extent, light response was also modified by vpd and Ta. The net effect of these and their relation with sky conditions helped enhance light response under sky conditions that produced higher ϕ. Six sky conditions were classified from cloud frequency and ϕ data: optically thick clouds, optically thin clouds, mixed sky (partial clouds within hour), high, medium and low optical aerosol. The frequency and light responses of each sky condition for the growing season were used to predict the role of changing sky conditions on annual GPP. The net effect of increasing frequency of thick clouds is to decrease GPP, changing low aerosol conditions has negligible effect. Increases in the other sky conditions all lead to gains in GPP. Sky conditions that enhance intermediate levels of ϕ, such as thin or scattered clouds or higher aerosol concentrations from volcanic eruptions or anthropogenic emissions, will have a positive outcome on annual GPP, while an increase in cloud cover will have a negative impact. Due to the ϕ/PAR tradeoff and since GPP response to changes in individual sky conditions differ in sign and magnitude, the net response of ecosystem GPP to future sky conditions is non-linear and tends toward moderation of change.

Coordination, inclusiveness and wage inequality between median and bottom income workers

What explains cross-national variation in wage inequality? Research in comparative political economy stresses the importance of the welfare state and wage coordination in reducing not only disposable income inequality but also gross earnings inequality. However, the cross-national variation in gross earnings inequality between median and low income workers is at odds with this conventional wisdom: the German coordinated market economy is now more unequal in this type of inequality than the UK, a liberal market economy. To solve this puzzle, I argue that non-inclusive coordination benefits median but not bottom income workers and is as a result associated with higher – rather than lower - wage inequality. I find support for this argument using a large N quantitative analysis of wage inequality in a panel of Western European countries. Results are robust to the inclusion of numerous controls, country fixed effects, and also hold with a sample of OECD countries. Taken together these findings force us to reconsider the relationship between coordination and wage inequality at the bottom of the income distribution.

Greening the United Nations' Human Development Index?

The Human Development Index (HDI) introduced by the United Nations Development Programme (UNDP) in 1990 has helped facilitate widespread debate amongst development researchers, practitioners and policy makers. The HDI is an aggregate index, calculated on an annual basis by the UNDP and published in its Human Development Reports, comprising measures of three components deemed by them to be central to development: W income (the gross domestic product per capita), (ii) education (adult literacy rate) and (iii) health (life expectancy at birth). The results of calculating the HDI are typically presented as country/regional league tables, and provide a quick means for policy makers and others to judge performance. Perhaps partly because of the relative simplicity of the index, the HDI has managed to achieve a level of acceptance and use amongst politicians and policy makers that has yet to emerge with any indicator of sustainability. Indeed, despite its existence for 11 years, including nine years after the Rio Earth Summit, the HDI has not even been modified to take on board wider issues of sustainability. This paper will critically examine the potential for 'greening' the HDI so as to include environmental and resource-consumption dimensions. Copyright (C) 2003 John Wiley & Sons, Ltd and ERP Environment.

On the use of headline indices to link environmental quality and income at the level of the nation state

This paper deconstructs the relationship between the Environmental Sustainability Index (ESI) and national income. The ESI attempts to provide a single figure which encapsulates environmental sustainability' for each country included in the analysis, and this allied with a 'league table' format so as to name and shame bad performers, has resulted in widespread reporting within the popular presses of a number of countries. In essence, the higher the value of the ESI then the more 'environmentally sustainable' a country is deemed to be. A logical progression beyond the use of the ESI to publicise environmental sustainability is its use within a more analytical context. Thus an index designed to simplify in order to have an impact on policy is used to try and understand causes of good and bad performance in environmental sustainability. For example the creators of the ESI claim that ESI is related to GDP/capita (adjusted for Purchasing Power Parity) such that the ESI increases linearly with wealth. While this may in a sense be a comforting picture, do the variables within the ESI allow for alternatives to the story, and if they do then what are the repercussions for those producing such indices for broad consumption amongst the policy makers, mangers, the press, etc.? The latter point is especially important given the appetite for such indices amongst non-specialists, and for all their weaknesses the ESI and other such aggregated indices will not go away. (C) 2007 Elsevier Ltd. All rights reserved.

Bt-cotton boosts the gross margin of small-scale cotton producers in South Africa

This paper explores some of the issues involved in the Genetic Modification (GM) debate by focusing on one crop that has been modified for pest resistance, cotton (Gossypium hirsutum), and commercially released to small-scale farmers in the Makhathini Flats, KwaZulu Natal, the Republic of South Africa. This was the first commercial release of a GM variety (Bt-cotton) in Sub-Saharan Africa, and thus provides valuable and timely insights into some of the potential advantages and disadvantages of the technology for small-scale farmers in Africa. Even though there are wider concerns regarding the vulnerability of small-scale farmers in the area, the survey results suggest that Bt-cotton generated higher yields and gross margins than non-Bt-cotton. In addition, Bt-cotton significantly reduced the use of pesticide with consequent potential benefits to human health and the environment.

Hydraulic modeling of runoff over a rough surface under partial inundation

This study presents a numerical method to derive the Darcy- Weisbach friction coefficient for overland flow under partial inundation of surface roughness. To better account for the variable influence of roughness with varying levels of emergence, we model the flow over a network which evolves as the free surface rises. This network is constructed using a height numerical map, based on surface roughness data, and a discrete geometry skeletonization algorithm. By applying a hydraulic model to the flows through this network, local heads, velocities, and Froude and Reynolds numbers over the surface can be estimated. These quantities enable us to analyze the flow and ultimately to derive a bulk friction factor for flow over the entire surface which takes into account local variations in flow quantities. Results demonstrate that although the flow is laminar, head losses are chiefly inertial because of local flow disturbances. The results also emphasize that for conditions of partial inundation, flow resistance varies nonmonotonically but does generally increase with progressive roughness inundation.

Scale-invariant moving finite elements for nonlinear partial differential equations in two dimensions

A scale-invariant moving finite element method is proposed for the adaptive solution of nonlinear partial differential equations. The mesh movement is based on a finite element discretisation of a scale-invariant conservation principle incorporating a monitor function, while the time discretisation of the resulting system of ordinary differential equations is carried out using a scale-invariant time-stepping which yields uniform local accuracy in time. The accuracy and reliability of the algorithm are successfully tested against exact self-similar solutions where available, and otherwise against a state-of-the-art h-refinement scheme for solutions of a two-dimensional porous medium equation problem with a moving boundary. The monitor functions used are the dependent variable and a monitor related to the surface area of the solution manifold. (c) 2005 IMACS. Published by Elsevier B.V. All rights reserved.

The income requirements of marine protected areas

Given the growing impact of human activities on the sea, managers are increasingly turning to marine protected areas (MPAs) to protect marine habitats and species. Many MPAs have been unsuccessful, however, and lack of income has been identified as a primary reason for failure. In this study, data from a global survey of 79 MPAs in 36 countries were analysed and attempts made to construct predictive models to determine the income requirements of any given MPA. Statistical tests were used to uncover possible patterns and relationships in the data, with two basic approaches. In the first of these, an attempt was made to build an explanatory "bottom-up" model of the cost structures that might be required to pursue various management activities. This proved difficult in practice owing to the very broad range of applicable data, spanning many orders of magnitude. In the second approach, a "top-down" regression model was constructed using logarithms of the base data, in order to address the breadth of the data ranges. This approach suggested that MPA size and visitor numbers together explained 46% of the minimum income requirements (P < 0.001), with area being the slightly more influential factor. The significance of area to income requirements was of little surprise, given its profile in the literature. However, the relationship between visitors and income requirements might go some way to explaining why northern hemisphere MPAs with apparently high incomes still claim to be under-funded. The relationship between running costs and visitor numbers has important implications not only in determining a realistic level of funding for MPAs, but also in assessing from where funding might be obtained. Since a substantial proportion of the income of many MPAs appears to be utilized for amenity purposes, a case may be made for funds to be provided from the typically better resourced government social and educational budgets as well as environmental budgets. Similarly visitor fees, already an important source of funding for some MPAs, might have a broader role to play in how MPAs are financed in the future. (C) 2007 Elsevier Ltd. All rights reserved.

Inequality and GM crops: a case study of Bt cotton in India

Critics of genetically modified (GM) crops often contend that their introduction enhances the gap between rich and poor farmers, as the former group are in the best position to afford the expensive seed as well as provide other inputs such as fertilizer and irrigation. The research reported in this paper explores this issue with regard to Bt cotton (cotton with the endotoxtin gene from Bacillus thuringiensis conferring resistance to some insect pests) in Jalgaon, Maharashtra State, India, spanning the 2002 and 2003 seasons. Questionnaire–based survey results from 63 non–adopting and 94 adopting households of Bt cotton were analyzed, spanning 137 Bt cotton plots and 95 non–Bt cotton plots of both Bt adopters and non–adopters. For these households, cotton income accounted for 85 to 88% of total household income, and is thus of vital importance. Results suggest that in 2003 Bt adopting households have significantly more income from cotton than do non–adopting households (Rp 66,872 versus Rp 46,351) but inequality in cotton income, measured with the Gini coefficient (G), was greater amongst non–adopters than adopters. While Bt adopters had greater acreage of cotton in 2003 (9.92 acres versus 7.42 for non–adopters), the respective values of G were comparable. The main reason for the lessening of inequality amongst adopters would appear to be the consistency in the performance of Bt cotton along with the preferred non–Bt cultivar of Bt adopters—Bunny. Taking gross margin as the basis for comparison, Bt plots had 2.5 times the gross margin of non–Bt plots of non–adopters, while the advantage of Bt plots over non–Bt plots of adopters was 1.6 times. Measured in terms of the Gini coefficient of gross margin/acre it was apparent that inequality was lessened with the adoption of Bunny (G = 0.47) and Bt (G = 0.3) relative to all other non–Bt plots (G = 0.63). Hence the issue of equality needs to be seen both in terms of differences between adopters and non–adopters as well as within each of the groups.