Sea level rise and South Florida coastal forests

Coastal ecosystems lie at the forefront of sea level rise. We posit that before the onset of actual inundation, sea level rise will influence the species composition of coastal hardwood hammocks and buttonwood (Conocarpus erectus L.) forests of the Everglades National Park based on tolerance to drought and salinity. Precipitation is the major water source in coastal hammocks and is stored in the soil vadose zone, but vadose water will diminish with the rising water table as a consequence of sea level rise, thereby subjecting plants to salt water stress. A model is used to demonstrate that the constraining effect of salinity on transpiration limits the distribution of freshwater-dependent communities. Field data collected in hardwood hammocks and coastal buttonwood forests over 11 years show that halophytes have replaced glycophytes. We establish that sea level rise threatens 21 rare coastal species in Everglades National Park and estimate the relative risk to each species using basic life history and population traits. We review salinity conditions in the estuarine region over 1999–2009 and associate wide variability in the extent of the annual seawater intrusion to variation in freshwater inflows and precipitation. We also examine species composition in coastal and inland hammocks in connection with distance from the coast, depth to water table, and groundwater salinity. Though this study focuses on coastal forests and rare species of South Florida, it has implications for coastal forests threatened by saltwater intrusion across the globe.

The market value implications of pension asset allocation

Pension funds have been part of the private sector since the 1850's. Defined Benefit pension plans [DB], where a company promises to make regular contributions to investment accounts held for participating employees in order to pay a promised lifelong annuity, are significant capital markets participants, amounting to 2.3 trillion dollars in 2010 (Federal Reserve Board, 2013). In 2006, Statement of Financial Accounting Standards No.158 (SFAS 158), Employers' Accounting for Defined Benefit Pension and Other Postemployment Plans, shifted information concerning funding status and pension asset/liability composition from disclosure in the footnotes to recognition in the financial statements. I add to the literature by being the first to examine the effect of recent pension reform during the financial crisis of 2008-09. This dissertation is comprised of three related essays. In my first essay, I investigate whether investors assign different pricing multiples to the various classes of pension assets when valuing firms. The pricing multiples on all classes of assets are significantly different from each other, but only investments in bonds and equities were value-relevant during the recent financial crisis. Consistent with investors viewing pension liabilities as liabilities of the firm, the pricing multiples on pension liabilities are significantly larger than those on non-pension liabilities. The only pension costs significantly associated with firm value are actual rate of return and interest expense. In my second essay, I investigate the role of accruals in predicting future cash flows, extending the Barth et al. (2001a) model of the accrual process. Using market value of equity as a proxy for cash flows, the results of this study suggest that aggregate accounting amounts mask how the components of earnings affect investors' ability to predict future cash flows. Disaggregating pension earnings components and accruals results in an increase in predictive power. During the 2008-2009 financial crisis, however, investors placed a greater (and negative) weight on the incremental information contained in the individual components of accruals. The inferences are robust to alternative specifications of accruals. Finally, in my third essay I investigate how investors view under-funded plans. On average, investors: view deficits arising from under-funded plans as belonging to the firm; reward firms with fully or over-funded pension plans; and encourage those funds with unfunded pension plans to become funded. Investors also encourage conservative pension asset allocations to mitigate firm risk, and smaller firms are perceived as being better able to handle the risk associated with underfunded plans. During the financial crisis of 2008-2009 underfunded status had a lower negative association with market value. In all three models, there are significant differences in pre- and post- SFAS 158 periods. These results are robust to various scenarios of the timing of the financial crisis and an alternative measure of funding.