Public-private partnership investments in dry ports – Russian logistics markets and risks

The investments have always been considered as an essential backbone and so-called ‘locomotive’ for the competitive economies. However, in various countries, the state has been put under tight budget constraints for the investments in capital intensive projects. In response to this situation, the cooperation between public and private sector has grown based on public-private mechanism. The promotion of favorable arrangement for collaboration between public and private sectors for the provision of policies, services, and infrastructure in Russia can help to address the problems of dry ports development that neither municipalities nor the private sector can solve alone. Especially, the stimulation of public-private collaboration is significant under the exposure to externalities that affect the magnitude of the risks during all phases of project realization. In these circumstances, the risk in the projects also is becoming increasingly a part of joint research and risk management practice, which is viewed as a key approach, aiming to take active actions on existing global and specific factors of uncertainties. Meanwhile, a relatively little progress has been made on the inclusion of the resilience aspects into the planning process of a dry ports construction that would instruct the capacity planner, on how to mitigate the occurrence of disruptions that may lead to million dollars of losses due to the deviation of the future cash flows from the expected financial flows on the project. The current experience shows that the existing methodological base is developed fragmentary within separate steps of supply chain risk management (SCRM) processes: risk identification, risk evaluation, risk mitigation, risk monitoring and control phases. The lack of the systematic approach hinders the solution of the problem of risk management processes of dry port implementation. Therefore, management of various risks during the investments phases of dry port projects still presents a considerable challenge from the practical and theoretical points of view. In this regard, the given research became a logical continuation of fundamental research, existing in the financial models and theories (e.g., capital asset pricing model and real option theory), as well as provided a complementation for the portfolio theory. The goal of the current study is in the design of methods and models for the facilitation of dry port implementation through the mechanism of public-private partnership on the national market that implies the necessity to mitigate, first and foremost, the shortage of the investments and consequences of risks. The problem of the research was formulated on the ground of the identified contradictions. They rose as a continuation of the trade-off between the opportunities that the investors can gain from the development of terminal business in Russia (i.e. dry port implementation) and risks. As a rule, the higher the investment risk, the greater should be their expected return. However, investors have a different tolerance for the risks. That is why it would be advisable to find an optimum investment. In the given study, the optimum relates to the search for the efficient portfolio, which can provide satisfaction to the investor, depending on its degree of risk aversion. There are many theories and methods in finance, concerning investment choices. Nevertheless, the appropriateness and effectiveness of particular methods should be considered with the allowance of the specifics of the investment projects. For example, the investments in dry ports imply not only the lump sum of financial inflows, but also the long-term payback periods. As a result, capital intensity and longevity of their construction determine the necessity from investors to ensure the return on investment (profitability), along with the rapid return on investment (liquidity), without precluding the fact that the stochastic nature of the project environment is hardly described by the formula-based approach. The current theoretical base for the economic appraisals of the dry port projects more often perceives net present value (NPV) as a technique superior to other decision-making criteria. For example, the portfolio theory, which considers different risk preference of an investor and structures of utility, defines net present value as a better criterion of project appraisal than discounted payback period (DPP). Meanwhile, in business practice, the DPP is more popular. Knowing that the NPV is based on the assumptions of certainty of project life, it cannot be an accurate appraisal approach alone to determine whether or not the project should be accepted for the approval in the environment that is not without of uncertainties. In order to reflect the period or the project’s useful life that is exposed to risks due to changes in political, operational, and financial factors, the second capital budgeting criterion – discounted payback period is profoundly important, particularly for the Russian environment. Those statements represent contradictions that exist in the theory and practice of the applied science. Therefore, it would be desirable to relax the assumptions of portfolio theory and regard DPP as not fewer relevant appraisal approach for the assessment of the investment and risk measure. At the same time, the rationality of the use of both project performance criteria depends on the methods and models, with the help of which these appraisal approaches are calculated in feasibility studies. The deterministic methods cannot ensure the required precision of the results, while the stochastic models guarantee the sufficient level of the accuracy and reliability of the obtained results, providing that the risks are properly identified, evaluated, and mitigated. Otherwise, the project performance indicators may not be confirmed during the phase of project realization. For instance, the economic and political instability can result in the undoing of hard-earned gains, leading to the need for the attraction of the additional finances for the project. The sources of the alternative investments, as well as supportive mitigation strategies, can be studied during the initial phases of project development. During this period, the effectiveness of the investments undertakings can also be improved by the inclusion of the various investors, e.g. Russian Railways’ enterprises and other private companies in the dry port projects. However, the evaluation of the effectiveness of the participation of different investors in the project lack the methods and models that would permit doing the particular feasibility study, foreseeing the quantitative characteristics of risks and their mitigation strategies, which can meet the tolerance of the investors to the risks. For this reason, the research proposes a combination of Monte Carlo method, discounted cash flow technique, the theory of real options, and portfolio theory via a system dynamics simulation approach. The use of this methodology allows for comprehensive risk management process of dry port development to cover all aspects of risk identification, risk evaluation, risk mitigation, risk monitoring, and control phases. A designed system dynamics model can be recommended for the decision-makers on the dry port projects that are financed via a public-private partnership. It permits investors to make a decision appraisal based on random variables of net present value and discounted payback period, depending on different risks factors, e.g. revenue risks, land acquisition risks, traffic volume risks, construction hazards, and political risks. In this case, the statistical mean is used for the explication of the expected value of the DPP and NPV; the standard deviation is proposed as a characteristic of risks, while the elasticity coefficient is applied for rating of risks. Additionally, the risk of failure of project investments and guaranteed recoupment of capital investment can be considered with the help of the model. On the whole, the application of these modern methods of simulation creates preconditions for the controlling of the process of dry port development, i.e. making managerial changes and identifying the most stable parameters that contribute to the optimal alternative scenarios of the project realization in the uncertain environment. System dynamics model allows analyzing the interactions in the most complex mechanism of risk management process of the dry ports development and making proposals for the improvement of the effectiveness of the investments via an estimation of different risk management strategies. For the comparison and ranking of these alternatives in their order of preference to the investor, the proposed indicators of the efficiency of the investments, concerning the NPV, DPP, and coefficient of variation, can be used. Thus, rational investors, who averse to taking increased risks unless they are compensated by the commensurate increase in the expected utility of a risky prospect of dry port development, can be guided by the deduced marginal utility of investments. It is computed on the ground of the results from the system dynamics model. In conclusion, the outlined theoretical and practical implications for the management of risks, which are the key characteristics of public-private partnerships, can help analysts and planning managers in budget decision-making, substantially alleviating the effect from various risks and avoiding unnecessary cost overruns in dry port projects.

The Bogota – sabana region : the political economy behind the struggle to implement a sustainable urban development model

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Interaction between Public Transportation and Urbanization in the Mexico City Metropolitan Area: an Expansive Model Reaching its Limits

In Metropolitan Area of Mexico City, most of urban displacements happen through semi formal public transportation: small and medium capacity vehicles operated by small private enterprises, through a concession scheme. This kind of public transportation has been playing a major role in the Mexican capital. On one hand, it has been one of the conditions for urbanization to be possible. On the other hand, despite its uncountable deficiencies, public transportation has allowed for a long time the whole population to be able to move within this huge metropolis. However, that important function with regards to integration has now reached its limits in the most recent suburbs of the city, where a new mode of urbanization is taking place, based on massive production of very big social housing gated settlements. Public transportation tends to constitute here a factor of exclusion and households meet with important difficulties for their daily mobility. 

Key competences in the new ventures: a model for evaluating

This research studies from an internal view based on the Competency-Based Perspective (CBP), key organizational competencies developed for small new business. CBP is chosen in an attempt to explain the differences characterizing the closed companies from the consolidated ones. The main contribution of this paper is the definition of a set of key organizational competencies for new ventures from services and low technology based sectors. Using the classification proposed by [1] and a review of the entrepreneurship literature, the main competencies were defined and classified as: managerial, input-based, transformation-based, and output-based competencies. The proposed model for evaluating new ventures organizational competence is tested by means of Structural Equation

Which economic model for a water-efficient Europe? Report of a CEPS Task Force. CEPS Task Force Report, 27 November 2012

This CEPS Task Force Report focuses on how to improve water efficiency in Europe, notably in public supply, households, agriculture, energy and manufacturing as well as across sectors. It presents a number of recommendations on how to make better use of economic policy instruments to sustainably manage the EU’s water resources. Published in the run-up to the European Commission’s “Blueprint to Safeguard Europe’s Waters”, the report contributes to the policy deliberations in two ways. First, by assessing the viability of economic policy instruments, it addresses a major shortcoming that has so far prevented the 2000 EU Water Framework Directive (WFD) from becoming fully effective in practice: the lack of appropriate, coherent and effective instruments in (some) member states. Second, as the Task Force report is the result of an interactive process involving a variety of stakeholders, it is able to point to the key differences in interpreting and applying WFD principles that have led to a lack of policy coherence across the EU and to offer some pragmatic advice on moving forward.

An analysis of the management of a public sector project: a systems-based case study

The management of a public sector project is analysed using a model developed from systems theory. Linear responsibility analysis is used to identify the primary and key decision structure of the project and to generate quantitative data regarding differentiation and integration of the operating system, the managing system and the client/project team. The environmental context of the project is identified. Conclusions are drawn regarding the project organization structure's ability to cope with the prevailing environmental conditions. It is found that the complexity of the managing system imposed on the project was unable to achieve this and created serious deficiencies in the outcome of the project.

Key features of the IPSL ocean atmosphere model and its sensitivity to atmospheric resolution

This paper presents the major characteristics of the Institut Pierre Simon Laplace (IPSL) coupled ocean–atmosphere general circulation model. The model components and the coupling methodology are described, as well as the main characteristics of the climatology and interannual variability. The model results of the standard version used for IPCC climate projections, and for intercomparison projects like the Paleoclimate Modeling Intercomparison Project (PMIP 2) are compared to those with a higher resolution in the atmosphere. A focus on the North Atlantic and on the tropics is used to address the impact of the atmosphere resolution on processes and feedbacks. In the North Atlantic, the resolution change leads to an improved representation of the storm-tracks and the North Atlantic oscillation. The better representation of the wind structure increases the northward salt transports, the deep-water formation and the Atlantic meridional overturning circulation. In the tropics, the ocean–atmosphere dynamical coupling, or Bjerknes feedback, improves with the resolution. The amplitude of ENSO (El Niño-Southern oscillation) consequently increases, as the damping processes are left unchanged.

A design of e-procurement infrastructure model for public service sector

Procurement is one of major business operations in public service sector. The advance of information and communication technology (ICT) pushes this business operation to increase its efficiency and foster collaborations between the organization and its suppliers. This leads to a shift from the traditional procurement transactions to an e-procurement paradigm. Such change impacts on business process, information management and decision making. E-procurement involves various stakeholders who engage in activities based on different social and cultural practices. Therefore, a design of e-procurement system may involve complex situations analysis. This paper describes an approach of using the problem articulation method to support such analysis. This approach is applied to a case study from UAE.

Incorporation of water vapour transfer in the JULES Land Surface Model: implications for key soil variables and land surface fluxes

This study focuses on the mechanisms underlying water and heat transfer in upper soil layers, and their effects on soil physical prognostic variables and the individual components of the energy balance. The skill of the JULES (Joint UK Land Environment Simulator) land surface model (LSM) to simulate key soil variables, such as soil moisture content and surface temperature, and fluxes such as evaporation, is investigated. The Richards equation for soil water transfer, as used in most LSMs, was updated by incorporating isothermal and thermal water vapour transfer. The model was tested for three sites representative of semi-arid and temperate arid climates: the Jornada site (New Mexico, USA), Griffith site (Australia) and Audubon site (Arizona, USA). Water vapour flux was found to contribute significantly to the water and heat transfer in the upper soil layers. This was mainly due to isothermal vapour diffusion; thermal vapour flux also played a role at the Jornada site just after rainfall events. Inclusion of water vapour flux had an effect on the diurnal evolution of evaporation, soil moisture content and surface temperature. The incorporation of additional processes, such as water vapour flux among others, into LSMs may improve the coupling between the upper soil layers and the atmosphere, which in turn could increase the reliability of weather and climate predictions.

In Vitro Fermentation of NUTRIOSE® FB06, a wheat dextrin soluble fibre, in a continuous culture human colonic model system

Wheat dextrin soluble fibre may have metabolic and health benefits, potentially acting via mechanisms governed by the selective modulation of the human gut microbiota. Our aim was to examine the impact of wheat dextrin on the composition and metabolic activity of the gut microbiota. We used a validated in vitro three-stage continuous culture human colonic model (gut model) system comprised of vessels simulating anatomical regions of the human colon. To mimic human ingestion, 7 g of wheat dextrin (NUTRIOSE® FB06) was administered to three gut models, twice daily at 10.00 and 15.00, for a total of 18 days. Samples were collected and analysed for microbial composition and organic acid concentrations by 16S rRNA-based fluorescence in situ hybridisation and gas chromatography approaches, respectively. Wheat dextrin mediated a significant increase in total bacteria in vessels simulating the transverse and distal colon, and a significant increase in key butyrate-producing bacteria Clostridium cluster XIVa and Roseburia genus in all vessels of the gut model. The production of principal short-chain fatty acids, acetate, propionate and butyrate, which have been purported to have protective, trophic and metabolic host benefits, were increased. Specifically, wheat dextrin fermentation had a significant butyrogenic effect in all vessels of the gut model and significantly increased production of acetate (vessels 2 and 3) and propionate (vessel 3), simulating the transverse and distal regions of the human colon, respectively. In conclusion, wheat dextrin NUTRIOSE® FB06 is selectively fermented in vitro by Clostridium cluster XIVa and Roseburia genus and beneficially alters the metabolic profile of the human gut microbiota.

Development of a food-exchange model to replace saturated fat with MUFAS and n-6 PUFAS in adults at moderate cardiovascular risk

The recommendation to reduce saturated fatty acid (SFA) consumption to ≤10% of total energy (%TE) is a key public health target aimed at lowering cardiovascular disease (CVD) risk. Replacement of SFA with unsaturated fats may provide greater benefit than replacement with carbohydrates, yet the optimal type of fat is unclear. The aim was to develop a flexible food-exchange model to investigate the effects of substituting SFAs with monounsaturated fatty acids (MUFAs) or n-6 (ω-6) polyunsaturated fatty acids (PUFAs) on CVD risk factors. In this parallel study, UK adults aged 21-60 y with moderate CVD risk (50% greater than the population mean) were identified using a risk assessment tool (n = 195; 56% females). Three 16-wk isoenergetic diets of specific fatty acid (FA) composition (%TE SFA:%TE MUFA:%TE n-6 PUFA) were designed using spreads, oils, dairy products, and snacks as follows: 1) SFA-rich diet (17:11:4; n = 65); 2) MUFA-rich diet (9:19:4; n = 64); and 3) n-6 PUFA-rich diet (9:13:10; n = 66). Each diet provided 36%TE total fat. Dietary targets were broadly met for all intervention groups, reaching 17.6 ± 0.4%TE SFA, 18.5 ± 0.3%TE MUFA, and 10.4 ± 0.3%TE n-6 PUFA in the respective diets, with significant overall diet effects for the changes in SFA, MUFA, and n-6 PUFA between groups (P < 0.001). There were no differences in the changes of total fat, protein, carbohydrate, and alcohol intake or anthropometric measures between groups. Plasma phospholipid FA composition showed changes from baseline in the proportions of total SFA, MUFA, and n-6 PUFA for each diet group, with significant overall diet effects for total SFA and MUFA between groups (P < 0.001). In conclusion, successful implementation of the food-exchange model broadly achieved the dietary target intakes for the exchange of SFA with MUFA or n-6 PUFA with minimal disruption to the overall diet in a free-living population. This trial was registered at clinicaltrials.gov as NCT01478958.

Key conclusions of the first international urban land surface model comparison project

he first international urban land surface model comparison was designed to identify three aspects of the urban surface-atmosphere interactions: (1) the dominant physical processes, (2) the level of complexity required to model these, and 3) the parameter requirements for such a model. Offline simulations from 32 land surface schemes, with varying complexity, contributed to the comparison. Model results were analysed within a framework of physical classifications and over four stages. The results show that the following are important urban processes; (i) multiple reflections of shortwave radiation within street canyons, (ii) reduction in the amount of visible sky from within the canyon, which impacts on the net long-wave radiation, iii) the contrast in surface temperatures between building roofs and street canyons, and (iv) evaporation from vegetation. Models that use an appropriate bulk albedo based on multiple solar reflections, represent building roof surfaces separately from street canyons and include a representation of vegetation demonstrate more skill, but require parameter information on the albedo, height of the buildings relative to the width of the streets (height to width ratio), the fraction of building roofs compared to street canyons from a plan view (plan area fraction) and the fraction of the surface that is vegetated. These results, whilst based on a single site and less than 18 months of data, have implications for the future design of urban land surface models, the data that need to be measured in urban observational campaigns, and what needs to be included in initiatives for regional and global parameter databases.