A climate change risk analysis for world ecosystems

We quantify the risks of climate-induced changes in key ecosystem processes during the 21st century by forcing a dynamic global vegetation model with multiple scenarios from 16 climate models and mapping the proportions of model runs showing forest/nonforest shifts or exceedance of natural variability in wildfire frequency and freshwater supply. Our analysis does not assign probabilities to scenarios or weights to models. Instead, we consider distribution of outcomes within three sets of model runs grouped by the amount of global warming they simulate: <2°C (including simulations in which atmospheric composition is held constant, i.e., in which the only climate change is due to greenhouse gases already emitted), 2–3°C, and >3°C. High risk of forest loss is shown for Eurasia, eastern China, Canada, Central America, and Amazonia, with forest extensions into the Arctic and semiarid savannas; more frequent wildfire in Amazonia, the far north, and many semiarid regions; more runoff north of 50°N and in tropical Africa and northwestern South America; and less runoff in West Africa, Central America, southern Europe, and the eastern U.S. Substantially larger areas are affected for global warming >3°C than for <2°C; some features appear only at higher warming levels. A land carbon sink of ≈1 Pg of C per yr is simulated for the late 20th century, but for >3°C this sink converts to a carbon source during the 21st century (implying a positive climate feedback) in 44% of cases. The risks continue increasing over the following 200 years, even with atmospheric composition held constant.

Green noise or green value? Measuring the effects of environmental certification on office values

This study investigates the price effects of environmental certification on commercial real estate assets. It is argued that there are likely to be three main drivers of price differences between certified and noncertified buildings. These are additional occupier benefits, lower holding costs for investors and a lower risk premium. Drawing upon the CoStar database of U.S. commercial real estate assets, hedonic regression analysis is used to measure the effect of certification on both rent and price. The results suggest that, compared to buildings in the same submarkets, eco-certified buildings have both a rental and sale price premium.

Real estate investment in global financial centers: risk, return and contagion

Global financial activity is heavily concentrated in a small number of world cities –international financial centers. The office markets in those cities receive significant flows of investment capital. The growing specialization of activity in IFCs and innovations in real estate investment vehicles lock developer, occupier, investment, and finance markets together, creating common patterns of movement and transmitting shocks from one office market throughout the system. International real estate investment strategies that fail to recognize this common source of volatility and risk may fail to deliver the diversification benefits sought.

Impact of earthworms on trace element solubility in contaminated mine soils amended with green waste compost

The common practice of remediating metal contaminated mine soils with compost can reduce metal mobility and promote revegetation, but the effect of introduced or colonising earthworms on metal solubility is largely unknown. We amended soils from an As/Cu (1150 mgAs kg−1 and 362 mgCu kg−1) and Pb/Zn mine (4550 mgPb kg−1 and 908 mgZn kg−1) with 0, 5, 10, 15 and 20% compost and then introduced Lumbricus terrestris. Porewater was sampled and soil extracted with water to determine trace element solubility, pH and soluble organic carbon. Compost reduced Cu, Pb and Zn, but increased As solubility. Earthworms decreased water soluble Cu and As but increased Pb and Zn in porewater. The effect of the earthworms decreased with increasing compost amendment. The impact of the compost and the earthworms on metal solubility is explained by their effect on pH and soluble organic carbon and the environmental chemistry of each element.

Diversification when it hurts? The joint distributions of real estate and equity markets

Much of the literature on the construction of mixed asset portfolios and the case for property as a risk diversifier rests on correlations measured over the whole of a given time series. Recent developments in finance, however, focuses on dependence in the tails of the distribution. Does property offer diversification from equity markets when it is most needed - when equity returns are poor. The paper uses an empirical copula approach to test tail dependence between property and equity for the UK and for a global portfolio. Results show strong tail dependence: in the UK, the dependence in the lower tail is stronger than in the upper tail, casting doubt on the defensive properties of real estate stocks.

Back from beyond bid-ask spread: estimating liquidity in international markets

Research on the topic of liquidity has greatly benefited from the improved availability of data. Researchers have addressed questions regarding the factors that influence bid-ask spreads and the relationship between spreads and risk, return and liquidity. Intra-day data have been used to measure the effective spread and researchers have been able to refine the concepts of liquidity to include the price impact of transactions on a trade-by-trade analysis. The growth in the creation of tax-transparent securities has greatly enhanced the visibility of securitized real estate, and has naturally led to the question of whether the increased visibility of real estate has caused market liquidity to change. Although the growth in the public market for securitized real estate has occurred in international markets, it has not been accompanied by universal publication of transaction data. Therefore this paper develops an aggregate daily data-based test for liquidity and applies the test to US data in order to check for consistency with the results of prior intra-day analysis. If the two approaches produce similar results, we can apply the same technique to markets in which less detailed data are available and offer conclusions on the liquidity of a wider set of markets.

A value chain approach to animal diseases risk management: technical foundations and practical framework for field application

Classical risk assessment approaches for animal diseases are influenced by the probability of release, exposure and consequences of a hazard affecting a livestock population. Once a pathogen enters into domestic livestock, potential risks of exposure and infection both to animals and people extend through a chain of economic activities related to producing, buying and selling of animals and products. Therefore, in order to understand economic drivers of animal diseases in different ecosystems and to come up with effective and efficient measures to manage disease risks from a country or region, the entire value chain and related markets for animal and product needs to be analysed to come out with practical and cost effective risk management options agreed by actors and players on those value chains. Value chain analysis enriches disease risk assessment providing a framework for interdisciplinary collaboration, which seems to be in increasing demand for problems concerning infectious livestock diseases. The best way to achieve this is to ensure that veterinary epidemiologists and social scientists work together throughout the process at all levels.

Flight to quality? An investigation of the attributes of sold properties in hot and cold markets

This paper uses sales transaction data in order to examine whether flight from risk phenomena took place in the US office property investment market during the financial crisis of 2007-2009. The effect of the crisis on the pricing of property quality attributes, mainly summarized by the class category of each building, is investigated. In addition, the paper examines how turnover levels were affected by the market downturn and whether there were significant variations between different real estate quality types. The results of the hedonic regression models suggest that the price spread between Class, A, B and C grew significantly during the downturn. We also find that property attributes such as size, height and age are priced significantly different in ‘hot’ and ‘cold’ markets.

Towards an integrated script for risk and value management: insights from the dramaturgical metaphor

It is contended that the current conceptual distinction between risk management and value management is unsustainable. The origins of the two traditions are reviewed and critiqued from a postmodernist perspective. It is concluded that they differ primarily in terms of their rhetoric, rather than their substantive content. Insights into the current practice of risk and value management are provided by considering their enactment in terms of ‘performance’. The scripts for such performances are seen to be provided by the accepted methodologies which determine the language to be used and the roles to be acted out. A coherent integrated script for risk and value management can be provided by the methodology known as strategic choice, which replaces the language of ‘risk’ and ‘value’ with that of ‘uncertainty’. The benefits of adopting this alternative script are illustrated through six case studies.

Risk management and the corporate real estate portfolio

In a global business economy, firms have a broad range of corporate real estate needs. During the past decade, multiple strategies and tactics have emerged in the corporate real estate community for meeting those needs. We propose here a framework for analysing and prioritising the various types of risk inherent in corporate real estate decisions. From a business strategy perspective, corporate real estate must serve needs beyond the simple one of shelter for the workforce and production process. Certain uses are strategic in that they allow access to externalities, embody the business strategy, or provide entrée to new markets. Other uses may be tactical, in that they arise from business activities of relatively short duration or provide an opportunity to pre-empt competitors. Still other corporate real estate uses can be considered “core” to the existence of the business enterprise. These might be special use properties or may be generic buildings that have become embodiments of the organisation’s culture. We argue that a multi-dimensional matrix approach organised around three broad themes and nine sub-categories allow the decision-maker to organise and evaluate choices with an acceptable degree of rigor and thoroughness. The three broad themes are Use (divided into Core, Cyclical or Casual) – Asset Type (which can be Strategic, Specialty or Generic) and Market Environment (which ranges from Mature Domestic to Emerging Economy). Proper understanding of each of these groupings brings critical variables to the fore and allows for efficient resource allocation and enhanced risk management.

Governing the clean development mechanism: global rhetoric versus local realities in carbon sequestration projects

Global agreements have proliferated in the past ten years. One of these is the Kyoto Protocol, which contains provisions for emissions reductions by trading carbon through the Clean Development Mechanism (CDM). The CDM is a market-based instrument that allows companies in Annex I countries to offset their greenhouse gas emissions through energy and tree offset projects in the global South. I set out to examine the governance challenges posed by the institutional design of carbon sequestration projects under the CDM. I examine three global narratives associated with the design of CDM forest projects, specifically North – South knowledge politics, green developmentalism, and community participation, and subsequently assess how these narratives match with local practices in two projects in Latin America. Findings suggest that governance problems are operating at multiple levels and that the rhetoric of global carbon actors often asserts these schemes in one light, while the rhetoric of those who are immediately involved locally may be different. I also stress the alarmist’s discourse that blames local people for the problems of environmental change. The case studies illustrate the need for vertical communication and interaction and nested governance arrangements as well as horizontal arrangements. I conclude that the global framing of forests as offsets requires better integration of local relationships to forests and their management and more effective institutions at multiple levels to link the very local to the very large scale when dealing with carbon sequestration in the CDM.