Risk Minimizing Option Pricing for a Class of Exotic Options in a Markov-Modulated Market

We address risk minimizing option pricing in a regime switching market where the floating interest rate depends on a finite state Markov process. The growth rate and the volatility of the stock also depend on the Markov process. Using the minimal martingale measure, we show that the locally risk minimizing prices for certain exotic options satisfy a system of Black-Scholes partial differential equations with appropriate boundary conditions. We find the corresponding hedging strategies and the residual risk. We develop suitable numerical methods to compute option prices.

Potential and economics of forestry options for carbon sequestration in India

There is a need to understand the carbon (C) sequestration potential of the forestry option and its financial implications for each country.In India the C emissions from deforestation are estimated to be nearly offset by C sequestration in forests under succession and tree plantations. India has nearly succeeded in stabilizing the area under forests and has adequate forest conservation strategies. Biomass demands for softwood, hardwood and firewood are estimated to double or treble by the year 2020. A set of forestry options were developed to meet the projected biomass needs, and keeping in mind the features of land categories available, three scenarios were developed: potential; demand-driven; and programme-driven scenarios. Adoption of the demand-driven scenario, targeted at meeting the projected biomass needs, is estimated to sequester 78 Mt of C annually after accounting for all emissions resulting from clearfelling and end use of biomass. The demand-driven scenario is estimated to offset 50% of national C emission at 1990 level. The cost per t of C sequestered for forestry options is lower than the energy options considered. The annual investment required for implementing the demand-driven scenario is estimated to be US$ 2.1 billion for six years and is shown to be feasible. Among forestry options, the ranking based on investment cost per t of C sequestered from least cost to highest cost is; natural regeneration-agro-forestry-enhanced natural regeneration (< US$ 2.5/t C)-timber-community-softwood forestry (US$ 3.3 to 7.3 per t of C).

Macro-economic analysis of forestry options on carbon sequestration in India

The forestry sector provides a number of climate change mitigation options. Apart from this ecological benefit, it has significant social and economic relevance. Implementation of forestry options requires large investments and sustained long-term planning. Thus there is a need for a detailed analysis of forestry options to understand their implications on stock and flow of carbon, required investments, value of forest wealth, contribution to GNP and livelihood, demand management, employment and foreign trade. There is a need to evaluate the additional spending on forestry by analysing the environmental (particularly carbon abatement), social and economic benefits. The biomass needs for India are expected to increase by two to three times by 2020. Depending upon the forest types, ownership patterns and land use patterns, feasible forestry options are identified. It is found among many supply options to be feasible to meet the 'demand based needs' with a mix of management options, species choices and organisational set up. A comparative static framework is used to analyze the macro-economic impacts. Forestry accounts for 1.84% of GNP in India. It is characterized by significant forward industrial linkages and least backward linkage. Forestry generates about 36 million person years of employment annually. India imports Rs. 15 billion worth of forest based materials annually. Implementation of the demand based forestry options can lead to a number of ecological, economic and institutional changes. The notable ones are: enhancement of C stock from 9578 to 17 094 Mt and a net annual C-sequestration from 73 to 149 Mt after accounting for all emissions; a trebling of the output of forestry sector from Rs. 49 billion to Rs. 146 billion annually; an increase in GDP contribution of forestry from Rs. 32 billion to Rs. 105 billion over a period of 35 years; an increase in annual employment level by 23 million person years, emergence of forestry as a net contributor of foreign exchange through trading of forestry products; and an increase in economic value of forest capital stock by Rs. 7260 billion with a cost benefit analysis showing forestry as a profitable option. Implementation of forestry options calls for an understanding of current forest policies and barriers which are analyzed and a number of policy options are suggested. (C) 1997 Elsevier Science B.V.

Issues and options related to management of Silver Springs rhesus macaques

Management options for the Silver Springs free-ranging rhesus macaque population range from removal to active maintenance of the population in situ. Selection of a management option is dependent upon which issues are perceived to be true problems. Management options are presented along with their effectiveness in dealing with issues previously described.(31 page document)