Reviewing the EU ETS review? Report of the CEPS TAsk Force on "Does the ETS market produce the 'right' price signal"? CEPS Task Force Report, 12 November 2012

Drawing on discussions within a CEPS Task Force on the revised EU emissions trading system, this report provides a comprehensive assessment of the pros and cons of the various measures put forward by different stakeholders to address the level and stability of the price of carbon in the EU. It argues that the European Commission, the member states, the European Parliament and other stakeholders need to give serious consideration to introducing some kind of ‘dynamic’ adjustment provision to address the relatively inelastic supply. The report also suggests that there is a need to improve communication of market-sensitive information, for example by leaving the management of the ETS to a specialised body.

Institutional sustainability: at what price? UNDP and the new cost-sharing model in Brazil

By the turn of the twenty-first century, UNDP had embraced a new form of funding based on ‘cost-sharing’, with this source accounting for 51 per cent of the organisation’s total expenditure worldwide in 2000. Unlike the traditional donor - recipient relationship so common with development projects, the new cost-sharing modality has created a situation whereby UNDP local offices become ‘subcontractors’ and agencies of the recipient countries become ‘clients’. This paper explores this transition in the context of Brazil, focusing on how the new modality may have compromised UNDP’s ability to promote Sustainable Human Development, as established in its mandate. The great enthusiasm for this modality within the UN system and its potential application to other developing countries increase the importance of a systematic assessment of its impact and developmental consequences.

Risk and price in the bidding process of contractors

Formal and analytical risk models prescribe how risk should be incorporated in construction bids. However, the actual process of how contractors and their clients negotiate and agree on price is complex, and not clearly articulated in the literature. Using participant observation, the entire tender process was shadowed in two leading UK construction firms. This was compared to propositions in analytical models and significant differences were found. 670 hours of work observed in both firms revealed three stages of the bidding process. Bidding activities were categorized and their extent estimated as deskwork (32%), calculations (19%), meetings (14%), documents (13%), off-days (11%), conversations (7%), correspondence (3%) and travel (1%). Risk allowances of 1-2% were priced in some bids and three tiers of risk apportionment in bids were identified. However, priced risks may sometimes be excluded from the final bidding price to enhance competitiveness. Thus, although risk apportionment affects a contractor’s pricing strategy, other complex, microeconomic factors also affect price. Instead of pricing in contingencies, risk was priced mostly through contractual rather than price mechanisms, to reflect commercial imperatives. The findings explain why some assumptions underpinning analytical models may not be sustainable in practice and why what actually happens in practice is important for those who seek to model the pricing of construction bids.

Threshold effects in price transmission: The case of Brazilian wheat, maize, and soya prices

Recent studies into price transmission have recognized the important role played by transport and transaction costs. Threshold models are one approach to accommodate such costs. We develop a generalized Threshold Error Correction Model to test for the presence and form of threshold behavior in price transmission that is symmetric around equilibrium. We use monthly wheat, maize, and soya prices from the United States, Argentina, and Brazil to demonstrate this model. Classical estimation of these generalized models can present challenges but Bayesian techniques avoid many of these problems. Evidence for thresholds is found in three of the five commodity price pairs investigated.

Temperature sensitivity of the low-moisture-content limit to negative seed longevity-moisture content relationships in hermetic storage

Background and Aims The negative logarithmic relationship between orthodox seed longevity and moisture content in hermetic storage is subject to a low-moisture-content limit (m(c)), but is m(c) affected by temperature? Methods Red clover (Trifolium pratense) and alfalfa (Medicago sativa) seeds were stored hermetically at 12 moisture contents (2-15 %) and five temperatures (-20, 30, 40, 50 and 65 degrees C) for up to 14.5 years, and loss in viability was estimated. Key Results Viability did not change during 14.5 years hermetic storage at -20 degrees C with moisture contents from 2.2 to 14.9 % for red clover, or 2.0 to 12.0 % for alfalfa. Negative logarithmic relationships between longevity and moisture contents > m(c) were detected at 30-65 degrees C, with discontinuities at low moisture contents; m(c) varied between 4.0 and 5.4 % (red clover) or 4.2 and 5.5 % (alfalfa), depending upon storage temperature. Within the ranges investigated, a reduction in moisture content below m(c) at any one temperature had no effect on longevity. Estimates of m(c) were greater the cooler the temperature, the relationship (P < 0.01) being curvilinear. Above m(c), the estimates of C-H and C-Q (i.e. the temperature term of the seed viability equation) did not differ (P > 0.10) between species, whereas those of K-E and C-W did (P < 0.001). Conclusions The low-moisture-content limit to negative logarithmic relationships between seed longevity and moisture content in hermetic storage increased the cooler the storage temperature, by approx. 1.5 % over 35 degrees C (4.0-4.2 % at 65 degrees C to 5.4-5.5 % at 30-40 degrees C) in these species. Further reduction in moisture content was not damaging. The variation in m(c) implies greater sensitivity of longevity to temperature above, compared with below, m(c). This was confirmed (P < 0.005).