Essays in International Finance and Macroeconomics

Thesis (Ph.D.)--University of Washington, 2016-08

Central banking and inequalities: taking off the blinders

What is the relation between monetary policy and inequalities in income and wealth? This question has received insufficient attention, especially in light of the unconventional policies introduced since the 2008 financial crisis. The article analyzes three ways in which the concern central banks show for inequalities in their official statements remains incomplete and underdeveloped. First, central banks tend to care about inequality for instrumental reasons only. When they do assign intrinsic value to containing inequalities, they shy away from trade-offs with the standard objectives of monetary policy that such a position entails. Second, central banks play down the causal impact monetary policy has on inequalities. When they do acknowledge it, they defend their actions by claiming that it is an unintended side effect, that it is temporary, and/or that any alternative policy would fare even worse. The article appeals to the doctrine of double effect to criticize these arguments. Third, even if one accepts that inequalities should be contained and that today’s monetary policies exacerbate them, is it both desirable and feasible to make containing inequalities part of the mandate of central banks? The article analyzes and rejects three attempts on the part of central banks to answer this question negatively.

Convex Optimization Algorithms and Statistical Bounds for Learning Structured Models

Thesis (Ph.D.)--University of Washington, 2016-08

Hydrological and economic effects of oil palm cultivation in Indonesian peatlands

Oil palm has increasingly been established on peatlands throughout Indonesia. One of the concerns is that the drainage required for cultivating oil palm in peatlands leads to soil subsidence, potentially increasing future flood risks. This study analyzes the hydrological and economic effects of oil palm production in a peat landscape in Central Kalimantan. We examine two land use scenarios, one involving conversion of the complete landscape including a large peat area to oil palm plantations, and another involving mixed land use including oil palm plantations, jelutung (jungle rubber; (Dyera spp.) plantations, and natural forest. The hydrological effect was analyzed through flood risk modeling using a high-resolution digital elevation model. For the economic analysis, we analyzed four ecosystem services: oil palm production, jelutung production, carbon sequestration, and orangutan habitat. This study shows that after 100 years, in the oil palm scenario, about 67% of peat in the study area will be subject to regular flooding. The flood-prone area will be unsuitable for oil palm and other crops requiring drained soils. The oil palm scenario is the most profitable only in the short term and when the externalities of oil palm production, i.e., the costs of CO2 emissions, are not considered. In the examined scenarios, the social costs of carbon emissions exceed the private benefits from oil palm plantations in peat. Depending upon the local hydrology, income from jelutung, which can sustainably be grown in undrained conditions and does not lead to soil subsidence, outweighs that from oil palm after several decades. These findings illustrate the trade-offs faced at present in Indonesian peatland management and point to economic advantages of an approach that involves expansion of oil palm on mineral lands while conserving natural peat forests and using degraded peat for crops that do not require drainage.

Anticipating future risk in social-ecological systems using fuzzy cognitive mapping: the case of wildfire in the Chiquitania, Bolivia

Understanding complex social-ecological systems, and anticipating how they may respond to rapid change, requires an approach that incorporates environmental, social, economic, and policy factors, usually in a context of fragmented data availability. We employed fuzzy cognitive mapping (FCM) to integrate these factors in the assessment of future wildfire risk in the Chiquitania region, Bolivia. In this region, dealing with wildfires is becoming increasingly challenging because of reinforcing feedbacks between multiple drivers. We conducted semistructured interviews and constructed different FCMs in focus groups to understand the regional dynamics of wildfire from diverse perspectives. We used FCM modelling to evaluate possible adaptation scenarios in the context of future drier climatic conditions. Scenarios also considered possible failure to respond in time to the emergent risk. This approach proved of great potential to support decision making for risk management. It helped identify key forcing variables and generate insights into potential risks and trade-offs of different strategies. The “Hands-off” scenario resulted in amplified impacts driven by intensifying trends, affecting particularly the agricultural production under drought conditions. The “Fire management” scenario, which adopted a bottom-up approach to improve controlled burning, showed less trade-offs between wildfire risk reduction and production compared with the “Fire suppression” scenario. Findings highlighted the importance of considering strategies that involve all actors who use fire, and the need to nest these strategies for a more systemic approach to manage wildfire risk. The FCM model could be used as a decision-support tool and serve as a “boundary object” to facilitate collaboration and integration of different perceptions of fire in the region. This approach also has the potential to inform decisions in other dynamic frontier landscapes around the world that are facing increased risk of large wildfires.

Scale and ecosystem services: how do observation, management, and analysis shift with scale—lessons from Québec

Ecosystem service assessment and management are shaped by the scale at which they are conducted; however, there has been little systematic investigation of the scales associated with ecosystem service processes, such as production, benefit distribution, and management. We examined how social-ecological spatial scale impacts ecosystem service assessment by comparing how ecosystem service distribution, trade-offs, and bundles shift across spatial scales. We used a case study in Québec, Canada, to analyze the scales of production, consumption, and management of 12 ecosystem services and to analyze how interactions among 7 of these ecosystem services change across 3 scales of observation (1, 9, and 75 km²). We found that ecosystem service patterns and interactions were relatively robust across scales of observation; however, we identified 4 different types of scale mismatches among ecosystem service production, consumption, and management. Based on this analysis, we have proposed 4 aspects of scale that ecosystem service assessments should consider.

Discrete-event Simulation and Optimization to Improve the Performance of a Healthcare System

Thesis (Ph.D.)--University of Washington, 2016-08

Applying a synthetic approach to the resilience of Finnish reindeer herding as a changing livelihood

Reindeer herding is an emblematic livelihood for Northern Finland, culturally important for local people and valuable in tourism marketing. We examine the livelihood resilience of Finnish reindeer herding by narrowing the focus of general resilience on social-ecological systems (SESs) to a specific livelihood while also acknowledging wider contexts in which reindeer herding is embedded. The questions for specified resilience can be combined with the applied DPSIR approach (Drivers; Pressures: resilience to what; State: resilience of what; Impacts: resilience for whom; Responses: resilience by whom and how). This paper is based on a synthesis of the authors’ extensive anthropological fieldwork on reindeer herding and other land uses in Northern Finland. Our objective is to synthesize various opportunities and challenges that underpin the resilience of reindeer herding as a viable livelihood. The DPSIR approach, applied here as a three step procedure, helps focus the analysis on different components of SES and their dynamic interactions. First, various land use-related DPSIR factors and their relations (synergies and trade-offs) to reindeer herding are mapped. Second, detailed DPSIR factors underpinning the resilience of reindeer herding are identified. Third, examples of interrelations between DPSIR factors are explored, revealing the key dynamics between Pressures, State, Impacts, and Responses related to the livelihood resilience of reindeer herding. In the Discussion section, we recommend that future applications of the DPSIR approach in examining livelihood resilience should (1) address cumulative pressures, (2) consider the state dimension as more tuned toward the social side of SES, (3) assess both the negative and positive impacts of environmental change on the examined livelihood by a combination of science led top-down and participatory bottom-up approaches, and (4) examine and propose governance solutions as well as local adaptations by reindeer herders as equally relevant responses to enhance livelihood resilience.

Le succès reproducteur au début de la vie, la longévité et le succès reproducteur tardif chez la femelle de la chèvre de montagne

La théorie biodémographique liée à l’âge prédit un compromis entre l’allocation reproductrice au début de la vie et la reproduction tardive, la survie, ou ces deux composantes de la valeur adaptative à la fois. Actuellement, la notion de compromis a été démontrée par plusieurs études en milieu naturel. Par contre, l’effet des conditions environnementales et de la qualité des individus a rarement été étudié. Grâce aux données longitudinales récoltées dans la population de chèvres de montagne (Oreamnos americanus) de Caw Ridge, Alberta, nous avons pu examiner l’influence de l’âge à la première reproduction (APR) et du succès reproducteur au début de la vie (SRD) sur la longévité et sur le succès reproducteur tardif, en tenant compte des conditions environnementales natales et de la qualité des individus. Contrairement à nos prédictions, nous n’avons pas détecté la présence d’un compromis entre l’allocation reproductrice au début de la vie et la performance tardive dans cette population. Au contraire, l’APR et le SRD avaient des effets directs et faiblement positifs sur le succès reproducteur tardif. La densité de population à la naissance d’une femelle a fortement réduit le succès reproducteur tardif de manière directe. Elle l’affectait également de manière indirecte par son effet sur l’APR et le SRD. La densité était le seul facteur déterminant de la longévité, par un effet direct et fortement négatif. Tel que démontré dans des études précédentes sur la même population, les femelles de bonne qualité avaient un SRD élevé par rapport aux femelles de mauvaise qualité. Ces résultats fournissent une vision intégrée des compromis au début et à la fin de la vie, en soulignant l’importance de tenir compte des conditions environnementales, qui pourraient engendrer des implications à long terme sur la dynamique des populations.

Coordination in humanitarian logistics through clusters

Purpose – In the field of humanitarianism, cluster thinking has been suggested as a solution to the lack of coordinated disaster response. Clusters for diverse functions, including sheltering, logistics and water and sanitation, can be viewed as an effort to achieve functional coordination. The purpose of this paper is to contribute to a greater understanding of the potential of cluster concepts using supply chain coordination and inter‐cluster coordination. The focus is on the conceptual level rather than on specific means of coordination. Design/methodology/approach – The cluster concept in humanitarian relief, along with some key empirical issues, is based on a case study. The concept is then compared to the literature on clusters and coordination in order to develop a theoretical framework with propositions on the tradeoffs between different types of coordination. Findings – The results provide important reflections on one of the major trends in contemporary development of humanitarian logistics. This paper shows that there is a tradeoff between different types of coordination, with horizontal coordination inside cluster drawing attention away from important issues of the supply chain as well as the need to coordinate among the clusters. Research limitations/implications – There is a need for more in‐depth case studies of experiences with clusters in various operations. Various perspectives should be taken into account, including the field, responding agencies, beneficiaries, donors, military and commercial service providers, both during and between disasters. Practical implications – The paper presents the tradeoffs between different types of coordination, in which basic aims such as standardisation through functional coordination, must be balanced with cross‐functional and vertical coordination in order to more successfully serve the users' composite needs. Originality/value – The focus on possible trade‐offs between different types of coordination is an important complement to the literature, which often assumes simultaneous high degrees of horizontal and vertical coordination.

Incorporation of Hysteretic Effects in Model-Order Reduction Analysis of Magnetic Devices

The ability to predict the properties of magnetic materials in a device is essential to ensuring the correct operation and optimization of the design as well as the device behavior over a wide range of input frequencies. Typically, development and simulation of wide-bandwidth models requires detailed, physics-based simulations that utilize significant computational resources. Balancing the trade-offs between model computational overhead and accuracy can be cumbersome, especially when the nonlinear effects of saturation and hysteresis are included in the model. This study focuses on the development of a system for analyzing magnetic devices in cases where model accuracy and computational intensity must be carefully and easily balanced by the engineer. A method for adjusting model complexity and corresponding level of detail while incorporating the nonlinear effects of hysteresis is presented that builds upon recent work in loss analysis and magnetic equivalent circuit (MEC) modeling. The approach utilizes MEC models in conjunction with linearization and model-order reduction techniques to process magnetic devices based on geometry and core type. The validity of steady-state permeability approximations is also discussed.

Evaluating conservation and fisheries management strategies by linking spatial prioritization software and ecosystem and fisheries modelling tools

Well-designed marine protected area (MPA) networks can deliver a range of ecological, economic and social benefits, and so a great deal of research has focused on developing spatial conservation prioritization tools to help identify important areas. However, whilst these software tools are designed to identify MPA networks that both represent biodiversity and minimize impacts on stakeholders, they do not consider complex ecological processes. Thus, it is difficult to determine the impacts that proposed MPAs could have on marine ecosystem health, fisheries and fisheries sustainability. Using the eastern English Channel as a case study, this paper explores an approach to address these issues by identifying a series of MPA networks using the Marxan and Marxan with Zones conservation planning software and linking them with a spatially explicit ecosystem model developed in Ecopath with Ecosim. We then use these to investigate potential trade-offs associated with adopting different MPA management strategies. Limited-take MPAs, which restrict the use of some fishing gears, could have positive benefits for conservation and fisheries in the eastern English Channel, even though they generally receive far less attention in research on MPA network design. Our findings, however, also clearly indicate that no-take MPAs should form an integral component of proposed MPA networks in the eastern English Channel, as they not only result in substantial increases in ecosystem biomass, fisheries catches and the biomass of commercially valuable target species, but are fundamental to maintaining the sustainability of the fisheries. Synthesis and applications. Using the existing software tools Marxan with Zones and Ecopath with Ecosim in combination provides a powerful policy-screening approach. This could help inform marine spatial planning by identifying potential conflicts and by designing new regulations that better balance conservation objectives and stakeholder interests. In addition, it highlights that appropriate combinations of no-take and limited-take marine protected areas might be the most effective when making trade-offs between long-term ecological benefits and short-term political acceptability.

DISSOLVED AND GASEOUS FLUXES OF CARBON AND NITROGEN FROM URBAN WATERSHEDS OF THE CHESAPEAKE BAY

Carbon and nitrogen loading to streams and rivers contributes to eutrophication as well as greenhouse gas (GHG) production in streams, rivers and estuaries. My dissertation consists of three research chapters, which examine interactions and potential trade-offs between water quality and greenhouse gas production in urban streams of the Chesapeake Bay watershed. My first research project focused on drivers of carbon export and quality in an urbanized river. I found that watershed carbon sources (soils and leaves) contributed more than in-stream production to overall carbon export, but that periods of high in-stream productivity were important over seasonal and daily timescales. My second research chapter examined the influence of urban storm-water and sanitary infrastructure on dissolved and gaseous carbon and nitrogen concentrations in headwater streams. Gases (CO2, CH4, and N2O) were consistently super-saturated throughout the course of a year. N2O concentrations in streams draining septic systems were within the high range of previously published values. Total dissolved nitrogen concentration was positively correlated with CO2 and N2O and negatively correlated with CH4. My third research chapter examined a long-term (15-year) record of GHG emissions from soils in rural forests, urban forest, and urban lawns in Baltimore, MD. CO2, CH4, and N2O emissions showed positive correlations with temperature at each site. Lawns were a net source of CH4 + N2O, whereas forests were net sinks. Gross CO2 fluxes were also highest in lawns, in part due to elevated growing-season temperatures. While land cover influences GHG emissions from soils, the overall role of land cover on this flux is very small (< 0.5%) compared with gases released from anthropogenic sources, according to a recent GHG budget of the Baltimore metropolitan area, where this study took place.

Climate Clever Beef: options to improve business performance and reduce greenhouse gas emissions in northern Australia

The Rangeland Journal – Climate Clever Beef special issue examines options for the beef industry in northern Australia to contribute to the reduction in global greenhouse gas (GHG) emissions and to engage in the carbon economy. Relative to its gross value (A$5 billion), the northern beef industry is responsible for a sizable proportion of national reportable GHG emissions (8–10%) through enteric methane, savanna burning, vegetation clearing and land degradation. The industry occupies large areas of land and has the potential to impact the carbon cycle by sequestering carbon or reducing carbon loss. Furthermore, much of the industry is currently not achieving its productivity potential, which suggests that there are opportunities to improve the emissions intensity of beef production. Improving the industry’s GHG emissions performance is important for its environmental reputation and may benefit individual businesses through improved production efficiency and revenue from the carbon economy. The Climate Clever Beef initiative collaborated with beef businesses in six regions across northern Australia to better understand the links between GHG emissions and carbon stocks, land condition, herd productivity and profitability. The current performance of businesses was measured and alternate management options were identified and evaluated. Opportunities to participate in the carbon economy through the Australian Government’s Emissions Reduction Fund (ERF) were also assessed. The initiative achieved significant producer engagement and collaboration resulting in practice change by 78 people from 35 businesses, managing more than 1 272 000 ha and 132 000 cattle. Carbon farming opportunities were identified that could improve both business performance and emissions intensity. However, these opportunities were not without significant risks, trade-offs and limitations particularly in relation to business scale, and uncertainty in carbon price and the response of soil and vegetation carbon sequestration to management. This paper discusses opportunities for reducing emissions, improving emission intensity and carbon sequestration, and outlines the approach taken to achieve beef business engagement and practice change. The paper concludes with some considerations for policy makers.

The Cost of Co-viability in the Australian Northern Prawn Fishery

Fisheries management must address multiple, often conflicting objectives in a highly uncertain context. In particular, while the bio-economic performance of trawl fisheries is subject to high levels of biological and economic uncertainty, the impact of trawling on broader biodiversity is also a major concern for their management. The purpose of this study is to propose an analytical framework to formally assess the trade-offs associated with balancing biological, economic and non-target species conservation objectives. We use the Australian Northern Prawn Fishery (NPF), which is one of the most valuable federally managed commercial fisheries in Australia, as a case study. We develop a stochastic co-viability assessment of the fishery under multiple management objectives. Results show that, due to the variability in the interactions between the fishery and the ecosystem, current management strategies are characterized by biological and economic risks. Results highlight the trade-offs between respecting biological, economic and non-target species conservation constraints at each point in time with a high probability and maximizing the net present value of the fishery.