Forests and water: Managing interrelations

Due to their biodiversity, forests generate a range of products and services that are of economic, social or cultural value to human beings. Natural resource management provisions should ensure the creation and maintenance of these goods and services in the long term. However, unsustainable management practices of forests do not only generate short-term benefits but also considerable costs for society. Payment by the beneficiaries of the services would enable us to internalise external costs and promote sustainable management. Two days of conferences on ”Forest and water”, on the multifunctionality of forests, on interactions between forests and water, on sustainable resource management, on payments for environmental services, their institutional and economic perspectives, were the basis of this brochure which presents an in-depth analysis of the information exchanged among conference participants and the public. It is intended for readers who work in international development cooperation and assistance in Switzerland and abroad. It offers additional information for local programmes in the field and at policy level.

Sensitisation to Ambrosia in Switzerland: a public health threat in waiting

BACKGROUND Ambrosia artemisiifolia (short name = Ambrosia common ragweed) pollen is a potent allergen and has recently been found in Switzerland, spreading from the southwest of the country. The aim of this study is to describe Ambrosia sensitisation rates in the population-based SAPALDIA cohort (Swiss Study on Air Pollution And Lung Diseases In Adults) and to test whether an increase in these rates could be observed. METHODS Among the 6345 participants from 8 areas who provided blood samples in 1991 and 2002, 5823 had valid results for specific IgE against common inhalant allergens tested with Phadiatop. In 2002 Ambrosia sensitisation was measured and positive tests were analysed for Artemisia vulgaris (mugwort). Blood samples taken in 1991 in Ticino and Geneva were also tested for Ambrosia. RESULTS Sensitisation rate (Phadiatop) did not increase significantly between the two surveys and sensitisation was found in 30% of the participants. A proportion of 7.9% showed specific IgE to Ambrosia pollen. The sensitisation rate in Lugano and Geneva had not changed substantially since 1991. Among those sensitised to Ambrosia 82% also showed specific IgE against Artemisia, suggesting a high rate of cross-reactivity. Only 1.3% were sensitized to Ambrosia alone. The incidence of asthma or hay fever in participants with specific IgE to Ambrosia pollen was not higher than in the general study population. CONCLUSION Currently Ambrosia pollen does not appear to be an important cause of inhalant allergies in Switzerland. Sensitisation rates are low and have not increased since 1991. Due to cross-reactivity Ambrosia sensitisation may be a consequence of primary sensitisation to Artemisia. Elimination of Ambrosia plants is nevertheless mandatory to avoid a future increase.

Characteristics of Digital Sustainability

The concept of digital sustainability is mentioned in research on digital preservation as well as on openness topics. Both streams of literature point out the necessary discussion how to create, use, and regulate digital resources in order to maximize their value for our society today and in the future. This paper therefore reviews current work on digital sustainability, presents a list of six charac-teristics how to define digitally sustainable goods, and draws the link to aspects of e-government.

Inseparable, incapable, or invisible: Why public organizations award no-bid contracts

No-bid contracting is a highly prevalent practice in public procurement of technology services. Alt-hough no-bid contracting is a substantial problem since it reduces competition and welfare, the litera-ture lacks theoretical explanations and empirical tests for why public organizations award no-bid con-tracts. In this paper, we propose three theoretical explanations for no-bid contracting, drawing on transaction cost economics, organizational learning, and institutional theory. We also present how we test these explanations using a comprehensive sample of public procurement transactions. We expect to contribute theoretical explanations for no-bid contracting and practical implications for policy-makers.

Public Governance durch Open Government: Zwei sich ergaenzende Ansaetze fuer die staatliche Aufgabenerfuellung der Zukunft

Waehrend zu Public Governance eine breite wissenschaftliche Debatte existiert und die Analyse staatlicher Aufgabeerfuellung davon profitiert, so steht die praxisnahe Umsetzung weniger im Zentrum der wissenschaftlichen Betrachtungen. Open Government hingegen entwickelt sich als relevante Praktikerbewegung ohne in die wissenschaftliche Diskussion eingeflossen zu sein. Dieser Artikel verbindet die beiden bislang unabhaengig voneinander existierenden Ansaetze und zeigt den Mehrwert von Open Government zur Umsetzung von Public Governance auf.

Extending private-collective innovation: a case study

The private-collective innovation model proposes incentives for individuals and firms to privately invest resources to create public goods innovations. Such innovations are characterized by non-rivalry and non-exclusivity in consumption. Examples include open source software, user-generated media products, drug formulas, and sport equipment designs. There is still limited empirical research on private-collective innovation. We present a case study to (1) provide empirical evidence of a case of private-collective innovation, showing specific benefits, and (2) to extend the private-collective innovation model by analyzing the hidden costs for the company involved. We examine the development of the Nokia Internet Tablet, which builds on both proprietary and open source software development, and that involves both Nokia developers and volunteers who are not employed by the company. Seven benefits for Nokia are identified, as are five hidden costs: difficulty to differentiate, guarding business secrets, reducing community entry barriers, giving up control, and organizational inertia. We examine the actions taken by the management to mitigate these costs throughout the development period.

How Firms Make Friends: Communities in Private-Collective Innovation

When firms contribute to open source projects, they in fact invest into public goods which may be used by everyone, even by their competitors. This seemingly paradoxical behavior can be explained by the model of private-collective innovation where private investors participate in collective action. Previous literature has shown that companies benefit through the production process providing them with unique incentives such as learning and reputation effects. By contributing to open source projects firms are able to build a network of external individuals and organizations participating in the creation and development of the software. As will be shown in this doctoral dissertation firm-sponsored communities involve the formation of interorganizational relationships which eventually may lead to a source of sustained competitive advantage. However, managing a largely independent open source community is a challenging balancing act between exertion of control to appropriate value creation, and openness in order to gain and preserve credibility and motivate external contributions. Therefore, this dissertation consisting of an introductory chapter and three separate research papers analyzes characteristics of firm-driven open source communities, finds reasons why and mechanisms by which companies facilitate the creation of such networks, and shows how firms can benefit most from their communities.

Bargaining for power and information : an experimental and theoretical analysis of the interaction between institutions, externalities and adverse selection

Bargaining is the building block of many economic interactions, ranging from bilateral to multilateral encounters and from situations in which the actors are individuals to negotiations between firms or countries. In all these settings, economists have been intrigued for a long time by the fact that some projects, trades or agreements are not realized even though they are mutually beneficial. On the one hand, this has been explained by incomplete information. A firm may not be willing to offer a wage that is acceptable to a qualified worker, because it knows that there are also unqualified workers and cannot distinguish between the two types. This phenomenon is known as adverse selection. On the other hand, it has been argued that even with complete information, the presence of externalities may impede efficient outcomes. To see this, consider the example of climate change. If a subset of countries agrees to curb emissions, non-participant regions benefit from the signatories’ efforts without incurring costs. These free riding opportunities give rise to incentives to strategically improve ones bargaining power that work against the formation of a global agreement. This thesis is concerned with extending our understanding of both factors, adverse selection and externalities. The findings are based on empirical evidence from original laboratory experiments as well as game theoretic modeling. On a very general note, it is demonstrated that the institutions through which agents interact matter to a large extent. Insights are provided about which institutions we should expect to perform better than others, at least in terms of aggregate welfare. Chapters 1 and 2 focus on the problem of adverse selection. Effective operation of markets and other institutions often depends on good information transmission properties. In terms of the example introduced above, a firm is only willing to offer high wages if it receives enough positive signals about the worker’s quality during the application and wage bargaining process. In Chapter 1, it will be shown that repeated interaction coupled with time costs facilitates information transmission. By making the wage bargaining process costly for the worker, the firm is able to obtain more accurate information about the worker’s type. The cost could be pure time cost from delaying agreement or cost of effort arising from a multi-step interviewing process. In Chapter 2, I abstract from time cost and show that communication can play a similar role. The simple fact that a worker states to be of high quality may be informative. In Chapter 3, the focus is on a different source of inefficiency. Agents strive for bargaining power and thus may be motivated by incentives that are at odds with the socially efficient outcome. I have already mentioned the example of climate change. Other examples are coalitions within committees that are formed to secure voting power to block outcomes or groups that commit to different technological standards although a single standard would be optimal (e.g. the format war between HD and BlueRay). It will be shown that such inefficiencies are directly linked to the presence of externalities and a certain degree of irreversibility in actions. I now discuss the three articles in more detail. In Chapter 1, Olivier Bochet and I study a simple bilateral bargaining institution that eliminates trade failures arising from incomplete information. In this setting, a buyer makes offers to a seller in order to acquire a good. Whenever an offer is rejected by the seller, the buyer may submit a further offer. Bargaining is costly, because both parties suffer a (small) time cost after any rejection. The difficulties arise, because the good can be of low or high quality and the quality of the good is only known to the seller. Indeed, without the possibility to make repeated offers, it is too risky for the buyer to offer prices that allow for trade of high quality goods. When allowing for repeated offers, however, at equilibrium both types of goods trade with probability one. We provide an experimental test of these predictions. Buyers gather information about sellers using specific price offers and rates of trade are high, much as the model’s qualitative predictions. We also observe a persistent over-delay before trade occurs, and this mitigates efficiency substantially. Possible channels for over-delay are identified in the form of two behavioral assumptions missing from the standard model, loss aversion (buyers) and haggling (sellers), which reconcile the data with the theoretical predictions. Chapter 2 also studies adverse selection, but interaction between buyers and sellers now takes place within a market rather than isolated pairs. Remarkably, in a market it suffices to let agents communicate in a very simple manner to mitigate trade failures. The key insight is that better informed agents (sellers) are willing to truthfully reveal their private information, because by doing so they are able to reduce search frictions and attract more buyers. Behavior observed in the experimental sessions closely follows the theoretical predictions. As a consequence, costless and non-binding communication (cheap talk) significantly raises rates of trade and welfare. Previous experiments have documented that cheap talk alleviates inefficiencies due to asymmetric information. These findings are explained by pro-social preferences and lie aversion. I use appropriate control treatments to show that such consideration play only a minor role in our market. Instead, the experiment highlights the ability to organize markets as a new channel through which communication can facilitate trade in the presence of private information. In Chapter 3, I theoretically explore coalition formation via multilateral bargaining under complete information. The environment studied is extremely rich in the sense that the model allows for all kinds of externalities. This is achieved by using so-called partition functions, which pin down a coalitional worth for each possible coalition in each possible coalition structure. It is found that although binding agreements can be written, efficiency is not guaranteed, because the negotiation process is inherently non-cooperative. The prospects of cooperation are shown to crucially depend on i) the degree to which players can renegotiate and gradually build up agreements and ii) the absence of a certain type of externalities that can loosely be described as incentives to free ride. Moreover, the willingness to concede bargaining power is identified as a novel reason for gradualism. Another key contribution of the study is that it identifies a strong connection between the Core, one of the most important concepts in cooperative game theory, and the set of environments for which efficiency is attained even without renegotiation.

Concepts of Bitemporal Database Theory and the Evolution of Web-Documents

A vast amount of temporal information is provided on the Web. Even though many facts expressed in documents are time-related, the temporal properties of Web presentations have not received much attention. In database research, temporal databases have become a mainstream topic in recent years. In Web documents, temporal data may exist as meta data in the header and as user-directed data in the body of a document. Whereas temporal data can easily be identified in the semi-structured meta data, it is more difficult to determine temporal data and its role in the body. We propose procedures for maintaining temporal integrity of Web pages and outline different approaches of applying bitemporal data concepts for Web documents. In particular, we regard desirable functionalities of Web repositories and other Web-related tools that may support the Webmasters in managing the temporal data of their Web documents. Some properties of a prototype environment are described.

The Marginal Impact of ENGOs in Different Types of Democratic Systems

Conventional wisdom suggests that environmental non-governmental organizations (ENGOs) play a major role in pushing states towards more ambitious environmental policies. However, demonstrating that this presumption is in fact true is rather difficult, because the same system structures of democracies that may create more opportunities for ENGO activities are also, on their own, conducive to better environmental policies. This leaves open the possibility that the additional (marginal) impact of ENGOs on policy making is smaller than presumed. In trying to disentangle these effects, this paper examines the influence of ENGOs contingent on key structural characteristics of democratic systems. We develop the argument that presidential systems with a plurality electoral rule per se tend to provide more environmental public goods, which induces a smaller marginal impact of ENGOs. Conversely, parliamentary systems with a proportional representation electoral rule are likely to provide fewer environmental public goods, which allows for a larger marginal impact of ENGOs. We find robust empirical support for these hypotheses in analyses that focus on the ratification behavior of 75 democracies vis-à-vis 250 international environmental agreements in 1973–2002.

The Role of Goods Trade Networks for Services Trade Volume

In this paper, we address the role of countries’ goods-trade networks for their services-trade volume. The paper employs a large cross section of bilateral trade data on aggregate cross-border goods and services sales and illustrates that the depth and overlap of two countries’ services networks induce a positive direct impact on their services-trade volume. The evidence takes into account that goods trade flows and networks are potentially endogenous so that the estimated direct effects support a causal interpretation. We find that the magnitude of the multilateral goods-trade network effect on the bilateral services-trade volume is much larger than that of bilateral goods-trade volume.

Technical Efficiency in Public and Private Sectors in India: Evidence from the Post-Reform Years

While India's state-owned enterprises are widely believed to be inefficient, there is a dearth of studies that document such inefficiency on any rigorous basis. Yet, since improvement in firm efficiency is one of the basic objectives of privatization, it is important to assess whether efficiency is indeed lower in the public sector than in the private sector. This paper compares the performance of state-owned enterprises with those of private sector firms in respect of technical efficiency. The comparison is made in eight different sectors over the period 1991-92 to 1998-99. We measure technical efficiency using the method of Data Envelopment Analysis. Judging by the average levels of technical efficiency, no conclusive evidence of superior performance on the part of the private sector is found.

Free Riders, Holdouts, and Public Use: A Tale of Two Externalities

Free riders and holdouts are market failures that potentially impede the completion of otherwise beneficial transactions. The key difference is that the free rider problem is a demand side externality that requires taxation to compel payment for a public good, while the holdout problem is a supply side externality that requires eminent domain to force the sale of land for large scale projects. This paper highlights that distinction between these two problems and uses the resulting insights to clarify the meaning of the public use requirement of the Fifth Amendment takings clause.

A model of factors determining levels of public support for health care policy in the United States

Public preferences for policy are formed in a little-understood process that is not adequately described by traditional economic theory of choice. In this paper I suggest that U.S. aggregate support for health reform can be modeled as tradeoffs among a small number of behavioral values and the stage of policy development. The theory underlying the model is based on Samuelson, et al.'s (1986) work and Wilke's (1991) elaboration of it as the Greed/Efficiency/Fairness (GEF) hypothesis of motivation in the management of resource dilemmas, and behavioral economics informed by Kahneman and Thaler's prospect theory. ^ The model developed in this paper employs ordered probit econometric techniques applied to data derived from U.S. polls taken from 1990 to mid-2003 that measured support for health reform proposals. Outcome data are four-tiered Likert counts; independent variables are dummies representing the presence or absence of operationalizations of each behavioral variable, along with an integer representing policy process stage. Marginal effects of each independent variable predict how support levels change on triggering that variable. Model estimation results indicate a vanishingly small likelihood that all coefficients are zero and all variables have signs expected from model theory. ^ Three hypotheses were tested: support will drain from health reform policy as it becomes increasingly well-articulated and approaches enactment; reforms appealing to fairness through universal health coverage will enjoy a higher degree of support than those targeted more narrowly; health reforms calling for government operation of the health finance system will achieve lower support than those that do not. Model results support the first and last hypotheses. Contrary to expectations, universal health care proposals did not provide incremental support beyond those targeted to “deserving” populations—children, elderly, working families. In addition, loss of autonomy (e.g. restrictions on choice of care giver) is found to be the “third rail” of health reform with significantly-reduced support. When applied to a hypothetical health reform in which an employer-mandated Medical Savings Account policy is the centerpiece, the model predicts support that may be insufficient to enactment. These results indicate that the method developed in the paper may prove valuable to health policy designers. ^