The Greek debt trap: an escape plan. Bruegel Policy Contribution 2012/19, 7 November 2012

Without corrective measures, Greek public debt will exceed 190 percent of GDP, instead of peaking at the anyway too-high target ratio of 167 percent of GDP of the March 2012 financial assistance programme. The rise is largely due to a negative feedback loop between high public debt and the collapse in GDP, and endangers Greek membership of the euro area. But a Greek exit would have devastating impacts both inside and outside Greece. A small reduction in the interest rate on bilateral loans, the exchange of European Central Bank holdings, buy-back of privately-held debt, and frontloading of some privatisation receipts are unlikely to be sufficient. A credible resolution should involve the reduction of the official lending rate to zero until 2020, an extension of the maturity of all official lending, and indexing the notional amount of all official loans to Greek GDP. Thereby, the debt ratio would fall below 100 percent of GDP by 2020, and if the economy deteriorates further, there will not be a need for new arrangements. But if growth is better than expected, official creditors will also benefit. In exchange for such help, the fiscal sovereignty of Greece should be curtailed further. An extended privatisation plan and future budget surpluses may be used to pay back the debt relief. The Greek fiscal tragedy highlights the need for a formal debt restructuring mechanism

Investigating Targets of Avian Habitat Management to Eliminate an Ecological Trap

Ecological traps are attractive population sinks created when anthropogenic habitat alteration inadvertently creates a mismatch between the attractiveness of a habitat based upon its settlement cues, and its current value for survival or reproduction. Traps represent a new threat to the conservation of native species, yet little attention has been given to developing practical approaches to eliminating them. In the northern Rocky Mountains of Montana, Olive-sided Flycatchers (Contopus cooperi) prefer to settle in patches of selectively harvested forest versus burned forest despite the lower reproductive success and higher nest predation risk associated with the former habitat. I investigated characteristics of preferred perch sites for this species and how these preferences varied between habitats and sexes. I then built on previous research to develop a range of management prescriptions for reducing the attractiveness of selectively harvested forest, thereby disarming the ecological trap. Female flycatchers preferred to forage from shorter perch trees than males, and females’ perches were shorter than other available perch trees. Both sexes preferred standing dead perch trees (snags) and these preferences were most obvious in harvested forest where snags are rarer. Because previous research shows that snag density is linked to habitat preference and spruce/fir trees are preferred nest substrate, my results suggest these two habitat components are focal habitat selection cues. I suggest alternative and complementary strategies for eliminating the ecological trap for Olive-sided Flycatchers including: (1) reduced retention and creation of snags, (2) avoiding selective harvest in spruce, fir, and larch stands, (3) avoiding retention of these tree species, and (4) selecting only even-aged canopy height trees for retention so as to reduce perch availability for female flycatchers. Because these strategies also have potential to negatively impact habitat suitability for other forest species or even create new ecological traps, we urge caution in the application of our management recommendations.

Bias from farmer self-selection in genetically modified crop productivity estimates: Evidence from Indian data

In the continuing debate over the impact of genetically modified (GM) crops on farmers of developing countries, it is important to accurately measure magnitudes such as farm-level yield gains from GM crop adoption. Yet most farm-level studies in the literature do not control for farmer self-selection, a potentially important source of bias in such estimates. We use farm-level panel data from Indian cotton farmers to investigate the yield effect of GM insect-resistant cotton. We explicitly take into account the fact that the choice of crop variety is an endogenous variable which might lead to bias from self-selection. A production function is estimated using a fixed-effects model to control for selection bias. Our results show that efficient farmers adopt Bacillus thuringiensis (Bt) cotton at a higher rate than their less efficient peers. This suggests that cross-sectional estimates of the yield effect of Bt cotton, which do not control for self-selection effects, are likely to be biased upwards. However, after controlling for selection bias, we still find that there is a significant positive yield effect from adoption of Bt cotton that more than offsets the additional cost of Bt seed.

Bryozoan populations reflect nutrient enrichment and productivity gradients in rivers

1. The hypothesis that nutrient enrichment will affect bryozoan abundance was tested using two complementary investigations; a field-based method determining bryozoan abundance in 20 rivers of different nutrient concentrations by deploying statoblast (dormant propagule) traps and an experimental laboratory microcosm study measuring bryozoan growth and mortality. These two methods confirmed independently that increased nutrient concentrations in water promote increases in the biomass of freshwater bryozoans. 2. Statoblasts of the genus Plumatella were recorded in all rivers, regardless of nutrient concentrations, demonstrating that freshwater bryozoans are widespread. Concentrations of Plumatella statoblasts were high in rivers with high nutrient concentrations relative to those with low to moderate nutrient concentrations. Regression analyses indicated that phosphorus concentrations, in particular, significantly influenced statoblast concentrations. 3. Concentrations of Lophopus crystallinus statoblasts were also higher in sites characterised by high nutrient concentrations. Logistic regression analysis revealed that the presence of L. crystallinus statoblasts was significantly associated with decreasing altitude and increasing phosphorus concentrations. This apparently rare species was found in nine rivers (out of 20), seven of which were new sites for L. crystallinus. 4. Growth rates of Fredericella sultana in laboratory microcosms increased with increasing nutrient concentration and high mortality rates were associated with low nutrient concentrations. 5. Our results indicate that bryozoans respond to increasing nutrient concentrations by increased growth, resulting in higher biomasses in enriched waters. We also found that an important component of bryozoan diets can derive from food items lacking chlorophyll a. Finally, bryozoans may be used as independent proxies for inferring trophic conditions, a feature that may be especially valuable in reconstructing historical environments by assessing the abundance of statoblasts in sediment cores.