The role of agronomic research in climate change and food security policy

Societal concern is growing about the consequences of climate change for food systems and, in a number of regions, for food security. There is also concern that meeting the rising demand for food is leading to environmental degradation thereby exacerbating factors in part responsible for climate change, and further undermining the food systems upon which food security is based. A major emphasis of climate change/food security research over recent years has addressed the agronomic aspects of climate change, and particularly crop yield. This has provided an excellent foundation for assessments of how climate change may affect crop productivity, but the connectivity between these results and the broader issues of food security at large are relatively poorly explored; too often discussions of food security policy appear to be based on a relatively narrow agronomic perspective. To overcome the limitation of current agronomic research outputs there are several scientific challenges where further agronomic effort is necessary, and where agronomic research results can effectively contribute to the broader issues underlying food security. First is the need to better understand how climate change will affect cropping systems including both direct effects on the crops themselves and indirect effects as a result of changed pest and weed dynamics and altered soil and water conditions. Second is the need to assess technical and policy options for either reducing the deleterious impacts or enhancing the benefits of climate change on cropping systems while minimising further environmental degradation. Third is the need to understand how best to address the information needs of policy makers and report and communicate agronomic research results in a manner that will assist the development of food systems adapted to climate change. There are, however, two important considerations regarding these agronomic research contributions to the food security/climate change debate. The first concerns scale. Agronomic research has traditionally been conducted at plot scale over a growing season or perhaps a few years, but many of the issues related to food security operate at larger spatial and temporal scales. Over the last decade, agronomists have begun to establish trials at landscape scale, but there are a number of methodological challenges to be overcome at such scales. The second concerns the position of crop production (which is a primary focus of agronomic research) in the broader context of food security. Production is clearly important, but food distribution and exchange also determine food availability while access to food and food utilisation are other important components of food security. Therefore, while agronomic research alone cannot address all food security/climate change issues (and hence the balance of investment in research and development for crop production vis à vis other aspects of food security needs to be assessed), it will nevertheless continue to have an important role to play: it both improves understanding of the impacts of climate change on crop production and helps to develop adaptation options; and also – and crucially – it improves understanding of the consequences of different adaptation options on further climate forcing. This role can further be strengthened if agronomists work alongside other scientists to develop adaptation options that are not only effective in terms of crop production, but are also environmentally and economically robust, at landscape and regional scales. Furthermore, such integrated approaches to adaptation research are much more likely to address the information need of policy makers. The potential for stronger linkages between the results of agronomic research in the context of climate change and the policy environment will thus be enhanced.

Bias or rationality? The case of UK commercial real estate investment

Purpose – The purpose of this paper is to test the hypothesis that investment decision making in the UK direct property market does not conform to the assumption of economic rationality underpinning portfolio theory. Design/methodology/approach – The developing behavioural real estate paradigm is used to challenge the idea that investor “man” is able to perform with economic rationality, specifically with reference to the analysis of the spatial dispersion of the entire UK “investible stock” and “investible locations” against observed spatial patterns of institutional investment. Location quotients are derived, combining different data sets. Findings – Considerably greater variation in institutional property holdings is found across the UK than would be expected given the economic and stock characteristics of local areas. This appears to provide evidence of irrationality (in the strict traditional economic sense) in the behaviour of institutional investors, with possible herding underpinning levels of investment that cannot be explained otherwise. Research limitations/implications – Over time a lack of distinction has developed between the cause and effect of comparatively low levels of development and institutional property investment across the regions. A critical examination of decision making and behaviour in practice could break this cycle, and could in turn promote regional economic growth. Originality/value – The entire “population” of observations is used to demonstrate the relationships between economic theory and investor performance exploring, for the first time, stock and local area characteristics.

Foreign direct investment in high-risk environments: an historical perspective

Since the banking crisis of 2008 the global economy is perceived as riskier than before. Firms that cannot manage risks have withdrawn from countries in which they previously invested. These problems are not new. For centuries firms have invested in risky foreign environments, and many of them have succeeded. This paper reviews the risk management strategies of foreign investors. Using archival evidence and secondary sources it distinguishes the different types of risks that investors face and the different strategies by which risks can be managed. It investigates which strategies are used to manage which types of risk.

Measuring European real estate investment performance: A comparison of different approaches

The performance of real estate investment markets is difficult to monitor because the constituent assets are heterogeneous, are traded infrequently and do not trade through a central exchange in which prices can be observed. To address this, appraisal based indices have been developed that use the records of owners for whom buildings are regularly re-valued. These indices provide a practical solution to the measurement problem, but have been criticised for understating volatility and not capturing market turning points in a timely manner. This paper evaluates alternative ‘Transaction Linked Indices’ that are estimated using an extension of the hedonic method for index construction and with Investment Property Databank data. The two types of indices are compared over Q4 2001 to Q4 2012 in order to examine whether movements in these indices are consistent. The Transaction Linked Indices show stronger growth and sharper declines than their appraisal based counterparts over the course of the cycle in different European markets and they are typically two to four times more volatile. However, they have some limitations; for instance, only country level indicators can be published in many cases owing to low trading volumes in the period studied.

Broker use and the cost of liquidity in commercial real estate investment

Purpose – Commercial real estate is a highly specific asset: heterogeneous, indivisible and with less information transparency than most other commonly held investment assets. These attributes encourage the use of intermediaries during asset acquisition and disposal. However, there are few attempts to explain the use of different brokerage models (with differing costs) in different markets. This study aims to address this gap. Design/methodology/approach – The study analyses 9,338 real estate transactions in London and New York City from 2001 to 2011. Data are provided by Real Capital Analytics and cover over $450 billion of investments in this period. Brokerage trends in the two cities are compared and probit regressions are used to test whether the decision to transact with broker representation varies with investor or asset characteristics. Findings – Results indicate greater use of brokerage in London, especially by purchasers. This persists when data are disaggregated by sector, time or investor type, pointing to the role of local market culture and institutions in shaping brokerage models and transaction costs. Within each city, the nature of the investors involved seems to be a more significant influence on broker use than the characteristics of the assets being traded. Originality/value – Brokerage costs are the single largest non-tax charge to an investor when trading commercial real estate, yet there is little research in this area. This study examines the role of brokers and provides empirical evidence on factors that influence the use and mode of brokerage in two major investment destinations.

Islamic mutual funds' financial performance and international investment style: evidence from 20 countries

We pursue the first large-scale investigation of a strongly growing mutual fund type: Islamic funds. Based on an unexplored, survivorship bias-adjusted data set, we analyse the financial performance and investment style of 265 Islamic equity funds from 20 countries. As Islamic funds often have diverse investment regions, we develop a (conditional) three-level Carhart model to simultaneously control for exposure to different national, regional and global equity markets and investment styles. Consistent with recent evidence for conventional funds, we find Islamic funds to display superior learning in more developed Islamic financial markets. While Islamic funds from these markets are competitive to international equity benchmarks, funds from especially Western nations with less Islamic assets tend to significantly underperform. Islamic funds’ investment style is somewhat tilted towards growth stocks. Funds from predominantly Muslim economies also show a clear small cap preference. These results are consistent over time and robust to time varying market exposures and capital market restrictions.

Building post crisis watchtowers: investment management Systems and new institutional logics for regulatory compliance

The financial crisis of 2007-2009 has precipitated large scale regulatory change. Tight deadlines for implementation require organizations to start working on remediation projects before final drafts of regulations are crystalized. Firms are faced with engaging in complex and costly change management programs at a time when profits are diminished. As a consequence of these factors, pre-crisis logics for organizing compliance practices are being questioned and new approaches introduced. Our study explores the use of Investment Management Systems (IMS) in facilitating compliance arrangements. Our motivation is to understand the new logics and the part played by IMS in supporting these approaches. The study adopts an institutional logics perspective to explore the use of such systems at eight financial organizations. The study found new logics for organizing compliance include consolidation, centralization, harmonization and consistency and that the IMS plays an important role in supporting and enabling related activities.

Destination UK: international property investment and the role of taxation

This research examines whether or not foreign property investors enjoy tax and other advantages over their UK counterparts and how, if such advantages exists, UK quoted property companies can redress the balance. Current issues such as lack of liquidity, inequalities amongst asset classes, and differences in tax burden are examined in detail. The report will be of interest to property investment specialists, valuers, fund managers, institutional investors and their advisers.

Residential investment and sustainable communities

This research examines the scope for more private rented housing as part of securing housing choice and affordability. A comprehensive review covers the current UK planning, housing and investment framework. It examines UK valuation practice and draws lessons from the Netherlands and Canada. UK case studies illustrate how private companies and social organisations are challenging commonly perceived barriers to mixed-use, mixed-tenure and rented housing through imaginative developments and investments. Additionally, the case studies incorporate financial appraisals of actual schemes and illustrate the reasons for different approaches by private and social organisations to assessing financial feasibility, based on their individual objectives. The report provides a practical resource for property professionals, investors and developers as well as an aid to policy makers in understanding property and investment market responses. The research was funded through the Pat Allsop Education Trust.

Administrative costs of regulation and foreign direct investment: evidence from Standard Cost Model implementation in non-OECD countries

In recent years both developed and developing countries have experienced an increasing number of government initiatives dedicated to reducing the administrative costs (AC) imposed on businesses by regulation. We use a bi-linear fixed-effects model to analyze the extent to which government initiatives to reduce AC through the Standard Cost Model (SCM) attract Foreign Direct Investment (FDI) among 32 developing countries. Controlling for standard determinants of the SCM, we find that the SCM in most cases leads to higher FDI and that the benefits are more significant where the SCM has been implemented for a longer period.

Can profitable trading strategies be derived from investment best-sellers?

A glance along the finance shelves at any bookshop reveals a large number of books that seek to show readers how to ‘make a million’ or ‘beat the market’ with allegedly highly profitable equity trading strategies. This paper investigates whether useful trading strategies can be derived from popular books of investment strategy, with What Works on Wall Street by James P. O'Shaughnessy used as an example. Specifically, we test whether this strategy would have produced a similarly spectacular performance in the UK context as was demonstrated by the author for the US market. As part of our investigation, we highlight a general methodology for determining whether the observed superior performance of a trading rule could be attributed in part or in entirety to data mining. Overall, we find that the O'Shaughnessy rule performs reasonably well in the UK equity market, yielding higher returns than the FTSE All-Share Index, but lower returns than an equally weighted benchmark

Parameter spaces of environmental fields responsible for cyclone development from tropics to extratropics

Objective cyclone tracking applied to a 30-yr reanalysis dataset shows that cyclone development in the summer and autumn seasons is active in the tropics and extratropics and inactive in the subtropics. To understand this geographically bimodal distribution of cyclone development associated with tropical and extratropical cyclones quantitatively, the direct relationship between cyclone types and their environments are assessed by using a parameter space of environmental variables [environmental parameter space (EPS)]. The number of cyclones is analyzed in terms of two different factors: the environmental conditions favorable for cyclone development and the area size that satisfies the favorable condition. The EPS analysis is mainly conducted for two representative environmental parameters that are commonly used for cyclone analysis: potential intensity for tropical cyclones and baroclinicity for extratropical cyclones. The geographically bimodal distribution is attributed to the high sensitivity of the cyclone development to the change in the environmental fields from tropics to extratropics. In addition, the bimodal distribution is partly attributed to the rapid change in the environmental fields from tropics to extratropics. The EPS analysis also shows that other environmental parameters, including relative humidity and vertical velocity, may enhance the contrast between the tropics (extratropics) and subtropics, whereas they are not essential for determining cyclone types. The relationship between cyclones and their environments is found to be similar between the hemispheres in the EPS, although the geographical distribution, particularly the longitudinal uniformity, is markedly different between the hemispheres.

Socially anxious mothers’ narratives to their children, and their relation to child representations and adjustment

Anxious mothers’ parenting, particularly transfer of threat information, has been considered important in their children’s risk for social anxiety disorder (SAnxD), and maternal narratives concerning potential social threat could elucidate this contribution. Maternal narratives to their pre-school 4-5 year-old children, via a picture book about starting school, were assessed in socially anxious (N=73), and non-anxious (N=63) mothers. Child representations of school were assessed via Doll Play (DP). After one school term, mothers (CBCL) and teachers (TRF) reported on child internalizing problems, and child SAnxD was assessed via maternal interview. Relations between these variables, infant behavioral inhibition, and attachment, were examined. Socially anxious mothers showed more negative (higher threat attribution), and less supportive (lower encouragement) narratives, than controls, and their children’s DP representations, SAnxD and CBCL scores were more adverse. High narrative threat predicted child SAnxD; lower encouragement predicted negative child CBCL scores and, particularly for behaviorally inhibited children, TRF scores and DP representations. In securely attached children, CBCL scores and risk for SAnxD were affected by maternal anxiety and threat attributions, respectively. Low encouragement mediated the effects of maternal anxiety on child DP representations, and CBCL scores. Maternal narratives are affected by social anxiety, and contribute to adverse child outcome.