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

Construction contract policy: do we mean what we say?

Recent developments in contracting practice in the UK have built upon recommendations contained in highprofile reports, such as those by Latham and Egan. However, the New Engineering Contract (NEC), endorsed by Latham, is based upon principles of contract drafting that seem open to question. Any contract operates in the context of its legislative environment and current working practices. This report identifies eight contentious hypotheses in the literature on construction contracts and tests their validity in a sample survey that attracted 190 responses. The survey shows, among other things, that while partnership is a positive and useful idea, authoritative contract management is considered more effective and that “win-win” contracts, while desirable, are basically impractical. Further, precision and fairness in contracts are not easy to achieve simultaneously. While participants should know what is in their contracts, they should not routinely resort to legal action; and standard-form contracts should not seek to be universally applicable. Fundamental changes to drafting policy should be undertaken within the context of current legal contract doctrine and with a sensitivity to the way that contracts are used in contemporary practice. Attitudes to construction contracting may seem to be changing on the surface, but detailed analysis of what lies behind apparent agreement on new ways of working reveals that attitudes are changing much more slowly than they appear to be.

A GCM study of the influence of equatorial winds on the timing of sudden stratospheric warmings

A full troposphere-stratosphere-mesosphere global circulation model is used in a set of idealised experiments to investigate the sensitivity of the Northern Hemisphere winter stratospheric flow to improvements in the equatorial zonal winds. The model shows significant sensitivity to variability in the upper equatorial stratosphere, the imposition of SAO and QBO like variability in this region advances the timing of midwinter sudden warmings by about one month. Perturbations to the lower equatorial stratosphere are mainly found to influence early winter polar variability. These results suggest that it is important to pay attention to the capability of models to simulate realistic variability in the upper equatorial stratosphere.

The Bureau International des Poids et Mesures: establishing standards in the physical sciences

In a vault on the outskirts of Paris, a cylinder of platinum-iridium sits in a safe under three layers of glass. It is the kilogram, kept by the Bureau International des Poids et Mesures (BIPM), which is the international home of metrology. Metrology is the science of measurement, and it is of fundamental importance to us all. It is essential for trade, commerce, navigation, transport, communication, surveying, engineering, and construction. It is essential for medical diagnosis and treatment, health and safety, food and consumer protection, and for preserving the environment—e.g., measuring ozone in the atmosphere. Many of these applications are of particular relevance to chemistry and thus to IUPAC. In all these activities we need to make measurements reliably—to an appropriate and known level of uncertainty. The financial implications of metrology are enormous. In the United States, for example, some 15% of the gross domestic product is spent on healthcare, involving reliable quantitative measurements for both diagnosis and treatment.

Century-of-Information Research (CIR): a strategy for research and innovation in the century of information

More data will be produced in the next five years than in the entire history of human kind, a digital deluge that marks the beginning of the Century of Information. Through a year-long consultation with UK researchers, a coherent strategy has been developed, which will nurture Century-of-Information Research (CIR); it crystallises the ideas developed by the e-Science Directors' Forum Strategy Working Group. This paper is an abridged version of their latest report which can be found at: http://wikis.nesc.ac.uk/escienvoy/Century_of_Information_Research_Strategy which also records the consultation process and the affiliations of the authors. This document is derived from a paper presented at the Oxford e-Research Conference 2008 and takes into account suggestions made in the ensuing panel discussion. The goals of the CIR Strategy are to facilitate the growth of UK research and innovation that is data and computationally intensive and to develop a new culture of 'digital-systems judgement' that will equip research communities, businesses, government and society as a whole, with the skills essential to compete and prosper in the Century of Information. The CIR Strategy identifies a national requirement for a balanced programme of coordination, research, infrastructure, translational investment and education to empower UK researchers, industry, government and society. The Strategy is designed to deliver an environment which meets the needs of UK researchers so that they can respond agilely to challenges, can create knowledge and skills, and can lead new kinds of research. It is a call to action for those engaged in research, those providing data and computational facilities, those governing research and those shaping education policies. The ultimate aim is to help researchers strengthen the international competitiveness of the UK research base and increase its contribution to the economy. The objectives of the Strategy are to better enable UK researchers across all disciplines to contribute world-leading fundamental research; to accelerate the translation of research into practice; and to develop improved capabilities, facilities and context for research and innovation. It envisages a culture that is better able to grasp the opportunities provided by the growing wealth of digital information. Computing has, of course, already become a fundamental tool in all research disciplines. The UK e-Science programme (2001-06)—since emulated internationally—pioneered the invention and use of new research methods, and a new wave of innovations in digital-information technologies which have enabled them. The Strategy argues that the UK must now harness and leverage its own, plus the now global, investment in digital-information technology in order to spread the benefits as widely as possible in research, education, industry and government. Implementing the Strategy would deliver the computational infrastructure and its benefits as envisaged in the Science & Innovation Investment Framework 2004-2014 (July 2004), and in the reports developing those proposals. To achieve this, the Strategy proposes the following actions: support the continuous innovation of digital-information research methods; provide easily used, pervasive and sustained e-Infrastructure for all research; enlarge the productive research community which exploits the new methods efficiently; generate capacity, propagate knowledge and develop skills via new curricula; and develop coordination mechanisms to improve the opportunities for interdisciplinary research and to make digital-infrastructure provision more cost effective. To gain the best value for money strategic coordination is required across a broad spectrum of stakeholders. A coherent strategy is essential in order to establish and sustain the UK as an international leader of well-curated national data assets and computational infrastructure, which is expertly used to shape policy, support decisions, empower researchers and to roll out the results to the wider benefit of society. The value of data as a foundation for wellbeing and a sustainable society must be appreciated; national resources must be more wisely directed to the collection, curation, discovery, widening access, analysis and exploitation of these data. Every researcher must be able to draw on skills, tools and computational resources to develop insights, test hypotheses and translate inventions into productive use, or to extract knowledge in support of governmental decision making. This foundation plus the skills developed will launch significant advances in research, in business, in professional practice and in government with many consequent benefits for UK citizens. The Strategy presented here addresses these complex and interlocking requirements.

Dichotomous-choice contingent valuation with 'don't know' responses and misreporting

A new approach is presented that simultaneously deals with Misreporting and Don't Know (DK) responses within a dichotomous-choice contingent valuation framework. Utilising a modification of the standard Bayesian Probit framework, a Gibbs with Metropolis-Hastings algorithm is used to estimate the posterior densities for the parameters of interest. Several model specifications are applied to two contingent valuation datasets: one on wolf management plans, and one on the US Fee Demonstration Program. We find that DKs are more likely to be from people who would be predicted to have positive utility for the bid. Therefore, a DK is more likely to be a YES than a NO. We also find evidence of misreporting, primarily in favour of the NO option. The inclusion of DK responses has an unpredictable impact on willingness-to-pay estimates, since it impacts differently on the results for the two datasets we examine. Copyright (C) 2009 John Wiley & Sons, Ltd.

Model selection for the mixed logit with Bayesian estimation

In this paper, the mixed logit (ML) using Bayesian methods was employed to examine willingness-to-pay (WTP) to consume bread produced with reduced levels of pesticides so as to ameliorate environmental quality, from data generated by a choice experiment. Model comparison used the marginal likelihood, which is preferable for Bayesian model comparison and testing. Models containing constant and random parameters for a number of distributions were considered, along with models in ‘preference space’ and ‘WTP space’ as well as those allowing for misreporting. We found: strong support for the ML estimated in WTP space; little support for fixing the price coefficient a common practice advocated and adopted in the environmental economics literature; and, weak evidence for misreporting.

The value of badger populations and control of tuberculosis in cattle in England and Wales: A note

This note reports on the results of a choice experiment survey of 400 people in England and Wales, conducted to estimate the value that society places on changes to the size of the badger population. The study was undertaken in the context of the possible need to reduce the badger population by culling to help control bovine tuberculosis in cattle. The study found that people were concerned about the problem of bovine tuberculosis in cattle, which was reflected in their willingness to pay to control the disease, and gave a relatively low value to changes in the size of the badger population (within limits). However, people did not like the idea of a policy that intentionally killed large numbers of badgers and had a relatively very high willingness to pay not to have such a policy.

Estimating the benefits of farm animal welfare legislation using the contingent valuation method

This paper presents the method and findings of a contingent valuation (CV) study that aimed to elicit United Kingdom citizens' willingness to pay to support legislation to phase out the use of battery cages for egg production in the European Union (EU). The method takes account of various biases associated with the CV technique, including 'warm glow', 'part-whole' and sample response biases. Estimated mean willingness to pay to support the legislation is used to estimate the annual benefit of the legislation to UK citizens. This is compared with the estimated annual costs of the legislation over a 12-year period, which allows for readjustment by the UK egg industry. The analysis shows that the estimated benefits of the legislation outweigh the costs. The study demonstrates that CV is a potentially useful technique for assessing the likely benefits associated with proposed legislation. However, estimates of CV studies must be treated with caution. It is important that they are derived from carefully designed surveys and that the willingness to pay estimation method allows for various biases. (C) 2003 Elsevier Science B.V. All rights reserved.

Public values for badgers, bovine TB reduction and management strategies

This paper applies an attribute-based stated choice experiment approach to estimate the value that society places on changes to the size of the badger population in England and Wales. The study was undertaken in the context of a rising incidence of bovine tuberculosis (bTB) in cattle and the government's review of current bTB control policy. This review includes consideration of culling badgers to reduce bTB in cattle, since badgers are thought to be an important wildlife reservoir for the disease. The design of the CE involved four attributes (size of badger population, cattle slaughtered due to bTB, badger management strategy and household tax) at four levels with eight choice sets of two alternatives presented to respondents. Telephone interviews were undertaken with over 400 respondents, which elicited their attitudes and preferences concerning badgers, bTB in cattle and badger management strategies. The study estimated a willingness to pay of 0.10 pound per household per year per 100,000 badgers and 1.52 pound per household per year per 10,000 cattle slaughtered due to bTB which aggregated to 22 per badger and 3298 pound per bTB slaughtered animal for all households in England and Wales. Management strategy toward badgers had a very high valuation, highlighting the emotive issue of badger culling for respondents and the importance of government policy towards badgers.

Consumer acceptance, valuation of and attitudes towards genetically modified food: Review and implications for food policy

An increasing set of evidence has been reported on how consumers could potentially react to the introduction of genetically modified food. Studies typically contain some empirical evidence and some theoretical explanations of the data, however, to date limited effort has been posed on systematically reviewing the existing evidence and its implications for policy. This paper contributes to the literature by bringing together the published evidence on the behavioural frameworks and evidence on the process leading to the public acceptance of genetically modified (GM) food and organisms (GMOs). In doing so, we employ a set of clearly defined search tools and a limited number of comprehensive key words. The study attempts to gather an understanding of the published findings on the determinants of the valuation of GM food - both in terms of willingness to accept and the willing-to-pay a premium for non-GM food, trust with information sources on the safety and public health and ultimate attitudes underpinning such evidence. Furthermore, in the light of such evidence, we formulate some policy strategies to deal with public uncertainly regarding to GMOs and, especially GM food. (c) 2007 Elsevier Ltd. All rights reserved.

Food choice in an interdisciplinary context

Reform of agricultural policies, notably the continuing elimination of production-enhancing subsidies, makes it possible for policies to respond to social issues such as the rural environment and health in future. In this paper, we draw on a Rural Economy and Land Use (RELU) research project which is examining the potential for the development of healthy food chains and the implications for human health and the environment. One of the key issues to be addressed is consumers' willingness to pay for the nutritionally enhanced food products from these new chains, but it is evident that only a partial understanding can be gained from a traditional economics approach. In the paper, we discuss how economists are beginning to incorporate views from other disciplines into their models of consumer choice.

An assessment of the benefits and limitations of the shamba agroforestry system in Kenya and of management and policy requirements for its successful and sustainable reintroduction

The shamba system involves farmers tending tree saplings on state-owned forest land in return for being permitted to intercrop perennial food crops until canopy closure. At one time the system was used throughout all state-owned forest lands in Kenya, accounting for a large proportion of some 160,000 ha. The system should theoretically be mutually beneficial to both local people and the government. However the system has had a chequered past in Kenya due to widespread malpractice and associated environmental degradation. It was last banned in 2003 but in early 2008 field trials were initiated for its reintroduction. This study aimed to: assess the benefits and limitations of the shamba system in Kenya; assess the main influences on the extent to which the limitations and benefits are realised and; consider the management and policy requirements for the system's successful and sustainable operation. Information was obtained from 133 questionnaires using mainly open ended questions and six participatory workshops carried out in forest-adjacent communities on the western slopes of Mount Kenya in Nyeri district. In addition interviews were conducted with key informants from communities and organisations. There was strong desire amongst local people for the system's reintroduction given that it had provided significant food, income and employment. Local perceptions of the failings of the system included firstly mismanagement by government or forest authorities and secondly abuse of the system by shamba farmers and outsiders. Improvements local people considered necessary for the shamba system to work included more accountability and transparency in administration and better rules with respect to plot allocation and stewardship. Ninety-seven percent of respondents said they would like to be more involved in management of the forest and 80% that they were willing to pay for the use of a plot. The study concludes that the structural framework laid down by the 2005 Forests Act, which includes provision for the reimplementation of the shamba system under the new plantation establishment and livelihood improvement scheme (PELIS) [It should be noted that whilst the shamba system was re-branded in 2008 under the acronym PELIS, for the sake of simplicity the authors continue to refer to the 'shamba system' and 'shamba farmers' throughout this paper.], is weakened because insufficient power is likely to be devolved to local people, casting them merely as 'forest users' and the shamba system as a 'forest user right'. In so doing the system's potential to both facilitate and embody the participation of local people in forest management is limited and the long-term sustainability of the new system is questionable. Suggested instruments to address this include some degree of sharing of profits from forest timber, performance related guarantees for farmers to gain a new plot and use of joint committees consisting of local people and the forest authorities for long term management of forests.

The engineer under FDIC's conditions of contract for construction

FIDIC has over the years produced standard forms of contracts for the international procurement of projects. A source of continuing criticism of its Red Book concerns the duality in the traditional role of the engineer as the employer's agent and as an independent third party holding the balance fairly between the employer and the contractor. In response to this and other criticisms FIDIC produced a replacement for it in 1999. The role of the engineer under the new Red Book is critically examined in the light of relevant case law, expert commentaries and feedback from two multidisciplinary workshops with international participation. The examination identified three major changes: (1) a duty to act impartially has been replaced by a duty to make fair determination of certain matters; (2) it is open to parties to allow greater control of the engineer by the employer by stating in the appropriate part of the contract powers the engineer must not exercise without the employer's approval; (3) there is provision for a Dispute Adjudication Board (DAB) to which disputes may be referred. Although the duality has not been eliminated completely, the contract is structured flexibly enough to support those who wish to contract on the basis of the engineer acting solely as the agent of the employer.

Comparative performance of UK PFI and non-PFI hospitals

Since the first PFI hospital was established in 1994, many debates centred on the value for money and risk transfer in PFIs. Little concern is shown with PFI hospitals’ performance in delivering healthcare. Exploratory research was carried out to compare PFI with non‐PFI hospital performance. Five performance indicators were analysed to compare differences between PFI and non‐PFI hospitals, namely the length of waiting, the length of stay, MRSA infection rate, C difficile infection rate and patient experience. Data was collected from various government bodies. The results show that only some indexes measuring patient experience emerge statistically significant. This leads to a conclusion that PFI hospitals may not perform better than non‐PFI hospitals but they are not worse than non‐PFI hospitals in the delivery of services. However, future research needs to pay attention to reliability and validity of data sets currently available to undertake comparison.