Valuation of reduced eutrophication in the Gulf of Finland : Choice experiment with attention to heterogeneous and discontinuous preferences and respondent uncertainty

Eutrophication of the Baltic Sea is a serious problem. This thesis estimates the benefit to Finns from reduced eutrophication in the Gulf of Finland, the most eutrophied part of the Baltic Sea, by applying the choice experiment method, which belongs to the family of stated preference methods. Because stated preference methods have been subject to criticism, e.g., due to their hypothetical survey context, this thesis contributes to the discussion by studying two anomalies that may lead to biased welfare estimates: respondent uncertainty and preference discontinuity. The former refers to the difficulty of stating one s preferences for an environmental good in a hypothetical context. The latter implies a departure from the continuity assumption of conventional consumer theory, which forms the basis for the method and the analysis. In the three essays of the thesis, discrete choice data are analyzed with the multinomial logit and mixed logit models. On average, Finns are willing to contribute to the water quality improvement. The probability for willingness increases with residential or recreational contact with the gulf, higher than average income, younger than average age, and the absence of dependent children in the household. On average, for Finns the relatively most important characteristic of water quality is water clarity followed by the desire for fewer occurrences of blue-green algae. For future nutrient reduction scenarios, the annual mean household willingness to pay estimates range from 271 to 448 and the aggregate welfare estimates for Finns range from 28 billion to 54 billion euros, depending on the model and the intensity of the reduction. Out of the respondents (N=726), 72.1% state in a follow-up question that they are either Certain or Quite certain about their answer when choosing the preferred alternative in the experiment. Based on the analysis of other follow-up questions and another sample (N=307), 10.4% of the respondents are identified as potentially having discontinuous preferences. In relation to both anomalies, the respondent- and questionnaire-specific variables are found among the underlying causes and a departure from standard analysis may improve the model fit and the efficiency of estimates, depending on the chosen modeling approach. The introduction of uncertainty about the future state of the Gulf increases the acceptance of the valuation scenario which may indicate an increased credibility of a proposed scenario. In conclusion, modeling preference heterogeneity is an essential part of the analysis of discrete choice data. The results regarding uncertainty in stating one s preferences and non-standard choice behavior are promising: accounting for these anomalies in the analysis may improve the precision of the estimates of benefit from reduced eutrophication in the Gulf of Finland.

Suomen maatalouden tuottamat kasvihuonekaasujen päästöt eri politiikkaskenaarioissa

Climate change is the single biggest environmental problem in the world at the moment. Although the effects are still not fully understood and there is considerable amount of uncertainty, many na-tions have decided to mitigate the change. On the societal level, a planner who tries to find an eco-nomically optimal solution to an environmental pollution problem seeks to reduce pollution from the sources where reductions are most cost-effective. This study aims to find out how effective the instruments of the agricultural policy are in the case of climate change mitigation in Finland. The theoretical base of this study is the neoclassical economic theory that is based on the assumption of a rational economic agent who maximizes his own utility. This theoretical base has been widened towards the direction clearly essential to the matter: the theory of environmental eco-nomics. Deeply relevant to this problem and central in the theory of environmental economics are the concepts of externalities and public goods. What are also relevant are the problems of global pollution and non-point-source pollution. Econometric modelling was the method that was applied to this study. The Finnish part of the AGMEMOD-model, covering the whole EU, was used for the estimation of the development of pollution. This model is a seemingly recursive, partially dynamic partial-equilibrium model that was constructed to predict the development of Finnish agricultural production of the most important products. For the study, I personally updated the model and also widened its scope in some relevant matters. Also, I devised a table that can calculate the emissions of greenhouse gases according to the rules set by the IPCC. With the model I investigated five alternative scenarios in comparison to the base-line scenario of Agenda 2000 agricultural policy. The alternative scenarios were: 1) the CAP reform of 2003, 2) free trade on agricultural commodities, 3) technological change, 4) banning the cultivation of organic soils and 5) the combination of the last three scenarios as the maximal achievement in reduction. The maximal achievement in the alternative scenario 5 was 1/3 of the level achieved on the base-line scenario. CAP reform caused only a minor reduction when com-pared to the base-line scenario. Instead, the free trade scenario and the scenario of technological change alone caused a significant reduction. The biggest single reduction was achieved by banning the cultivation of organic land. However, this was also the most questionable scenario to be real-ized, the reasons for this are further elaborated in the paper. The maximal reduction that can be achieved in the Finnish agricultural sector is about 11 % of the emission reduction that is needed to comply with the Kyoto protocol.

Tukien tuotannosta irrottamisen vaikutukset viljan, naudanlihan ja sianlihan tarjontaan Suomessa

This research discusses decoupling CAP (Common Agricultural Policy) support and impacts which may occur on grain cultivation area and supply of beef and pork in Finland. The study presents the definitions and studies on decoupled agricultural subsidies, the development of supply of grain, beef and pork in Finland and changes in leading factors affecting supply between 1970 and 2005. Decoupling agricultural subsidies means that the linkage between subsidies and production levels is disconnected; subsidies do not affect the amount produced. The hypothesis is that decoupling will decrease the amounts produced in agriculture substantially. In the supply research, the econometric models which represent supply of agricultural products are estimated based on the data of prices and amounts produced. With estimated supply models, the impacts of changes in prices and public policies, can be forecasted according to supply of agricultural products. In this study, three regression models describing combined cultivation areas of rye, wheat, oats and barley, and the supply of beef and pork are estimated. Grain cultivation area and supply of beef are estimated based on data from 1970 to 2005 and supply of pork on data from 1995 to 2005. The dependencies in the model are postulated to be linear. The explanatory variables in the grain model were average return per hectare, agricultural subsidies, grain cultivation area in the previous year and the cost of fertilization. The explanatory variables in the beef model were the total return from markets and subsidies and the amount of beef production in the previous year. In the pork model the explanatory variables were the total return, the price of piglet, investment subsidies, trend of increasing productivity and the dummy variable of the last quarter of the year. The R-squared of model of grain cultivation area was 0,81, the model of beef supply 0,77 and the model of pork supply 0,82. Development of grain cultivation area and supply of beef and pork was estimated for 2006 - 2013 with this regression model. In the basic scenario, development of explanatory variables in 2006 - 2013 was postulated to be the same as they used to be in average in 1995 - 2005. After the basic scenario the impacts of decoupling CAP subsidies and domestic subsidies on cultivation area and supply were simulated. According to the results of the decoupling CAP subsidies scenario, grain cultivation area decreases from 1,12 million hectares in 2005 to 1,0 million hectares in 2013 and supply of beef from 88,8 million kilos in 2005 to 67,7 million kilos in 2013. Decoupling domestic and investment subsidies will decrease the supply of pork from 194 million kilos in 2005 to 187 million kilos in 2006. By 2013 the supply of pork grows into 203 million kilos.

Weed–pathogen interactions and elevated CO2: growth changes in favour of the biological control agent

In this study, we used Parthenium hysterophorus and one of its biological control agents, the winter rust (Puccinia abrupta var. partheniicola) as a model system to investigate how the weed may respond to infection under a climate change scenario involving an elevated atmospheric CO2 (550 μmol mol−1) concentration. Under such a scenario, P. hysterophorus plants grew significantly taller (52%) and produced more biomass (55%) than under the ambient atmospheric CO2 concentration (380 μmol mol−1). Following winter rust infection, biomass production was reduced by 17% under the ambient and by 30% under the elevated atmospheric CO2 concentration. The production of branches and leaf area was significantly increased by 62% and 120%, under the elevated as compared with ambient CO2 concentration, but unaffected by rust infection under either condition. The photosynthesis and water use efficiency (WUE) of P. hysterophorus plants were increased by 94% and 400%, under the elevated as compared with the ambient atmospheric CO2 concentration. However, in the rust-infected plants, the photosynthesis and WUE decreased by 18% and 28%, respectively, under the elevated CO2 and were unaffected by the ambient atmospheric CO2 concentration. The results suggest that although P. hysterophorus will benefit from a future climate involving an elevation of the atmospheric CO2 concentration, it is also likely that the winter rust will perform more effectively as a biological control agent under these same conditions.

Scientists in Control: a progressive approach to preparing work ready graduates in QC, EQA and method evaluation

Introduction QC, EQA and method evaluation are integral to delivery of quality patient results. To ensure QUT graduates have a solid grounding in these key areas of practice, a theory-to-practice approach is used to progressively develop and consolidate these skills. Methods Using a BCG assay for serum albumin, each student undertakes an eight week project analysing two levels of QC alongside ‘patient’ samples. Results are assessed using both single rules and Multirules. Concomitantly with the QC analyses, an EQA project is undertaken; students analyse two EQA samples, twice in the semester. Results are submitted using cloud software and data for the full ‘peer group’ returned to students in spreadsheets and incomplete Youden plots. Youden plots are completed with target values and calculated ALP values and analysed for ‘lab’ and method performance. The method has a low-level positive bias, which leads to the need to investigate an alternative method. Building directly on the EQA of the first project and using the scenario of a lab that services renal patients, students undertake a method validation comparing BCP and BCG assays in another eight-week project. Precision and patient comparison studies allow students to assess whether the BCP method addresses the proportional bias of the BCG method and overall is a ‘better’ alternative method for analysing serum albumin, accounting for pragmatic factors, such as cost, as well as performance characteristics. Results Students develop understanding of the purpose and importance of QC and EQA in delivering quality results, the need to optimise testing to deliver quality results and importantly, a working knowledge of the analyses that go into ensuring this quality. In parallel to developing these key workplace competencies, students become confident, competent practitioners, able to pipette accurately and precisely and organise themselves in a busy, time pressured work environment.

Damage assessment of structures with uncertainty by using mode-shape curvatures and fuzzy logic

Uncertainties associated with the structural model and measured vibration data may lead to unreliable damage detection. In this paper, we show that geometric and measurement uncertainty cause considerable problem in damage assessment which can be alleviated by using a fuzzy logic-based approach for damage detection. Curvature damage factor (CDF) of a tapered cantilever beam are used as damage indicators. Monte Carlo simulation (MCS) is used to study the changes in the damage indicator due to uncertainty in the geometric properties of the beam. Variation in these CDF measures due to randomness in structural parameter, further contaminated with measurement noise, are used for developing and testing a fuzzy logic system (FLS). Results show that the method correctly identifies both single and multiple damages in the structure. For example, the FLS detects damage with an average accuracy of about 95 percent in a beam having geometric uncertainty of 1 percent COV and measurement noise of 10 percent in single damage scenario. For multiple damage case, the FLS identifies damages in the beam with an average accuracy of about 94 percent in the presence of above mentioned uncertainties. The paper brings together the disparate areas of probabilistic analysis and fuzzy logic to address uncertainty in structural damage detection.

Radical Enhanced Atomic Layer Deposition of Metals and Oxides

Atomic Layer Deposition (ALD) is a chemical, gas-phase thin film deposition method. It is known for its ability for accurate and precise thickness control, and uniform and conformal film growth. One area where ALD has not yet excelled is film deposition at low temperatures. Also deposition of metals, besides the noble metals, has proven to be quite challenging. To alleviate these limitations, more aggressive reactants are required. One such group of reactants are radicals, which may be formed by dissociating gases. Dissociation is most conveniently done with a plasma source. For example, dissociating molecular oxygen or hydrogen, oxygen or hydrogen radicals are generated. The use of radicals in ALD may surmount some of the above limitations: oxide film deposition at low temperatures may become feasible if oxygen radicals are used as they are highly reactive. Also, as hydrogen radicals are very effective reducing agents, they may be used to deposit metals. In this work, a plasma source was incorporated in an existing ALD reactor for radical generation, and the reactor was used to study five different Radical Enhanced ALD processes. The modifications to the existing reactor and the different possibilities during the modification process are discussed. The studied materials include two metals, copper and silver, and three oxides, aluminium oxide, titanium dioxide and tantalum oxide. The materials were characterized and their properties were compared to other variations of the same process, utilizing the same metal precursor, to understand what kind of effect the non-metal precursor has on the film properties and growth characteristics. Both metals were deposited successfully, and silver for the first time by ALD. The films had low resistivity and grew conformally in the ALD mode, demonstrating that the REALD of metals is true ALD. The oxide films had exceptionally high growth rates, and aluminium oxide grew at room temperature with low cycle times and resulted in good quality films. Both aluminium oxide and titanium dioxide were deposited on natural fibres without damaging the fibre. Tantalum oxide was also deposited successfully, with good electrical properties, but at slightly higher temperature than the other two oxides, due to the evaporation temperature required by the metal precursor. Overall, the ability of REALD to deposit metallic and oxide films with high quality at low temperatures was demonstrated.

Spatial impact of projected changes in rainfall and temperature on wheat yields in Australia

Climate projections over the next two to four decades indicate that most of Australia’s wheat-belt is likely to become warmer and drier. Here we used a shire scale, dynamic stress-index model that accounts for the impacts of rainfall and temperature on wheat yield, and a range of climate change projections from global circulation models to spatially estimate yield changes assuming no adaptation and no CO2 fertilisation effects. We modelled five scenarios, a baseline climate (climatology, 1901–2007), and two emission scenarios (“low” and “high” CO2) for two time horizons, namely 2020 and 2050. The potential benefits from CO2 fertilisation were analysed separately using a point level functional simulation model. Irrespective of the emissions scenario, the 2020 projection showed negligible changes in the modelled yield relative to baseline climate, both using the shire or functional point scale models. For the 2050-high emissions scenario, changes in modelled yield relative to the baseline ranged from −5 % to +6 % across most of Western Australia, parts of Victoria and southern New South Wales, and from −5 to −30 % in northern NSW, Queensland and the drier environments of Victoria, South Australia and in-land Western Australia. Taking into account CO2 fertilisation effects across a North–south transect through eastern Australia cancelled most of the yield reductions associated with increased temperatures and reduced rainfall by 2020, and attenuated the expected yield reductions by 2050.

Analysis and prevention of extreme vibration in high speed craft - A research framework

Extreme vibration has been reported for small, high speed craft in the maritime sector, with performance and health threatening effects on boat operators and crew. Musculoskeletal injuries are an enduring problem for high speed craft passengers. Spinal or joint injuries and neurological disorders may occur from repetitive pounding over rough water, continued vibration and single impact events. The risk from whole body vibration (WBV) induced through the small vessels mainly depends on time spent on the craft, which can’t be changed in a military scenario; as well as the number of shocks and jolts, and their magnitude and frequency. In the European Union for example, physical agents directives require all employers to control exposure to a number of physical agents including noise and vibration. The EC Vibration Directive 2002/44/EC then sets out regulations for the control of health and safety risks from the exposure of workers to hand arm vibration (HAV) and WBV in the workplace. Australia has exposure standards relating to WBV, AS 2670.1-2001 – Evaluation of human exposure to whole body vibration. This standard is identical to the ISO 2631-1:1997, Mechanical vibration and shock – Evaluation of human exposure to whole-body vibration. Currently, none of the jurisdictions in Australia have specific regulations for vibration exposures in workplaces. However vibration is mentioned to varying degrees in their general regulations, codes of practice and guidance material. WBV on high speed craft is normally caused by “continuous 'hammering' from short steep seas or wind against tide conditions. Shock on High Speed Craft is usually caused by random impacts. Military organisations need the knowledge to make informed decisions regarding their marine operations, compliance with legislation and potentially harmful health effects, and develop and implement appropriate counter-measures. Marine case studies in the UK such as published MAIB (Marine Accident Investigation Branch) reports show injuries that have occurred in operation, and subsequent MCA (Maritime Coastguard Agency) guidance is provided (MGN 436 (M+F), WHOLE-BODY VIBRATION: Guidance on Mitigating Against the Effects of Shocks and Impacts on Small Vessels. MCA, 2011). This paper proposes a research framework to study the origin, impact and pathways for prevention of WBV in small, high speed craft in a maritime environment.

Interference and management of parthenium: The world's most important invasive weed

Parthenium (Parthenium hysterophorus L.) is one of the most aggressive herbaceous weeds of the Asteraceae family. It is widely distributed, almost across the world and has become the most important invasive weed. Comprehensive information on interference and control of this devastating species is required to facilitate better management decisions. A broad review on the interference and management of this weed is presented here. Inspite of its non-tropical origin, parthenium grows quite successfully under a wide range of environmental conditions. It is spreading rapidly in Australia, Western Africa, Asia, and Caribbean countries, and has become a serious weed of pastures, wastelands, roadsides, railwaysides, water courses, and agricultural crops. The infestations of parthenium have been reported to reduce grain and forage yields by 40–90%. The spread of parthenium has been attributed to its allelopathic activity, strong competitiveness for soil moisture and nutrients, and its capability to exploit natural biodiversity. Allelochemicals released from parthenium has been reported to decrease germination and growth of agronomic crops, vegetables, trees, and many other weed species. Growth promoting effects of parthenium extracts at low concentrations have also been reported in certain crops. Many pre- and post-emergence herbicides have been evaluated for the control of parthenium in cropped and non-cropped areas. The most effective herbicides are clomazone, metribuzin, atrazine, glyphosate, metsulfuron methyl, butachlor, bentazone, dicamba, and metsulfuron methyl. Extracts, residues, and essential oils of many allelopathic herbs (Cassia, Amaranthus, and Xanthium species), grasses (Imperata and Desmostachya species), and trees (Eucalyptus, Azadirachta, Mangifera species, etc.) have demonstrated inhibitory activities on seed germination and seedling growth of parthenium. Metabolites of several fungi, e.g., Fusarium oxysporun and Fusarium monilifonne, exhibit bioherbicidal activity against seeds and seedlings of this weed. Intercropping, displacement by competitive plant species like Cassia species, bisset bluegrass, florgen blugress, buffelgrass, along with the use of biological control agents like Mexican beetle, seed-feeding and stem-boring weevils, stem-galling and leaf-mining moth, and sap-feeding plant hopper, have been reported as possible strategies for the management of parthenium. An appropriate integration of these approaches could help minimize spread of parthenium and provide sustainable weed management with reduced environmental concerns.

Digital elevation model error in terrain analysis

Digital elevation models (DEMs) have been an important topic in geography and surveying sciences for decades due to their geomorphological importance as the reference surface for gravita-tion-driven material flow, as well as the wide range of uses and applications. When DEM is used in terrain analysis, for example in automatic drainage basin delineation, errors of the model collect in the analysis results. Investigation of this phenomenon is known as error propagation analysis, which has a direct influence on the decision-making process based on interpretations and applications of terrain analysis. Additionally, it may have an indirect influence on data acquisition and the DEM generation. The focus of the thesis was on the fine toposcale DEMs, which are typically represented in a 5-50m grid and used in the application scale 1:10 000-1:50 000. The thesis presents a three-step framework for investigating error propagation in DEM-based terrain analysis. The framework includes methods for visualising the morphological gross errors of DEMs, exploring the statistical and spatial characteristics of the DEM error, making analytical and simulation-based error propagation analysis and interpreting the error propagation analysis results. The DEM error model was built using geostatistical methods. The results show that appropriate and exhaustive reporting of various aspects of fine toposcale DEM error is a complex task. This is due to the high number of outliers in the error distribution and morphological gross errors, which are detectable with presented visualisation methods. In ad-dition, the use of global characterisation of DEM error is a gross generalisation of reality due to the small extent of the areas in which the decision of stationarity is not violated. This was shown using exhaustive high-quality reference DEM based on airborne laser scanning and local semivariogram analysis. The error propagation analysis revealed that, as expected, an increase in the DEM vertical error will increase the error in surface derivatives. However, contrary to expectations, the spatial au-tocorrelation of the model appears to have varying effects on the error propagation analysis depend-ing on the application. The use of a spatially uncorrelated DEM error model has been considered as a 'worst-case scenario', but this opinion is now challenged because none of the DEM derivatives investigated in the study had maximum variation with spatially uncorrelated random error. Sig-nificant performance improvement was achieved in simulation-based error propagation analysis by applying process convolution in generating realisations of the DEM error model. In addition, typology of uncertainty in drainage basin delineations is presented.

An approach to palaeoseismicity in the Olkiluoto (sea) area during the early Holocene

Olkiluoto Island is situated in the northern Baltic Sea, near the southwestern coast of Finland, and is the proposed location of a spent nuclear fuel repository. This study examined Holocene palaeoseismicity in the Olkiluoto area and in the surrounding sea areas by computer simulations together with acoustic-seismic, sedimentological and dating methods. The most abundant rock type on the island is migmatic mica gneiss, intruded by tonalites, granodiorites and granites. The surrounding Baltic Sea seabed consists of Palaeoproterozoic crystalline bedrock, which is to a great extent covered by younger Mesoproterozoic sedimentary rocks. The area contains several ancient deep-seated fracture zones that divide it into bedrock blocks. The response of bedrock at the Olkiluoto site was modelled considering four future ice-age scenarios. Each scenario produced shear displacements of fractures with different times of occurrence and varying recovery rates. Generally, the larger the maximum ice load, the larger were the permanent shear displacements. For a basic case, the maximum shear displacements were a few centimetres at the proposed nuclear waste repository level, at proximately 500 m b.s.l. High-resolution, low-frequency echo-sounding was used to examine the Holocene submarine sedimentary structures and possible direct and indirect indicators of palaeoseismic activity in the northern Baltic Sea. Echo-sounding profiles of Holocene submarine sediments revealed slides and slumps, normal faults, debris flows and turbidite-type structures. The profiles also showed pockmarks and other structures related to gas or groundwater seepages, which might be related to fracture zone activation. Evidence of postglacial reactivation in the study area was derived from the spatial occurrence of some of the structures, especial the faults and the seepages, in the vicinity of some old bedrock fracture zones. Palaeoseismic event(s) (a single or several events) in the Olkiluoto area were dated and the palaeoenvironment was characterized using palaeomagnetic, biostratigraphical and lithostratigraphical methods, enhancing the reliability of the chronology. Combined lithostratigraphy, biostratigraphy and palaeomagnetic stratigraphy revealed an age estimation of 10 650 to 10 200 cal. years BP for the palaeoseismic event(s). All Holocene sediment faults in the northern Baltic Sea occur at the same stratigraphical level, the age of which is estimated at 10 700 cal. years BP (9500 radiocarbon years BP). Their movement is suggested to have been triggered by palaeoseismic event(s) when the Late Weichselian ice sheet was retreating from the site and bedrock stresses were released along the bedrock fracture zones. Since no younger or repeated traces of seismic events were found, it corroborates the suggestion that the major seismic activity occurred within a short time during and after the last deglaciation. The origin of the gas/groundwater seepages remains unclear. Their reflections in the echo-sounding profiles imply that part of the gas is derived from the organic-bearing Litorina and modern gyttja clays. However, at least some of the gas is derived from the bedrock. Additional information could be gained by pore water analysis from the pockmarks. Information on postglacial fault activation and possible gas and/or fluid discharges under high hydraulic heads has relevance in evaluating the safety assessment of a planned spent nuclear fuel repository in the region.

Veneer Grade Analysis of Early to Mid-rotation Plantation Eucalyptus Species in Australia

Processing Australian hardwood plantations into rotary veneer can produce more acceptable marketable product recoveries compared to traditional processing techniques (e.g. sawmilling). Veneers resulting from processing trials from six commercially important Australian hardwood species were dominated by D-grade veneer. Defects such as encased knots, gum pockets, gum veins, surface roughness, splits, bark pockets, and decay impacted the final assigned grade. Four grading scenarios were adopted. The first included a change to the grade limitations for gum pockets and gum veins, while the second investigated the potential impact of effective pruning on grade recovery. Although both scenarios individually had a positive impact on achieving higher face grade veneer qualities, the third and fourth scenarios, which combined both, had a substantial impact, with relative veneer values increasing up to 18.2% using conservative calculations (scenario three) or up to 22.6% (scenario four) where some of the upgraded veneers were further upgraded to A-grade, which attracts superior value. The total change in veneer value was found to depend on the average billet diameter unless defects other than those relating to the scenarios (gum or knots) restricted the benefit of pruning and gum upgrading. This was the case for species prone to high levels of growth stress and related defects.

Designing against boredom in automated driving

I draw on four years of experience in mobility and transport research. I was part of a research project with Siemens, for which we identified global trends in urban mobility and explored future business opportunities through scenario planning methods. Some of the proposed solutions for personal and public transport included driverless vehicles. In collaboration with BMW Design I explored the potential of new materials for automotive user interfaces...

Mathematical Aspects of Financial Markets with Frictions

Frictions are factors that hinder trading of securities in financial markets. Typical frictions include limited market depth, transaction costs, lack of infinite divisibility of securities, and taxes. Conventional models used in mathematical finance often gloss over these issues, which affect almost all financial markets, by arguing that the impact of frictions is negligible and, consequently, the frictionless models are valid approximations. This dissertation consists of three research papers, which are related to the study of the validity of such approximations in two distinct modeling problems. Models of price dynamics that are based on diffusion processes, i.e., continuous strong Markov processes, are widely used in the frictionless scenario. The first paper establishes that diffusion models can indeed be understood as approximations of price dynamics in markets with frictions. This is achieved by introducing an agent-based model of a financial market where finitely many agents trade a financial security, the price of which evolves according to price impacts generated by trades. It is shown that, if the number of agents is large, then under certain assumptions the price process of security, which is a pure-jump process, can be approximated by a one-dimensional diffusion process. In a slightly extended model, in which agents may exhibit herd behavior, the approximating diffusion model turns out to be a stochastic volatility model. Finally, it is shown that when agents' tendency to herd is strong, logarithmic returns in the approximating stochastic volatility model are heavy-tailed. The remaining papers are related to no-arbitrage criteria and superhedging in continuous-time option pricing models under small-transaction-cost asymptotics. Guasoni, Rásonyi, and Schachermayer have recently shown that, in such a setting, any financial security admits no arbitrage opportunities and there exist no feasible superhedging strategies for European call and put options written on it, as long as its price process is continuous and has the so-called conditional full support (CFS) property. Motivated by this result, CFS is established for certain stochastic integrals and a subclass of Brownian semistationary processes in the two papers. As a consequence, a wide range of possibly non-Markovian local and stochastic volatility models have the CFS property.