The dynamics of commodity prices

In this paper we study the stochastic behavior of the prices and volatilities of a sample of six of the most important commodity markets and we compare these properties with those of the equity market. we observe a substantial degree of heterogeneity in the behavior of the series. Our findings show that it is inappropriate to treat different kinds of commodities as a single asset class as is frequently the case in the academic literature and in the industry. We demonstrate that commodities can be a useful diversifier of equity volatility as well as equity returns. Options pricing and hedging applications exemplify the economic impacts of the differences across commodities and between model specifications.

The impacts of climate change on river flow regimes at the global scale

This paper presents an assessment of the impacts of climate change on a series of indicators of hydrological regimes across the global domain, using a global hydrological model run with climate scenarios constructed using pattern-scaling from 21 CMIP3 (Coupled Model Intercomparison Project Phase 3) climate models. Changes are compared with natural variability, with a significant change being defined as greater than the standard deviation of the hydrological indicator in the absence of climate change. Under an SRES (Special Report on Emissions Scenarios) A1b emissions scenario, substantial proportions of the land surface (excluding Greenland and Antarctica) would experience significant changes in hydrological behaviour by 2050; under one climate model scenario (Hadley Centre HadCM3), average annual runoff increases significantly over 47% of the land surface and decreases over 36%; only 17% therefore sees no significant change. There is considerable variability between regions, depending largely on projected changes in precipitation. Uncertainty in projected river flow regimes is dominated by variation in the spatial patterns of climate change between climate models (hydrological model uncertainty is not included). There is, however, a strong degree of consistency in the overall magnitude and direction of change. More than two-thirds of climate models project a significant increase in average annual runoff across almost a quarter of the land surface, and a significant decrease over 14%, with considerably higher degrees of consistency in some regions. Most climate models project increases in runoff in Canada and high-latitude eastern Europe and Siberia, and decreases in runoff in central Europe, around the Mediterranean, the Mashriq, central America and Brasil. There is some evidence that projecte change in runoff at the regional scale is not linear with change in global average temperature change. The effects of uncertainty in the rate of future emissions is relatively small

Economic analysis of international supply chains: an internalization perspective

Offshoring and outsourcing in global value chains have been extensively analyzed from a strategic management perspective (Gereffi & Li, 2012; Gereffi, Humphrey & Sturgeon, 2005; Mudambi & Venzin, 2010). This paper examines these issues from an internalization theory perspective by summarizing the contribution of internalization theory to supply chain analysis; considering how a division of labor is coordinated and comparing coordination by management with coordination by the market; and discussing the formal models of supply chains developed by economists. Supply chain researchers possessing an interest in economic principles and good mathematical skills can make an important contribution to internalization theory, and it is hoped that this paper will encourage them to do so.

A dwelling-level investigation into the physical and socio-economic drivers of domestic energy consumption in England

The UK Government's Department for Energy and Climate Change has been investigating the feasibility of developing a national energy efficiency data framework covering both domestic and non-domestic buildings. Working closely with the Energy Saving Trust and energy suppliers, the aim is to develop a data framework to monitor changes in energy efficiency, develop and evaluate programmes and improve information available to consumers. Key applications of the framework are to understand trends in built stock energy use, identify drivers and evaluate the success of different policies. For energy suppliers, it could identify what energy uses are growing, in which sectors and why. This would help with market segmentation and the design of products. For building professionals, it could supplement energy audits and modelling of end-use consumption with real data and support the generation of accurate and comprehensive benchmarks. This paper critically examines the results of the first phase of work to construct a national energy efficiency data-framework for the domestic sector focusing on two specific issues: (a) drivers of domestic energy consumption in terms of the physical nature of the dwellings and socio-economic characteristics of occupants and (b) the impact of energy efficiency measures on energy consumption.

Predictable climate impacts of the decadal changes in the ocean in the 1990s

During the 1990s there was a major change in the state of the world's oceans. In particular, the North Atlantic underwent a rapid warming, with sea surface temperatures (SSTs) in the subpolar gyre region increasing by 1°C in just a few years. Associated with the changes in SST patterns were changes in the surface climate, in particular, a tendency for warm and dry conditions over areas of North America in all seasons, and warm springs and wet summers over areas of Europe. Here, the extent to which a climate prediction system initialized using observations of the ocean state is able to capture the observed changes in seasonal mean surface climate is investigated. Rather than examining predictions of the mid-1990s North Atlantic warming event itself, this study compares hindcasts started before and after the warming, relative to hindcasts that do not assimilate information. It is demonstrated that the hindcasts capture many aspects of the observed changes in seasonal mean surface climate, especially in North, South, and Central America and in Europe. Furthermore, the prediction system retains skill beyond the first year. Finally, it is shown that, in addition to memory of Atlantic SSTs, successfully predicting Pacific SSTs was likely important for the hindcasts to predict surface climate over North America.

Exploring socioeconomic impacts of forest based mitigation projects: Lessons from Brazil and Bolivia

This paper aims to contribute new insights globally and regionally on how carbon forest mitigation contributes to sustainable development in South America. Carbon finance has emerged as a potential policy option to tackling global climate change, degradation of forests, and social development in poor countries. This paper focuses on evaluating the socioeconomic impacts of a set of forest based mitigation pilot projects that emerged under the United Nations Framework Convention on Climate Change. The paper reviews research conducted in 2001–2002, drawing from empirical data from four pilot projects, derived from qualitative stakeholder interviews, and complemented by policy documents and literature. Of the four projects studied three are located in frontier areas, where there are considerable pressures for conversion of standing forest to agriculture. In this sense, forest mitigation projects have a substantial role to play in the region. Findings suggest however, that all four projects have experienced cumbersome implementation processes specifically, due to weak social objectives, poor communication, as well as time constraints. In three out of four cases, stakeholders highlighted limited local acceptance at the implementation stages. In the light of these findings, we discuss opportunities for implementation of future forest based mitigation projects in the land use sector.

Climatic impacts of fresh water hosing under Last Glacial Maximum conditions: a multi-model study

Fresh water hosing simulations, in which a fresh water flux is imposed in the North Atlantic to force fluctuations of the Atlantic Meridional Overturning Circulation, have been routinely performed, first to study the climatic signature of different states of this circulation, then, under present or future conditions, to investigate the potential impact of a partial melting of the Greenland ice sheet. The most compelling examples of climatic changes potentially related to AMOC abrupt variations, however, are found in high resolution palaeo-records from around the globe for the last glacial period. To study those more specifically, more and more fresh water hosing experiments have been performed under glacial conditions in the recent years. Here we compare an ensemble constituted by 11 such simulations run with 6 different climate models. All simulations follow a slightly different design, but are sufficiently close in their design to be compared. They all study the impact of a fresh water hosing imposed in the extra-tropical North Atlantic. Common features in the model responses to hosing are the cooling over the North Atlantic, extending along the sub-tropical gyre in the tropical North Atlantic, the southward shift of the Atlantic ITCZ and the weakening of the African and Indian monsoons. On the other hand, the expression of the bipolar see-saw, i.e., warming in the Southern Hemisphere, differs from model to model, with some restricting it to the South Atlantic and specific regions of the southern ocean while others simulate a widespread southern ocean warming. The relationships between the features common to most models, i.e., climate changes over the north and tropical Atlantic, African and Asian monsoon regions, are further quantified. These suggest a tight correlation between the temperature and precipitation changes over the extra-tropical North Atlantic, but different pathways for the teleconnections between the AMOC/North Atlantic region and the African and Indian monsoon regions.

People or machines? Assessing the impacts of smart meters and load controllers in Italian office spaces

Government initiatives in several developed and developing countries to roll-out smart meters call for research on the sustainability impacts of these devices. In principle smart meters bring about higher control over energy theft and lower consumption, but require a high level of engagement by end-users. An alternative consists of load controllers, which control the load according to pre-set parameters. To date, research has focused on the impacts of these two alternatives separately. This study compares the sustainability impacts of smart meters and load controllers in an occupied office building in Italy. The assessment is carried out on three different floors of the same building. Findings show that demand reductions associated with a smart meter device are 5.2% higher than demand reductions associated with the load controller.

The effect of climate policy on the impacts of climate change on river flows in the UK

This paper compares the effects of two indicative climate mitigation policies on river flows in six catchments in the UK with two scenarios representing un-mitigated emissions. It considers the consequences of uncertainty in both the pattern of catchment climate change as represented by different climate models and hydrological model parameterisation on the effects of mitigation policy. Mitigation policy has little effect on estimated flow magnitudes in 2030. By 2050 a mitigation policy which achieves a 2oC temperature rise target reduces impacts on low flows by 20-25% compared to a business-as-usual emissions scenario which increases temperatures by 4oC by the end of the 21st century, but this is small compared to the range in impacts between different climate model scenarios. However, the analysis also demonstrates that an early peak in emissions would reduce impacts by 40-60% by 2080 (compared with the 4oC pathway), easing the adaptation challenge over the long term, and can delay by several decades the impacts that would be experienced from around 2050 in the absence of policy. The estimated proportion of impacts avoided varies between climate model patterns and, to a lesser extent, hydrological model parameterisations, due to variations in the projected shape of the relationship between climate forcing and hydrological response.

The impacts of climate change on river flood risk at the global scale

This paper presents an assessment of the implications of climate change for global river flood risk. It is based on the estimation of flood frequency relationships at a grid resolution of 0.5 × 0.5°, using a global hydrological model with climate scenarios derived from 21 climate models, together with projections of future population. Four indicators of the flood hazard are calculated; change in the magnitude and return period of flood peaks, flood-prone population and cropland exposed to substantial change in flood frequency, and a generalised measure of regional flood risk based on combining frequency curves with generic flood damage functions. Under one climate model, emissions and socioeconomic scenario (HadCM3 and SRES A1b), in 2050 the current 100-year flood would occur at least twice as frequently across 40 % of the globe, approximately 450 million flood-prone people and 430 thousand km2 of flood-prone cropland would be exposed to a doubling of flood frequency, and global flood risk would increase by approximately 187 % over the risk in 2050 in the absence of climate change. There is strong regional variability (most adverse impacts would be in Asia), and considerable variability between climate models. In 2050, the range in increased exposure across 21 climate models under SRES A1b is 31–450 million people and 59 to 430 thousand km2 of cropland, and the change in risk varies between −9 and +376 %. The paper presents impacts by region, and also presents relationships between change in global mean surface temperature and impacts on the global flood hazard. There are a number of caveats with the analysis; it is based on one global hydrological model only, the climate scenarios are constructed using pattern-scaling, and the precise impacts are sensitive to some of the assumptions in the definition and application.