Economic valuation of natural resources: a handbook for coastal resource policymakers

Professionals who are responsible for coastal environmental and natural resource planning and management have a need to become conversant with new concepts designed to provide quantitative measures of the environmental benefits of natural resources. These amenities range from beaches to wetlands to clean water and other assets that normally are not bought and sold in everyday markets. At all levels of government — from federal agencies to townships and counties — decisionmakers are being asked to account for the costs and benefits of proposed actions. To non-specialists, the tools of professional economists are often poorly understood and sometimes inappropriate for the problem at hand. This handbook is intended to bridge this gap. The most widely used organizing tool for dealing with natural and environmental resource choices is benefit-cost analysis — it offers a convenient way to carefully identify and array, quantitatively if possible, the major costs, benefits, and consequences of a proposed policy or regulation. The major strength of benefit-cost analysis is not necessarily the predicted outcome, which depends upon assumptions and techniques, but the process itself, which forces an approach to decision-making that is based largely on rigorous and quantitative reasoning. However, a major shortfall of benefit-cost analysis has been the difficulty of quantifying both benefits and costs of actions that impact environmental assets not normally, nor even regularly, bought and sold in markets. Failure to account for these assets, to omit them from the benefit-cost equation, could seriously bias decisionmaking, often to the detriment of the environment. Economists and other social scientists have put a great deal of effort into addressing this shortcoming by developing techniques to quantify these non-market benefits. The major focus of this handbook is on introducing and illustrating concepts of environmental valuation, among them Travel Cost models and Contingent Valuation. These concepts, combined with advances in natural sciences that allow us to better understand how changes in the natural environment influence human behavior, aim to address some of the more serious shortcomings in the application of economic analysis to natural resource and environmental management and policy analysis. Because the handbook is intended for non-economists, it addresses basic concepts of economic value such as willingness-to-pay and other tools often used in decision making such as costeffectiveness analysis, economic impact analysis, and sustainable development. A number of regionally oriented case studies are included to illustrate the practical application of these concepts and techniques.

Handling uncertainty in housing stock models

Housing stock models can be useful tools in helping to assess the environmental and socio-economic impacts of retrofits to residential buildings; however, existing housing stock models are not able to quantify the uncertainties that arise in the modelling process from various sources, thus limiting the role that they can play in helping decision makers. This paper examines the different sources of uncertainty involved in housing stock models and proposes a framework for handling these uncertainties. This framework involves integrating probabilistic sensitivity analysis with a Bayesian calibration process in order to quantify uncertain parameters more accurately. The proposed framework is tested on a case study building, and suggestions are made on how to expand the framework for retrofit analysis at an urban-scale. © 2011 Elsevier Ltd.

Transport energy demand: techno-economic modelling and scenarios for Irish climate policy

The case for energy policy modelling is strong in Ireland, where stringent EU climate targets are projected to be overshot by 2015. Policy targets aiming to deliver greenhouse gas and renewable energy targets have been made, but it is unclear what savings are to be achieved and from which sectors. Concurrently, the growth of personal mobility has caused an astonishing increase in CO2 emissions from private cars in Ireland, a 37% rise between 2000 and 2008, and while there have been improvements in the efficiency of car technology, there was no decrease in the energy intensity of the car fleet in the same period. This thesis increases the capacity for evidenced-based policymaking in Ireland by developing techno-economic transport energy models and using them to analyse historical trends and to project possible future scenarios. A central focus of this thesis is to understand the effect of the car fleet‘s evolving technical characteristics on energy demand. A car stock model is developed to analyse this question from three angles: Firstly, analysis of car registration and activity data between 2000 and 2008 examines the trends which brought about the surge in energy demand. Secondly, the car stock is modelled into the future and is used to populate a baseline “no new policy” scenario, looking at the impact of recent (2008-2011) policy and purchasing developments on projected energy demand and emissions. Thirdly, a range of technology efficiency, fuel switching and behavioural scenarios are developed up to 2025 in order to indicate the emissions abatement and renewable energy penetration potential from alternative policy packages. In particular, an ambitious car fleet electrification target for Ireland is examined. The car stock model‘s functionality is extended by linking it with other models: LEAP-Ireland, a bottom-up energy demand model for all energy sectors in the country; Irish TIMES, a linear optimisation energy system model; and COPERT, a pollution model. The methodology is also adapted to analyse trends in freight energy demand in a similar way. Finally, this thesis addresses the gap in the representation of travel behaviour in linear energy systems models. A novel methodology is developed and case studies for Ireland and California are presented using the TIMES model. Transport Energy

Nonparametric estimation of structural models for high-frequency currency market data

Empirical modeling of high-frequency currency market data reveals substantial evidence for nonnormality, stochastic volatility, and other nonlinearities. This paper investigates whether an equilibrium monetary model can account for nonlinearities in weekly data. The model incorporates time-nonseparable preferences and a transaction cost technology. Simulated sample paths are generated using Marcet's parameterized expectations procedure. The paper also develops a new method for estimation of structural economic models. The method forces the model to match (under a GMM criterion) the score function of a nonparametric estimate of the conditional density of observed data. The estimation uses weekly U.S.-German currency market data, 1975-90. © 1995.

Estimating equilibrium models of sorting across locations

While there is growing interest in measuring the size and scope of local spillovers, it is well understood that such spillovers cannot be distinguished from unobservable local attributes using solely the observed location decisions of individuals or firms. We propose an empirical strategy for recovering estimates of spillovers in the presence of unobserved local attributes for a broadly applicable class of equilibrium sorting models. Our approach relies on an IV strategy derived from the internal logic of the sorting model itself. We show practically how the strategy is implemented, provide intuition for our instruments, discuss the role of effective choice-set variation in identifying the model, and carry-out a series of Monte Carlo simulations to demonstrate performance in small samples. © 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Bayesian Analysis of Latent Threshold Dynamic Models

We discuss a general approach to dynamic sparsity modeling in multivariate time series analysis. Time-varying parameters are linked to latent processes that are thresholded to induce zero values adaptively, providing natural mechanisms for dynamic variable inclusion/selection. We discuss Bayesian model specification, analysis and prediction in dynamic regressions, time-varying vector autoregressions, and multivariate volatility models using latent thresholding. Application to a topical macroeconomic time series problem illustrates some of the benefits of the approach in terms of statistical and economic interpretations as well as improved predictions. Supplementary materials for this article are available online. © 2013 Copyright Taylor and Francis Group, LLC.

Modeling economy-wide vs sectoral climate policies using combined aggregate-sectoral models

Economic analyses of climate change policies frequently focus on reductions of energy-related carbon dioxide emissions via market-based, economy-wide policies. The current course of environment and energy policy debate in the United States, however, suggests an alternative outcome: sector-based and/or inefficiently designed policies. This paper uses a collection of specialized, sector-based models in conjunction with a computable general equilibrium model of the economy to examine and compare these policies at an aggregate level. We examine the relative cost of different policies designed to achieve the same quantity of emission reductions. We find that excluding a limited number of sectors from an economy-wide policy does not significantly raise costs. Focusing policy solely on the electricity and transportation sectors doubles costs, however, and using non-market policies can raise cost by a factor of ten. These results are driven in part by, and are sensitive to, our modeling of pre-existing tax distortions. Copyright © 2006 by the IAEE. All rights reserved.

Multiple attractors of host-parasitoid models with integrated pest management strategies: eradication, persistence and outbreak

Host-parasitoid models including integrated pest management (IPM) interventions with impulsive effects at both fixed and unfixed times were analyzed with regard to host-eradication, host-parasitoid persistence and host-outbreak solutions. The host-eradication periodic solution with fixed moments is globally stable if the host's intrinsic growth rate is less than the summation of the mean host-killing rate and the mean parasitization rate during the impulsive period. Solutions for all three categories can coexist, with switch-like transitions among their attractors showing that varying dosages and frequencies of insecticide applications and the numbers of parasitoids released are crucial. Periodic solutions also exist for models with unfixed moments for which the maximum amplitude of the host is less than the economic threshold. The dosages and frequencies of IPM interventions for these solutions are much reduced in comparison with the pest-eradication periodic solution. Our results, which are robust to inclusion of stochastic effects and with a wide range of parameter values, confirm that IPM is more effective than any single control tactic.

Making modelling count - increasing the contribution of shelf-seas community and ecosystem models to policy development and management

Marine legislation is becoming more complex and marine ecosystem-based management is specified in national and regional legislative frameworks. Shelf-seas community and ecosystem models (hereafter termed ecosystem models) are central to the delivery of ecosystem-based management, but there is limited uptake and use of model products by decision makers in Europe and the UK in comparison with other countries. In this study, the challenges to the uptake and use of ecosystem models in support of marine environmental management are assessed using the UK capability as an example. The UK has a broad capability in marine ecosystem modelling, with at least 14 different models that support management, but few examples exist of ecosystem modelling that underpin policy or management decisions. To improve understanding of policy and management issues that can be addressed using ecosystem models, a workshop was convened that brought together advisors, assessors, biologists, social scientists, economists, modellers, statisticians, policy makers, and funders. Some policy requirements were identified that can be addressed without further model development including: attribution of environmental change to underlying drivers, integration of models and observations to develop more efficient monitoring programmes, assessment of indicator performance for different management goals, and the costs and benefit of legislation. Multi-model ensembles are being developed in cases where many models exist, but model structures are very diverse making a standardised approach of combining outputs a significant challenge, and there is a need for new methodologies for describing, analysing, and visualising uncertainties. A stronger link to social and economic systems is needed to increase the range of policy-related questions that can be addressed. It is also important to improve communication between policy and modelling communities so that there is a shared understanding of the strengths and limitations of ecosystem models.

Applications of statistical models in proportioning medium strength self-compacting concrete

Self-compacting concrete (SCC) is generally designed with a relatively higher content of finer, which includes cement, and dosage of superplasticizer than the conventional concrete. The design of the current SCC leads to high compressive strength, which is already used in special applications, where the high cost of materials can be tolerated. Using SCC, which eliminates the need for vibration, leads to increased speed of casting and thus reduces labour requirement, energy consumption, construction time, and cost of equipment. In order to obtain and gain maximum benefit from SCC it has to be used for wider applications. The cost of materials will be decreased by reducing the cement content and using a minimum amount of admixtures. This paper reviews statistical models obtained from a factorial design which was carried out to determine the influence of four key parameters on filling ability, passing ability, segregation and compressive strength. These parameters are important for the successful development of medium strength self-compacting concrete (MS-SCC). The parameters considered in the study were the contents of cement and pulverised fuel ash (PFA), water-to-powder ratio (W/P), and dosage of superplasticizer (SP). The responses of the derived statistical models are slump flow, fluidity loss, rheological parameters, Orimet time, V-funnel time, L-box, JRing combined to Orimet, JRing combined to cone, fresh segregation, and compressive strength at 7, 28 and 90 days. The models are valid for mixes made with 0.38 to 0.72 W/P ratio, 60 to 216 kg/m3 of cement content, 183 to 317 kg/m3 of PFA and 0 to 1% of SP, by mass of powder. The utility of such models to optimize concrete mixes to achieve good balance between filling ability, passing ability, segregation, compressive strength, and cost is discussed. Examples highlighting the usefulness of the models are presented using isoresponse surfaces to demonstrate single and coupled effects of mix parameters on slump flow, loss of fluidity, flow resistance, segregation, JRing combined to Orimet, and compressive strength at 7 and 28 days. Cost analysis is carried out to show trade-offs between cost of materials and specified consistency levels and compressive strength at 7 and 28 days that can be used to identify economic mixes. The paper establishes the usefulness of the mathematical models as a tool to facilitate the test protocol required to optimise medium strength SCC.

Cultural policy models and cultural facilities models: from national to local models. Analysis of Barcelona’s case

The development of cultural policy analysis by social science has been produced a theorization about cultural policy models from sociology and political science. This analysis shows the influence of the national model of cultural policy on the forms of governance and management of cultural facilities. However, in this paper we will defend that currently the local model of cultural policy decisively influences the model of cultural institutions. This is explained by the growing importance of culture in local development strategies. In order to demonstrate this we will analyze the case of the Barcelona Model of local development and cultural policy, that is characterized for the level of local government leadership, multilevel governance, the use of culture in urban planning processes and a tendency to use public-private partnership in public management. This Model influences the genesis and development of the cultural facilities and it produces a singular and relatively successful model.

Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random-Effects Models

This paper reports the findings from a discrete-choice experiment designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness-to-pay values for every individual in the sample. This departs from customary approaches in which the willingness-to-pay estimates are normally expressed as measures of central tendency of an a priori distribution. Random-effects models for panel data are subsequently used to identify the determinants of the individual-specific willingness-to-pay estimates. In comparison with the standard methods used to incorporate individual-specific variables into the analysis of discrete-choice experiments, the analytical approach outlined in this paper is shown to add considerable explanatory power to the welfare estimates.

Perceptions and reality: Economic voting at the 2004 European Parliament elections

One of the most influential explanations of voting behaviour is based on economic factors: when the economy is doing well, voters reward the incumbent government and when the economy is doing badly, voters punish the incumbent. This reward-punishment model is thought to be particularly appropriate at second order contests such as European Parliament elections. Yet operationalising this economic voting model using citizens' perceptions of economic performance may suffer from endogeneity problems if citizens' perceptions are in fact a function of their party preferences rather than being a cause of their party preferences. Thus, this article models a 'strict' version of economic voting in which they purge citizens' economic perceptions of partisan effects and only use as a predictor of voting that portion of citizens' economic perceptions that is caused by the real world economy. Using data on voting at the 2004 European Parliament elections for 23 European Union electorates, the article finds some, but limited, evidence for economic voting that is dependent on both voter sophistication and clarity of responsibility for the economy within any country. First, only politically sophisticated voters' subjective economic assessments are in fact grounded in economic reality. Second, the portion of subjective economic assessments that is a function of the real world economy is a significant predictor of voting only in single party government contexts where there can be a clear attribution of responsibility. For coalition government contexts, the article finds essentially no impact of the real economy via economic perceptions on vote choice, at least at European Parliament elections.

Generalized social trust across 22 European countries: A multi-level analysis of four competing models

Concern with what can explain variation in generalized social trust has led to an abundance of theoretical models. Defining generalized social trust as a belief in human benevolence, we focus on the emancipation theory and social capital theory as well as the ethnic diversity and economic development models of trust. We then determine which dimensions of individuals’ behavior and attitudes as well as of their national context are the most important predictors. Using data from 20 countries that participated in round one of the European Social Survey, we test these models at their respective level of analysis, individual and/or national. Our analysis revealed that individuals’ own trust in the political system as a moral and competent institution was the most important predictor of generalized social trust at the individual level, while a country’s level of affluence was the most important contextual predictor, indicating that different dimensions are significant at the two levels of analysis. This analysis also raised further questions as to the meaning of social capital at the two levels of analysis and the conceptual equivalence of its civic engagement dimension across cultures.

A strategic review of electricity systems models

Electricity systems models are software tools used to manage electricity demand and the electricity systems, to trade electricity and for generation expansion planning purposes. Various portfolios and scenarios are modelled in order to compare the effects of decision making in policy and on business development plans in electricity systems so as to best advise governments and industry on the least cost economic and environmental approach to electricity supply, while maintaining a secure supply of sufficient quality electricity. The modelling techniques developed to study vertically integrated state monopolies are now applied in liberalised markets where the issues and constraints are more complex. This paper reviews the changing role of electricity systems modelling in a strategic manner, focussing on the modelling response to key developments, the move away from monopoly towards liberalised market regimes and the increasing complexity brought about by policy targets for renewable energy and emissions. The paper provides an overview of electricity systems modelling techniques, discusses a number of key proprietary electricity systems models used in the USA and Europe and provides an information resource to the electricity analyst not currently readily available in the literature on the choice of model to investigate different aspects of the electricity system.