Five Essays in the Economics of Climate Engineering, Research, and Regulation under Uncertainty

This thesis revolves around two of the most prominent strategies for tackling environmental problems. One is technological innovation with a focus on Climate Engineering technologies, mostly Solar Radiation Management (SRM) (Crutzen 2006; Keith 2013). The other is regulatory decision-making under fundamental uncertainty. Research and learning are intimately linked with both strategies, thus playing a connecting role in this dissertation. Methodologically, this thesis takes a theoretical approach, combining modern environmental economics with recent developments in decision theory and the literature on regulation. The first part of this thesis advances the current state of knowledge on technological solutions to environmental problems, taking Climate Engineering technologies as an illustration. The focus here is on the implications of specific strategic conflicts on the incentives to develop SRM technologies with costly R&D. The two dimensions of strategic conflict analyzed are the intergenerational conflict among generations when the generation providing the technology for a future generation anticipates that the way the technology will be used is different from its own preferred profile (“The Intergenerational Transfer of Solar Radiation Management Capabilities and Atmospheric Carbon Stocks”) and the intragenerational conflict among countries that have different preferences for the amount of global cooling (“Free rider vs. free driver – R&D incentives for environmental technologies”). The findings can be summarized as follows: First, the intergenerational strategic conflict that results if a current generation cannot stipulate the specific use of SRM technologies can give rise to a rich set of outcomes in terms of R&D decision and abatement efforts, including the ban of SRM, abatement collapse, but also the development of SRM accompanied by an increase in abatement efforts in order to nudge future generation towards a specific use of the technology. Second, the anticipation of strategic conflicts between countries can give rise to suboptimal low or suboptimal high investments in R&D, depending on whether the expected strategic conflict in the deployment profile of the Climate Engineering technology is a standard free-rider or a free-driver conflict; the latter occurs if one country chooses high levels of SRM and thus imposes an externality on other countries (Weitzman 2012). The second part of this thesis focuses on regulatory decisions under uncertainty for which the standard expected utility framework is inadequate. This may happen if the matter of regulation involves complex processes or novel substances and thus requires a description of knowledge that goes beyond a unique probability distribution formulation. A well-known alternative are multiple prior models (static and dynamic axiomatizations were provided by Gilboa and Schmeidler 1989 and Epstein and Schneider 2003/2007, respectively). The third and fourth paper in this thesis overcome shortcomings in the existing decision-theoretic literature on multiple prior by establishing a consistent notion of the value of information (“Informativeness of Experiments for MEU – A Recursive Definition”) and well-behaved learning dynamics (“Learning Under Ambiguity – A Note on the Belief Dynamics of Epstein and Schneider (2007)”) for maxmin expected utility (MEU) preferences, a well-established ambiguity averse decision rule widely used to model precaution (Vardas and Xepapadeas 2010; Heal and Millner 2013). These decision-theoretical contributions stand for themselves, but also build the ground for the main paper in this part (“Information acquisition under Ambiguity – Why the Precautionary Principle may keep us uninformed”). This paper connects learning and technology choices by focusing on regulatory settings like the approval of a new pesticide in which ambiguous scientific knowledge can be reduced by the regulator by means of (costly) research, for instance with animal testing. In decision-theoretic terms, this paper analyzes active learning under ambiguity and is, to our knowledge, the first model to do so. We find a complex and surprising interplay of the maxmin rule and the research behavior of the regulator: Our results suggest that, despite its notion of precaution, the maxmin rule often leads to an underinvestment in research relative to a standard expected utility regulation, giving rise to a counterintuitive increase in erroneous regulatory decisions (for instance the approval of harmful pesticides). Jointly, the five papers in this thesis contribute to theoretical environmental economics by furthering our knowledge on the role of learning when science is uncertain, on the role of technologies, and on the interplay between technological solutions and uncertainty

Desk study to apply knowledge developed for conventional horticulture to the control of pests in organic vegetables (OF0179)

This is the final report for Defra project OF0179. The demand for organic vegetable and salad crops is likely to increase as a result of the projected requirements of the multiple retailers. The threat of yield and quality reductions due to pest damage is a major constraint to increasing the organic vegetable crop area. The aim of this project is to demonstrate how methods of pest control developed for conventional vegetable production can be adapted for use by organic growers. The project concentrates on the pest insects that cause damage to umbelliferous and cruciferous vegetable crops. Umbelliferous crops are attacked by one major pest insect, the carrot fly (Psila rosae), and two minor pests, whereas cruciferous crops are attacked by about eight major, and over 40 less important pests. A strategy for reducing carrot fly damage in organically grown umbelliferous crops was produced. The strategy is based on the existing carrot fly forecast, on published data and on information collected previously at HRI. This includes the contribution that can be made by partial host plant resistance. Commercial breeding lines of carrots now have levels of partial resistance up to 75% and, if used in combination with late sowing, could reduce infestations by more than 90% when compared with a susceptible variety sown early. The carrot fly forecast was adapted to predict 1) the proportion of the first generation of flies that will lay eggs on crops sown on different dates and 2) the timing of emergence of the subsequent (second) fly generation within the crop. Field experiments confirmed that late sowing is an effective method of reducing carrot fly damage. The model was modified to identify the times at which crops should be covered to reduce damage by carrot fly larvae. Previous experiments have shown that to avoid damage by carrot fly larvae, crop covers should be applied to susceptible crops before the start of fly emergence. Although third generation carrot flies may be active after the end of September, their progeny do not damage overwintering crops, so late control is unnecessary. The strategy for reducing carrot fly damage in umbelliferous crops grown organically was evaluated in 2001. Participating growers grew plots of a partially resistant variety and applied/removed crop covers according to the carrot fly forecast. At harvest, the experimental plots, with one exception, suffered similar or less damage than the main area of crop, that had been grown according to standard practice. A strategy for controlling the pest insects of organically-grown cruciferous crops was developed. This is based on existing forecasts for several crucifer pests. The pest forecasts were verified in a field experiment in 2000. The literature was reviewed to 1) identify crop/pest combinations where it would be advantageous to apply covers to exclude pests, 2) find simple ways of sampling crops to detect the presence of each species, and 3) indicate the best time to apply the control measures available to organic growers. Crop covers can be used to exclude many crucifer pests. However, if aphids are able to penetrate the covers then infestations may be greater than if the crop was left uncovered. The crucifer pest control strategy was evaluated in 2001 in the organic areas at HRI Kirton and HRI Wellesbourne using forecasts for several pests and pheromone traps to monitor diamond-back moths. Plants were inspected for aphids and caterpillars. Treatments (crop covers or garlic for cabbage root fly, soft soap for aphids, Bacillus thuringiensis for caterpillars) were applied as necessary. In general, pest damage was not severe and where a large percentage of the crop was unmarketable, this was due to non-pest damage. A workshop on carrot fly control was held at HDRA, Ryton in January 2002. As a result of this project, and the conclusions drawn from this workshop, two factsheets (carrot fly and crucifer pest control in organic crops) have been produced for publication by the HDC. Other sources of information, such as the HDC/HRI pest forecasts, will be publicised through the HDRA pest and disease e-mail group. There is a more detailed summary at the start of the attached report document

New Project Knowledge Management: Lessons Learned from temporary structures of Public Sector R&D Organisations

R&D Organisations are key players in the knowledge economy and make major contributions to Australia’s efforts to achieve and maintain competitive advantage. The explicit purpose of R&D organisations is to develop new knowledge and apply existing knowledge in new ways. Much of the R&D is carried out in temporary structures or project teams. Drawing upon theory and grounded in case based evidence, this paper explores how new forms of project management affect knowledge generating and application processes in R&D organisations. It appears that much of the knowledge generation and application occurs through taking advantage of almost naturally occurring oscillations between open and closed system practices over the course of projects. Theoretical and practical lessons and implications for further research are advanced

Smaller scale New Zealand dairy farmers: long term plans and key challenges

Farmer wellbeing has been defined as “a dynamic process that gives people a sense of how their lives are evolving” (Nimpagariste & Culver, 2010). In order to support and enhance the wellbeing of farmers in New Zealand, the farmers’ goals, future plans and challenges to their plans all need to be understood. A particular group of interest is smaller scale dairy farmers. The average size of dairy farms in developed agricultural nations is increasing and New Zealand is no different. A high proportion (62%) of NZ dairy herds are smaller scale, milking less than 400 cows at peak. Their wellbeing, now and in the future, is important to the New Zealand dairy industry as a whole. Consequently, the aim of this study is to develop an understanding of smaller-scale dairy farmers’ future goals, plans and challenges so that recommendations can be made to enhance and support their wellbeing in the future. Farms who peak milked less than 400 cows were surveyed via telephone. A total of 346 surveys were completed, in Taranaki (n=103), the Waikato (n=144) and Northland (n=99). The majority of respondents’ were owner-operators (75%), male (67%), born and bred in a rural area (79%), and between 40 and 60 years old (57%). Overall, the mean farm size was 97ha, with 240 cows producing 86,789kgMS with 0.83 of a full time employee. Respondents’ had high (67%) equity levels in their businesses and a third (35%) had non-farming investments. Farmers’ most likely future investments were related to their current farming business, that is reducing debt to very low levels and increasing production by more than 10%. Based on farmers future plans and challenges reported and discussed in this study, it is clear the smaller scale dairy farmers would like knowledge and assistance in five key areas; succession, regulation and compliance, staff, technology and cash-flow/profitability. This report concludes with suggestions for each of these areas, which has the potential to maintain or increase the wellbeing of smaller scale dairy farmers in New Zealand. [Executive summary]DairyNZ Ltd, Ministry for Primary Industry (NZ

Network strategies for the new economy

In this paper we argue that the pace and scale of development in the information and communication technology industries (ICT) has had and continues to have major effects on the industry economics and competitive dynamics generally. We maintain that the size of changes in demand and supply conditions is forcing companies to make significant changes in the way they conceive and implement their strategies. We decompose the ICT industries into four levels, technology standards, supply chains, physical platforms, and consumer networks. The nature of these technologies and their cost characteristics coupled with higher degrees of knowledge specialisation is impelling companies to radical revisions of their attitudes towards cooperation and co-evolution with suppliers and customers. Where interdependencies between customers are particularly strong, we anticipate the possibility of winner-takes-all strategies. In these circumstances industry risks become very high and there will be significant consequences for competitive markets

Knowledge management : critical perspectives on e-business activities

This article is both a review and an agenda-setting piece. It argues that knowledge management suffers from conceptual and definitional ambiguity, oversimplification of its development processes, and methodological limitations. Nevertheless, there is a consensus in business and academia that knowledge is a key component of success and allows firms to achieve and sustains competitive advantages. In a digital era, these advantages arise from the potential of data and information that can be gathered, processed, shared, and used to improve e-business activities. Thus, this research bridges the gap in the assessment of knowledge management and e-business relationship, by applying an SEM to a large database sample of KM activities performed by European firms.N/

Do employees’ generational cohorts influence corporate venturing? A multilevel analysis

Organizations are facing an interesting phenomenon in the composition of theirworkforce: the concurrence of multiple age generations that demand suitablestrategies regarding work design, job satisfaction, and incentives. Ongoingentrepreneurship and strategic management debates require a betterunderstanding of the relationship between workplace generational cohorts’configurations and organizational performance. We propose a conceptual modelfor understanding how a diversified workforce influences some determinants(i.e., employees’ human capital and attitudes, organizational climate, andenvironmental conditions) of entrepreneurial organizations’ outcomes (i.e.,corporate venturing). Our framework offers insights into corporate venturingdeterminants for three generational cohorts: Baby Boomers, Generation X, andGeneration Y. Using a sample of 20,256 employees across 28 countries, ourfindings lend support to the positive effect of individual and organizationaldeterminants on corporate venturing, as well as how these effects are reinforcedper generational cohort. Specifically, our results show that younger generations(millennials) have more propensity to be involved in corporate venturingactivities. This study also contributes to thought-provoking implications forentrepreneurial organizational leaders who manage employees from differentgenerations

Exploring Knowledge Engineering Strategies in Designing and Modelling a Road Traffic Accident Management Domain

Formulating knowledge for use in AI Planning engines is currently something of an ad-hoc process, where the skills of knowledge engineers and the tools they use may significantly influence the quality of the resulting planning application. There is little in the way of guidelines or standard procedures, however, for knowledge engineers to use when formulating knowledge into planning domain languages such as PDDL. This paper seeks to investigate this process using as a case study a road traffic accident management domain. Managing road accidents requires systematic, sound planning and coordination of resources to improve outcomes for accident victims. We have derived a set of requirements in consultation with stakeholders for the resource coordination part of managing accidents. We evaluate two separate knowledge engineering strategies for encoding the resulting planning domain from the set of requirements: (a) the traditional method of PDDL experts and text editor, and (b) a leading planning GUI with built in UML modelling tools. These strategies are evaluated using process and product metrics, where the domain model (the product) was tested extensively with a range of planning engines. The results give insights into the strengths and weaknesses of the approaches, highlight lessons learned regarding knowledge encoding, and point to important lines of research for knowledge engineering for planning