Monitoring bank performance in the presence of risk

This paper proposes a managerial control tool that integrates risk in efficiency measures. Building on existing efficiency specifications, our proposal reflects the real banking technology and accurately models the relationship between desirable and undesirable outputs. Specifically, the undesirable output is defined as nonperforming loans to capture credit risk, and is linked only to the relevant dimension of the output set. We empirically illustrate how our efficiency measure functions for managerial control purposes. The application considers a unique dataset of Costa Rican banks during 1998–2012. Results’ implications are mostly discussed at bank-level, and their interpretations are enhanced by using accounting ratios. We also show the usefulness of our tool for corporate governance by examining performance changes around executive turnover. Our findings confirm that appointing CEOs from outside the bank is associated with significantly higher performance ex post executive turnover, thus suggesting the potential benefits of new organisational practices.Peer ReviewedPostprint (author’s final draft

Learning from 20 Years of Payments for Ecosystem Services in Costa Rica

Costa Rica's Payments for Ecosystems Services (PES) programme has become something of an icon in the world of conservation. Its innovative blend of economic and regulatory instruments - and its hitches and successes - provide a valuable source of inspiration for other countries that are looking for effective ways to conserve and regenerate ecosystems. Since 1997, nearly one million hectares of forest in Costa Rica have been part of the PES programme at one time or another, and forest cover has now returned to over 50 per cent of the country's land area, from a low of just 20 per cent in the 1980s. What lessons can be learnt from the 20 years since it was founded? Also published in Spanish, this paper is for local practitioners, international researchers and donors who are interested in the Costa Rican experience

Costa Rica: The Next Stage-Reform without Volatility. A Report

This study assesses macroeconomic volatility in Costa Rica, based largely on politically weak governments` inability or unwillingness to effect key reforms. Notable problems include volatility-prone fiscal and monetary policy, structurally weak public finances due to large domestic debts and politically motivated expenditure cycles, underdeveloped financial markets, weak financial links abroad, and risky corporate financing. The paper recommends greater fiscal discipline, financial and policy independence for the Central Bank, improvements in financial system operations, and improving financial links abroad, further discussing the interdependence among these proposals.

Productive Development Policies in Costa Rica: Market Failures, Government Failures, and Policy Outcomes

This paper analyzes five Productive Development Policies (PDPs) implemented in Costa Rica, finding that they are not optimally addressing market failures. Moreover, government failures rather than market failures represent the main justification for PDPs. Even in the presence of market failures, the policy instruments applied are not necessarily the most economically efficient but rather the most politically feasible options. In addition, the lack of policy evaluation and monitoring prevents adjustments and corrections of such policies. Addressing the arguments for policy intervention and incorporating the results of evaluation into policy design and reform are necessary conditions for success. In spite of positive policy outcomes, limitations to enhance competitiveness and create the conditions for productivity growth are still present. An umbrella approach in the case of those PDPs that reinforce each other is necessary for productivity growth.Policy Analysis, Policy Making, Industrial Policy, Costa Rica

All that Glitters: A Review of Payments for Watershed Services in Developing Countries

This report reviews the current status of payments for watershed services in developing countries. It highlights the main trends in the evolution of these schemes, synthesising the available evidence on their environmental and social impacts, and drawing lessons for the design of future initiatives. The interest in payments for watershed services (PWS) as a tool for watershed management in developing countries is growing, despite major setbacks. This review identified 50 ongoing schemes, 8 advanced proposals and 37 preliminary proposals for PWS. A previous review published by the International Institute for Environment and Development (IIED) on markets and payments for environmental services (Silver Bullet or Fools' Gold? (Landell-Mills and Porras 2002)) identified just 41 proposed and ongoing PWS schemes in developing countries, which suggests a considerable growth in interest in this approach

Pesticide use in banana plantations in Costa Rica-A review of environmental and human exposure, effects and potential risks

Biodiversity is declining on a global scale. Especially tropical ecosystems, containing most of the planetary biodiversity, are at risk. Agricultural monocrop systems contribute to this decline as they replace original hab-itats and depend on extensive use of synthetic pesticides that impact ecosystems. In this review we use large-scale banana production for export purposes in Costa Rica as an example for pesticide impacts, as it is in production for over a century and uses pesticides extensively for more than fifty years. We summarise the research on pesticide exposure, effects and risks for aquatic and terrestrial environment, as well as for human health. We show that exposure to pesticides is high and relatively well-studied for aquatic systems and humans, but hardly any data are available for the terrestrial compartment including adjacent non target ecosystems such as rainforest fragments. Ecological effects are demonstrated on an organismic level for various aquatic species and processes but are not available at the population and community level. For human health studies exposure evaluation is crucial and recognised effects include various types of cancer and neurobiological dysfunctions particularly in children. With the many synthetic pesticides involved in banana production, the focus on insecticides, revealing highest aquatic risks, and partly herbicides should be extended to fungicides, which are applied aerially over larger areas. The risk assessment and regulation of pesticides so far relies on temperate models and test species and is therefore likely underestimating the risk of pesticide use in tropical ecosystems, with crops such as banana. We highlight further research approaches to improve risk assessment and, in parallel, urge to follow other strategies to reduce pesticides use and especially hazardous substances

Regional Study on Social Dimensions of MPA Practice in Central America: Cases Studies from Honduras, Nicaragua, Costa Rica and Panamá

This research focuses on the social dimensions of marine conservation, and makes an assessment of the experiences of coastal and fishing communities with regard to the governance of MPAs in North America (Central America); based on case studies from Honduras, Nicaragua, Costa Rica and North America (Central America)-Panama;. It examines the national contexts of the above countries in relation to the governance of MPAs. Furthermore, it analyzes the social impacts of MPAs on coastal communities by gathering the experiences and the voices of the communities and institutions involved, and reflects on how to build bridges in the search for forms and models of conservation that respect human rights and which are able to successfully integrate into local development efforts without affecting cultural and/or social patterns. To this end, this monograph looks at nine case studies across the region: in Honduras, the Islas de la Bahia-Guanaja Marine National Park, the Cayos Cochinos Marine Archipelago Natural Monument, and the Cuero and Salado Wildlife Refuge; in Nicaragua, the Chacocente Wildlife Refuge; in North America (Central America)-Costa Rica; the Guanacaste Conservation Area, the Ballena Marine National Park and the Golfo Dulce Responsible Fishing Area; and, in North America (Central America)-North America (Central America)-Panama; the Nargana Protected Area, in the Comarca de la Biosfera Guna-Yala, the Bastimentos Island Marine National Park, and Bocas del Toro

Opportunity Costs as a Determinant of Participation in Payments for Ecosystem Service Schemes

Landholders are generally assumed to be willing to participate in payments for ecosystem service (PES) schemes if the offered payment exceeds the opportunity cost of participation. The calculation of opportunity costs is often based on historic financial data such as net returns of the formerly practiced land use. Reliable estimates of opportunity costs are required especially in flexible, cost-aligned payment schemes with differentiated payments at the farm scale. We question whether opportunity cost estimates that do not consider personal landholder characteristics such as risk considerations, information access and non-monetary personal preferences (e.g. for traditional land use practices) are sufficient to explain a landholder's decision to enrol land in PES. To test these assumptions, a PES adoption model was developed for hypothetical adoption decisions by 178 landholders in Costa Rica. The model explained up to 73.5% (Nagelkerkes pseudo R2) of adoption variance. The results confirm that adoption is not determined by financial costs alone. Trust in state institutions, for example, was highly significant. The results call for more integrated methods of opportunity cost estimation such as inverse auctions. Their strength lies, among others, in that all adoption determinants are potentially expressed in the landholder's bid.Resource /Energy Economics and Policy,