Incentive scheme based on investment plan compliance for public water utilities in Peru

Using the budget-based scheme approach developed by Kirby et.al. (1991) and Reichelstein (1992), this paper establishes the optimal policy function in order to control hidden actions from managers of Public Water Utilities (PWU) regarding investments that deviate from the Optimized Business Plan (OBP), with the purpose of inducing managers to reduce deviation from the execution of not programmed investments in the OBP and from programmed investments that were not executed. We find a high percentage of investment (47%) that deviates from its OBP. However between 16% and 35% of executed investment that it deviates from its programmation, can be controlled by the PWU manager with a compensation payment schemes. --

Designing IS service strategy: an information acceleration approach

Information technology-based innovation involves considerable risk that requires insight and foresight. Yet, our understanding of how managers develop the insight to support new breakthrough applications is limited and remains obscured by high levels of technical and market uncertainty. This paper applies a new experimental method based on “discrete choice analysis” and “information acceleration” to directly examine how decisions are made in a way that is behaviourally sound. The method is highly applicable to information systems researchers because it provides relative importance measures on a common scale, greater control over alternate explanations and stronger evidence of causality. The practical implications are that information acceleration reduces the levels of uncertainty and generates a more accurate rationale for IS service strategy decisions

Does democracy cure a resource curse?

In this paper we utilise a large and reasonably detailed dataset to show that a greater level of democracy in a country's political institutions can alleviate the widely known resource curse. Raw material abundance affects per capita growth negatively, an effect that seems to work through several different channels. Resource-abundant countries have a lower degree of democracy and political rights, and also a lower level of educational attainment. These factors inhibit growth. On the other hand, countries with large extractive industries exhibit high levels of investment. The effects of resource abundance differ for different raw material types, and the largest negative effect on growth appears to come from non-fuel extractive raw materials.economic growth; resource curse; cross-country regression; development; governance; institutions

Impact of New Madrid Seismic Zone Earthquakes on the Central USA, Vol. 1 and 2

The information presented in this report has been developed to support the Catastrophic Earthquake Planning Scenario workshops held by the Federal Emergency Management Agency. Four FEMA Regions (Regions IV, V, VI and VII) were involved in the New Madrid Seismic Zone (NMSZ) scenario workshops. The four FEMA Regions include eight states, namely Illinois, Indiana, Kentucky, Tennessee, Alabama, Mississippi, Arkansas and Missouri. The earthquake impact assessment presented hereafter employs an analysis methodology comprising three major components: hazard, inventory and fragility (or vulnerability). The hazard characterizes not only the shaking of the ground but also the consequential transient and permanent deformation of the ground due to strong ground shaking as well as fire and flooding. The inventory comprises all assets in a specific region, including the built environment and population data. Fragility or vulnerability functions relate the severity of shaking to the likelihood of reaching or exceeding damage states (light, moderate, extensive and near-collapse, for example). Social impact models are also included and employ physical infrastructure damage results to estimate the effects on exposed communities. Whereas the modeling software packages used (HAZUS MR3; FEMA, 2008; and MAEviz, Mid-America Earthquake Center, 2008) provide default values for all of the above, most of these default values were replaced by components of traceable provenance and higher reliability than the default data, as described below. The hazard employed in this investigation includes ground shaking for a single scenario event representing the rupture of all three New Madrid fault segments. The NMSZ consists of three fault segments: the northeast segment, the reelfoot thrust or central segment, and the southwest segment. Each segment is assumed to generate a deterministic magnitude 7.7 (Mw7.7) earthquake caused by a rupture over the entire length of the segment. US Geological Survey (USGS) approved the employed magnitude and hazard approach. The combined rupture of all three segments simultaneously is designed to approximate the sequential rupture of all three segments over time. The magnitude of Mw7.7 is retained for the combined rupture. Full liquefaction susceptibility maps for the entire region have been developed and are used in this study. Inventory is enhanced through the use of the Homeland Security Infrastructure Program (HSIP) 2007 and 2008 Gold Datasets (NGA Office of America, 2007). These datasets contain various types of critical infrastructure that are key inventory components for earthquake impact assessment. Transportation and utility facility inventories are improved while regional natural gas and oil pipelines are added to the inventory, alongside high potential loss facility inventories. The National Bridge Inventory (NBI, 2008) and other state and independent data sources are utilized to improve the inventory. New fragility functions derived by the MAE Center are employed in this study for both buildings and bridges providing more regionally-applicable estimations of damage for these infrastructure components. Default fragility values are used to determine damage likelihoods for all other infrastructure components. The study reports new analysis using MAE Center-developed transportation network flow models that estimate changes in traffic flow and travel time due to earthquake damage. Utility network modeling was also undertaken to provide damage estimates for facilities and pipelines. An approximate flood risk model was assembled to identify areas that are likely to be flooded as a result of dam or levee failure. Social vulnerability identifies portions of the eight-state study region that are especially vulnerable due to various factors such as age, income, disability, and language proficiency. Social impact models include estimates of displaced and shelter-seeking populations as well as commodities and medical requirements. Lastly, search and rescue requirements quantify the number of teams and personnel required to clear debris and search for trapped victims. The results indicate that Tennessee, Arkansas, and Missouri are most severely impacted. Illinois and Kentucky are also impacted, though not as severely as the previous three states. Nearly 715,000 buildings are damaged in the eight-state study region. About 42,000 search and rescue personnel working in 1,500 teams are required to respond to the earthquakes. Damage to critical infrastructure (essential facilities, transportation and utility lifelines) is substantial in the 140 impacted counties near the rupture zone, including 3,500 damaged bridges and nearly 425,000 breaks and leaks to both local and interstate pipelines. Approximately 2.6 million households are without power after the earthquake. Nearly 86,000 injuries and fatalities result from damage to infrastructure. Nearly 130 hospitals are damaged and most are located in the impacted counties near the rupture zone. There is extensive damage and substantial travel delays in both Memphis, Tennessee, and St. Louis, Missouri, thus hampering search and rescue as well as evacuation. Moreover roughly 15 major bridges are unusable. Three days after the earthquake, 7.2 million people are still displaced and 2 million people seek temporary shelter. Direct economic losses for the eight states total nearly $300 billion, while indirect losses may be at least twice this amount. The contents of this report provide the various assumptions used to arrive at the impact estimates, detailed background on the above quantitative consequences, and a breakdown of the figures per sector at the FEMA region and state levels. The information is presented in a manner suitable for personnel and agencies responsible for establishing response plans based on likely impacts of plausible earthquakes in the central USA.Armu W0132T-06-02unpublishednot peer reviewe

Asymmetric information and imperfect competition in the loan market

We measure the consequences of asymmetric information in the Italian market for small business lines of credit. Exploiting detailed, proprietary data on a random sample of Italian firms, the population of medium and large Italian banks, individual lines of credit between them, and subsequent individual defaults, we estimate models of demand for credit, loan pricing, loan use, and firm default based on the seminal work of Stiglitz and Weiss (1981) to measure the extent and consequences of asymmetric information in this market. While our data include a measure of observable credit risk comparable to that available to a bank during the application process, we allow firms to have private information about the underlying riskiness of their project. This riskiness influences banks’ pricing of loans as higher interest rates attract a riskier pool of borrowers, increasing aggregate default probabilities. Data on default, loan size, demand, and pricing separately identify the distribution of private riskiness from heterogeneous firm disutility from paying interest. Preliminary results suggest evidence of asymmetric information, separately identifying adverse selection and moral hazard. We use our results to quantify the impact of asymmetric information on pricing and welfare, and the role imperfect competition plays in mediating these effects