Debunking the myth that a legal trade will solve the rhino horn crisis : a system dynamics model for market demand

There is considerable debate in the literature over whether or not to legalise the trade in rhino horns. Here a system dynamics model is developed that considers five components: rhino abundance, rhino demand, a price model, an income model and a supply model. The results indicate that income elasticities are much greater than previously observed, while demand is relatively insensitive to price. At the same time, legalising the trade without income modification policies did not prevent extinction. The theory of s-curve growth may provide some indications of future growth patterns of Asian economies. Results suggest that, even though the demand curve for rhino horn may be downward sloping as conventional theory predicts, non-conventional demand management strategies may be more effective than price orientated demand curve strategies such as trade legalisation in curbing supply.National Research Foundation (NRF) and Economic Research Southern Africa (ERSA).http://www.journals.elsevier.com/journal-for-nature-conservation/2016-11-30hb2016Economic

A categorisation and evaluation of rhino management policies

Rhino populations are at a critical level and new approaches are needed to ensure their survival. This study conducts a review and categorisation of policies for the management of rhinos. Twenty seven policies are identified and classified into in situ (reserve based) and ex situ (market based) policies. The policies are then evaluated based on four target areas: poachers/hunters; consumers; intermediaries and the game reserves themselves. The study finds that protected areas management policies seem most beneficial in the short run, in particular the enforcement of private property rights over resource utilisation, as well as the establishment of wildlife sanctuaries that act as sustainable breeding grounds for rhino populations.The National Research Foundation and Economic Research Southern Africa.http://www.tandfonline.com/loi/cdsa202017-12-01hb2016Economic

Predator–prey analysis using system dynamics : an application to the steel industry

In this paper, we use a predator–prey model to simulate intersectoral dynamics, with the global steel sector as the prey that supplies inputs and the automotive sector as the predator that demands its inputs. A further prey, an additional upstream supply sector, namely the iron ore sector, is added to reflect the implications of scarcity and resource limitations for industrial development and economic prospects. We find that capacity constraints in the steel industry could limit the future supply of vehicles, a result exacerbated by the unsustainable use of iron ore reserves. The solution is not for marginal steel industries to close, but for steelmakers to adapt and move to less resource-demanding secondary steelmaking technology rather than focusing on primary steelmaking. The forecasting capabilities of the model are compared with the outputs from a neural-network model. Although the results are comparable over the short term (±10 years), over the long term, results diverge, showing that forecasting steel-industry dynamics is complex and that further work is required to disentangle the drivers of supply and demand. This study indicates the potential advantages of using predator–prey models in modelling the supply chain in economics.http://www.sajems.org/am2016Economic

Predator–prey analysis using system dynamics : an application to the steel industry

In this paper, we use a predator–prey model to simulate intersectoral dynamics, with the global steel sector as the prey that supplies inputs and the automotive sector as the predator that demands its inputs. A further prey, an additional upstream supply sector, namely the iron ore sector, is added to reflect the implications of scarcity and resource limitations for industrial development and economic prospects. We find that capacity constraints in the steel industry could limit the future supply of vehicles, a result exacerbated by the unsustainable use of iron ore reserves. The solution is not for marginal steel industries to close, but for steelmakers to adapt and move to less resource-demanding secondary steelmaking technology rather than focusing on primary steelmaking. The forecasting capabilities of the model are compared with the outputs from a neural-network model. Although the results are comparable over the short term (±10 years), over the long term, results diverge, showing that forecasting steel-industry dynamics is complex and that further work is required to disentangle the drivers of supply and demand. This study indicates the potential advantages of using predator–prey models in modelling the supply chain in economics.http://www.sajems.org/am2016Economic

Improving the electricity efficiency in South Africa through a benchmark-and-trade system

The improvement of energy efficiency is considered internationally as one of the ways to ensure energy security of supply, reduce greenhouse gas (GHG) emissions and mitigate the negative consequences of the climate change. In this paper, we propose a benchmark-and-trade system to improve the electricity intensity in South Africa in an effort towards the reduction of the country's emissions.This theoretical system is then used into a calculative application, as a simplistic example, with 2006 being the base year.The results show that the majority of the economic sectors will benefit by participating in the system. Also, the system has the ability to decrease the electricity intensity of the country without affecting its economic output.The findings indicate that, compared to the implementation of a carbon tax, this system gives the participants' stronger incentives to change their behaviour.http://www.elsevier.com/locate/rserhb201

Estimating the opportunity cost of water for the Kusile and Medupi coal-fired electricity power plants in South Africa

In South Africa, water is considered a limited source, not only because of the country’s arid nature, but also because of the relatively skew distribution of the resource and the fact that 98% of the resource is already allocated. Eskom, the South African electricity supplier, commenced with the construction of two new coal-fired power stations namely Kusile and Medupi. The question is: what is the opportunity cost of investing in these power stations from a water perspective? We do not argue here against the need for power plants and additional electricity generation capacity per se, but consider the opportunity cost of using this specific technology. We estimate the shadow price of water for different power generation technologies as an indicator of the opportunity cost of water. We apply a production function approach for a baseline case (coal-fired power generation using the Medupi and Kusile parameters), and four alternative technologies. The only alternative that performs worse than the baseline case is the traditional wetcooling coal-fired power process. The baseline case, however, does show a high opportunity cost when compared to renewable alternatives (solar, wind and biomass) ranging from R0.66/kWh (biomass) to R0.83/kWh (solar) to R1.31/kWh (wind).http://www.erc.uct.ac.zaam201

Externality costs of the coal-fuel cycle : the case of Kusile Power Station

Coal-based electricity is an integral part of daily life in South Africa and globally. However, the use of coal for electricity generation carries a heavy cost for social and ecological systems that goes far beyond the price we pay for electricity. We developed a model based on a system dynamics approach for understanding the measurable and quantifiable coal-fuel cycle burdens and externality costs, over the lifespan of a supercritical coal-fired power station that is fitted with a flue-gas desulfurisation device (i.e. Kusile Power Station). The total coal-fuel cycle externality cost on both the environment and humans over Kusile’s lifespan was estimated at ZAR1 449.9 billion to ZAR3 279 billion or 91c/kWh to 205c/kWh sent out (baseline: ZAR2 172.7 billion or 136c/kWh). Accounting for the life-cycle burdens and damages of coal-derived electricity conservatively, doubles to quadruples the price of electricity, making renewable energy sources such as wind and solar attractive alternatives. SIGNIFICANCE : • The use of coal for electricity generation carries a heavy cost for social and ecological systems that goes far beyond the price we pay for electricity. • The estimation of social costs is particularly important to the electric sector because of non-differentiation of electricity prices produced from a variety of sources with potentially very dissimilar environmental and human health costs. • Because all electricity generation technologies are associated with undesirable side effects in their fuelcycle and lifespan, comprehensive comparative analyses of life-cycle costs of all power generation technologies is indispensable to guide the development of future energy policies in South Africa.The research was conducted as part of N.P.N.’s PhD, which was supervised by J.N.B. (http://hdl.handle.net/2263/45866)National Research Foundation (South Africa)http://www.sajs.co.zaam2017Economic

Determining the efficiency of contractors in clearing invasive alien plant species : the case of the Mopani District, Limpopo province, South Africa

This study assesses the efficiency of contractors hired by the Natural Resource Management programme of the Department of Environmental Affairs (DEA:NRM) in clearing invasive alien plants. We analyse the efficiencies of 49 contractors in two catchments for three time periods, namely 2003 to 2006, 2007 to 2010 and 2011 to 2014. It was found that the size of the contract areas allocated for clearing decreased slightly from 2003 to 2014, while the unit costs (in real terms) have increased considerably. A reason for the increase in the costs can be attributed, among others, to the increase in the infestation densities of stands, because the more densely the infestation is, the more time is required to clear a hectare (Pd/ha) and hence the higher the costs of clearing (R/ha). This is an important observation, as it suggests that focusing on early restoration will further accelerate the clearing of invasive alien plants (IAPs) towards achieving the desired targets.The Natural Resource Management programme of the Department of Environmental Affairs (DEA:NRM).http://www.aaae-africa.org/afjaream2018Agricultural Economics, Extension and Rural DevelopmentEconomic

Restoration of natural capital : mobilising private sector investment

This research aims to provide an analysis of the private sector’s potential contribution to the maintenance of ecosystem services in South Africa. While there is widespread support for payment for ecosystem services and goods (PES), the development of markets and the making of payments are heavily constrained by a number of factors. This constraint is because there are barriers to entry and the need to facilitate the market-making process. This process could be supported by, among others, the establishment of a PES stimulation fund. It is unlikely that the PES potential would be realised without such high-level intervention and support. The fund has a very important role to play in assisting the development of the PES industry in South Africa. Its development enjoys overwhelming support, and the role of a financial intermediary is central to the success of PES.http://www.tandfonline.com/loi/cdsa202016-01-30hj201

The impact of human behaviour and restoration on the economic lifespan of the proposed Ntabelanga and Laleni dams, South Africa : system dynamics approach

The South African government intends to develop the Mzimvubu Water Project (MWP) which includes the construction of two dams (the Ntabelanga and Laleni dams) in the Tsitsa River, Eastern Cape province, South Africa. This investment is believed to be important to unlock the economic potential of this rural, poor and underdeveloped area. We consider a range of variables to ascertain what the realistic economic lifespan of each of the dams are, subject to uncertainty and complexity, as the benefits from the development of the dams are closely linked to such lifespans. The selected sites are prone to soil erosion thereby potentially jeopardising the derived benefits from the investment. We therefore develop a catchment-wide system dynamics model, incorporating both technical and behavioural dimensions, in an effort to determine which factors influence the economic lifespan of the dams and to what extent. The results suggest that, without taking any restorative or behavioural effects into consideration, the lifespan of the Ntabelanga and Laleni dams are 55–68 years and 26–33 years, respectively. Introducing business-as-usual type behavioural patterns could reduce the dams’ lifespans by between 35% and 44% due to the increased erosion. The increased soil erosion and resulting sedimentation is the direct result of increased human and animal movements due to the economic investment and associated land use change. Restorative and desirable behavioural action that will mitigate these impacts have the potential to reduce this loss to only 4%–9%. This would imply investing heavily both in restoration and in capacity-building and community development programmes to facilitate desirable behavioural change. In sum, this suggests that investment in social and natural capital has to coincide with the investment of financial capital in manufactured capital to make economic development last. Investment in social and natural capital could therefore be viewed as a type of insurance policy, and thus an insurance investment, against the risk of very plausible losses of the benefits derived from the manufactured capital (the dams). Alternatively, the opportunity cost of not investing in social and natural capital, is the much reduced lifespans of the dams and all associated economic benefits.Department of Environmental Affairs of South Africa and the South African Environment Observation Network (SAEON).http://www.elsevier.com/locate/wrehj2020Economic