Decomposing the social discount rate

Recent modelling of the costs and benefits of climate change has renewed debate surrounding assumptions regarding the social discount rate in analysing the impacts of environmental change. Previous literature segments the social discount rate into being influenced by two key factors; the rate of pure time preference and the elasticity of marginal utility of future consumption. These components of the social discount rate reinforce the linkages between the choice of social discount rate and intergenerational distribution. In an extension of previous work by the author on intergenerational distributional preferences, this paper discusses the relationship between intergenerational equity and the social discount rate. The work has significant policy implications given the sensitivity of Cost Benefit Analysis outcomes to assumptions regarding the social discount rate.Intergenerational equity, Social discount rate, Environmental Economics and Policy,

Coping with Climatic Variability by Rain-fed Farmers in Dry Zone, Sri Lanka: Towards Understanding Adaptation to Climate Change

Climate change introduces numerous uncertainties over the livelihoods of farming communities that depend heavily on weather and climate. Rain-fed farmers in developing countries are among the most vulnerable communities. However, climate risks are not new to farmers. Coping with ‘natural variability’ of climate has been a constant challenge faced by farmers even though broad sweeping change in climate due to anthropogenic causes is a relatively new prospect. Some argue ‘climate change’ could be significantly different from ‘climatic variability’ known to and experienced by farmers. In spite of this it is widely accepted that understanding farmers’ behavior towards adapting to climatic variability could generate useful insights in facing the risk of climate change. In Sri Lanka, the village tank farming community in the dry zone is one of the most vulnerable communities thereby deserving the priority attention of policy makers. This study is based on information gathered in Anuradhapura district of Sri Lanka. It depends mainly on information from secondary sources supplemented by qualitative primary information. Analysis was guided by recently introduced behavioral economics concepts of decisions based on experience. Accordingly adaptation is viewed as a response to the climate perceptions of farmers' aided by judgments based on heuristics. Farmers' adaptation decisions can be explained on the basis of their perception of climate variability with two major components. Firstly, farmers perceive climatic variability as an average annual pattern with variable probabilities of seasonal distribution of precipitation. Farmers base their long-term adaptation responses on this perceived average pattern and many of the choices made by them in the existing farming system and resource management practices can be explained accordingly. The average pattern of variability is largely a shared perception and therefore enables the option of joint adaptation. The land allocation practice popularly known as ‘Bethma’ provides a fine example for this. Secondly, farmers also perceive feasibility of random shocks with variable probabilities across the average pattern. This gives rise to short-term responses in the farming system activities. Such responses seem to be more individually oriented and reflect the variations in individual perceptions of climate risks.Adaptation, Climatic variability, Village tanks, Climate change, Rain-fed farmer, Environmental Economics and Policy,

Australian Commonwealth, State and Territory Government Budgets and the Selective Announcement of Budget Surplus/Deficit Numbers

This paper presents the findings from a case study of the 2004-05 annual budgets prepared by the Australian Commonwealth government and the governments of the six Australian states and the two Australian territories. The study examined the headline financial outcome (general government sector surplus or deficit) announced in the budget papers of each of the nine governments. Findings indicate the adoption of varying measurement bases and a consequent lack of comparability in the headlined budget outcome numbers. Accounting reforms have resulted in a variety of cash and accrual based measurements becoming available for presentation by governments. However, there has been no prescription of the manner in which these alternative measures are to be presented, resulting in a lack of consistency and comparability. It is not surprising in this reporting environment that different governments would choose to headline different budget outcome numbers in their budget announcements.

Estimation of the Recreational Use Value Gained from Recreational Fishing of Southern Bluefin Tuna at Portland, Australia

Southern bluefin tuna (Thunnus Maccoyii) is a global resource which is critically endangered. The Committee for the Conservation of Southern Bluefin Tuna (CCSBT) sets commercial quota levels for member nations, including Australia, each year. However, southern bluefin tuna is also a popular “trophy” fish with recreational anglers and the size of the total recreational catch in Australia is unknown but thought to be significant. This study focuses on the recreational southern bluefin tuna catch at Portland, in southwest Victoria and is based on data collected during the 2010 fishing season. The results indicate that the size of the recreational catch at Portland is significant in terms of the management of the fishery. A travel cost study was undertaken to estimate the recreational value of the fishery. The on-site recreational use value (consumer surplus) per person per visit is estimated to be between $33 and$132 and the on-site annual recreational use value of the fishery for this one season is estimated to be between $449,533 and$1,325,124.Travel cost method, recreational fishing, southern bluefin tuna, Resource /Energy Economics and Policy,

Decision-making in a Social Welfare Context

This paper presents analysis of the decision-making strategies adopted by respondents when confronted with potential environmental policy options that include changes in both aggregate levels of welfare and equity in distribution. The analysis is based on the results of a choice experiment designed to estimate intergenerational distribution preferences. Non-linear welfare functions are employed within a conventional conditional logit framework. The heuristics employed by respondents in the stated preference context provide valuable insights into the application of welfare principles by respondents in determining trade-offs between the potential changes in the well-being of different generations.Intergenerational Equity, Distribution, Choice Modelling

Enhancing the learning environment for distance education students

This paper reports on the development of an asynchronous learning&nbsp; environment for the teaching of introductory macroeconomics to&nbsp;&nbsp;&nbsp; approximately 200 distance education students. The research supports evidence in the current literature that computer mediated communication and in particular, collaborative learning, can make a positive difference to the educational experience of some students. These findings are based on both quantitative and qualitative data gained from student evaluations,&nbsp; participation levels, staff interviews and an analysis of the online communication. The discussion centres on the extent of collaboration, the role of assessment, adaptation of curriculum and pedagogy and the students\u27 attitudes to economics.<br /

Australian government budget balance numbers: the hybrid nature of public sector accrual accounting

Purpose - The purpose of this paper is to analyse the nature and comparability of budget balance (surplus/deficit) numbers headlined by the Australian Commonwealth Government and the governments of the six Australian States and the two Australian Territories. It does this in the context of the transition to Australian accounting standard AASB 1049 Whole of Government and General Government Sector Financial Reporting. Design/methodology/approach - A case study research method is adopted, based on a content/documentary analysis of the headline budget balance numbers in the general government sector budget statements of each of the nine governments for the eight financial years from 2004-2005 to 2011-2012. Findings - Findings indicate some variation in the measurement bases adopted and a number of departures from the measurement bases prescribed in the reporting frameworks, including AASB 1049. Findings also reveal that none of the nine governments have headlined a full accrual based budget balance number since the implementation of AASB 1049 in 2008. Research limitations/implications - While the study focuses on the Australian general government sector environment, it has significant implications in highlighting the ambiguity in the government budget balance numbers presented and the monitoring and information asymmetry problems that can arise. Research findings have wider relevance internationally in highlighting issues arising with the public sector adoption of accrual accounting. Practical implications - The paper highlights the manner in which governments have been selective in the manner in which they present important budget aggregates. This has important practical and social implications, as the budget balance number is one of the most important measures used to evaluate a government\u27s fiscal management and responsibility. Originality/value - The paper represents the first detailed examination of aspects of the effect of the transition to AASB 1049