Examining the Degree of Duration Dependence in the Western Cape Labour Market

This paper investigates the effects of long bouts of unemployment on the employment probabilities of the unemployed, and the factors affecting unemployment duration. This is achieved through the estimation of the hazard rate. The parametric analysis was conducted using a Weibull regression model. The Weibull estimates indicate that long term unemployment will be more prevalent for young women who care for dependents aged below 16 years, have no grade 12 or tertiary qualifications and have limited proficiency in English. This effect is compounded when the unemployed are marginalised and live with few or no wage earners. Slight positive duration dependence was found, indicating that employment probabilities do not decrease as unemployment duration increases. A graphical depiction of the Weibull hazard indicates that the hazard is initially upward sloping, reaching a maximum at approximately 13 months of unemployment, at which point it declines steeply. At the 13 month turning point, merely 17 percent of respondents have exited from unemployment. Even at its highest, the hazard remains below 8 percent. A piece-wise model was estimated which confirmed the Weibull estimates, but indicated that the hazard follows a more flexible shape and is not monotonic in nature.

Behavioural economic applications to climate change mitigation and adaptation: public good games and risk experiments

Includes bibliographical references.This thesis contributes to the economics of climate change by incorporating insights from behavioural economics. As both mitigation and adaptation are components of any climate change strategy, the four papers presented here use laboratory and field experiments to examine different dimensions of individuals' mitigation and adaptive behaviour. The papers in Section 1 utilise framed public good games to focus on two different aspects of the public goods dilemma synonymous with climate change mitigation. In this context, the first paper 'What is fair? An experimental guide to climate negotiations' examines the degree to which the use of particular burden-sharing principles in multilateral climate change negotiations reflects self-interest. The multi-country public good game is conducted with a sample of individuals from the United States, European Union, China, India and South Africa. The results signal the use of the historical and future polluter-pays rules by American and Chinese participants to reflect self-interest. The potential for groups of heterogeneous individuals to meet a collective emission-reduction target through individual contributions is examined in the second paper: "Cooperation and Climate Change: Can Communication Facilitate the Provision of Public Goods in Heterogeneous Agents?" Heterogeneity is framed as differences in participants' marginal abatement costs. While communication promotes cooperation, even when heterogeneity is present, the non-binding nature of communication results in the two dominant contribution strategies of free-riding and perfect-cooperation. The papers in Section 2 examine the role of risk and uncertainty in individuals' adaptive strategies. The correlation between risk attitudes and individuals' flood adaptation strategies is examined in the third paper: "Risk Attitudes and Adaptation: Experimental Evidence from a Flood Prone Urban Informal Settlement in South Africa." Risk attitudes are elicited from a series of lottery tasks conducted across a sample of individuals living in a flood-prone urban informal settlement. The results indicate that individuals adopting more effective (and costly) adaptation strategies are more risk averse. The fourth paper "Risk Preferences, Technology Adoption and Insurance Uptake" uses lottery tasks and a framed insurance game to examine whether the provision of a framed index insurance product induces individuals to opt into riskier but potentially more profitable activities. Experiment participants are small-scale and subsistence urban food growers. The results indicate that risk-averse individuals are more likely to opt into traditional agriculture and are less likely to use modern farming inputs that require financing

Meeting a national emission reduction target in an experimental setting

Climate change poses the ultimate dichotomy between social welfare and individual incentives because, despite the global benefits synonymous with mitigation, individuals lack incentive to reduce their own emissions. Using a public good experiment with a climate change framing, this paper examines the scope for cooperation in meeting a national mitigation goal; in particular, the experimental design examines how different sectors with differing marginal abatement costs distribute the responsibility of reducing emissions between themselves. The experiment consists of four treatments including the counterfactual baseline scenario which examines voluntary cooperation, a communication treatment examining the role of stakeholder participation in facilitating cooperation and, finally, two treatments simulating a carbon tax, where the carbon tax reflects an electricity levy. The results suggest that voluntary cooperation will not be sufficient to meet the mitigation target. While communication significantly increases average contribution levels, it also polarises individual player strategies between full cooperation and free riding. With the introduction of a tax, cooperation becomes near-universal. However, a carbon tax crowds out contributions in excess of a specified mitigation target. This emphasises the important of choosing the correct tax level.Draf

Green certificate trading

This paper proceeds as follows: Section 2 briefly outlines the policy instruments available for the promotion of renewable energy sources, while section 3 discusses green certificate trading in more detail, including the green certificate market in South Africa at present. Section 4 describes the international implementation of renewable energy support mechanisms. The lessons learnt from this experience in terms of design suggestions for the development of a South African TREC framework are detailed in Section 5. Also from international experience, Section 6 provides a comparison of a feed-in tariff scheme and a quota obligation system combined with tradable green certificates. Finally, the interaction between emission trading schemes and renewable energy promotion systems are outlined in Section 7

Green certificate trading

Policies to promote renewable electricity are increasingly seen as a way to reduce the negative environmental impacts associated with electricity consumption and meet growing electricity demand. This paper reviews the international experience with one such policy, namely, renewable energy certificates, and considers important design aspects of a national green certificate system. Within a South African context, a green certificate system would provide a mechanism with which to verify compliance with any future renewable energy obligations, and would encourage renewable electricity generation in the current monopoly environment. In terms of a national green certificate framework, international experience has shown that renewable energy certificates must be both accredited and standardized, with enforcement of penalties for non-compliance with renewable energy quotas. Above all, a long-term and stable policy environment is crucial for developing renewable energy markets

Economics of climate change: context and concepts related to mitigation

Climate change is increasingly seen as not only an environmental issue, but a deeply economic one. ‘Climate change presents a unique challenge for economics: it is the greatest and widest ranging market failure ever seen’ (Stern Review 2006). Markets are failing to put a price on the emissions of greenhouse gases, passing the costs on to society as a whole

Risk Preferences and the Poverty Trap: A Look at Farm Technology Uptake amongst Smallholder Farmers in the Matzikama Municipality

This study looks at the determinants of farm technology uptake, with attention to farmers’ risk preference and income. We use a field experiment to elicit measures of risk aversion, loss aversion, and non-linear weights of probability. We then relate these measures to the uptake of drought-resistant and improved seeds. In light of the poverty trap theory, we also consider the role that income plays in risk preference. Our findings suggest that farm risk management policies need to take into account the role of risk and loss preferences in uptake decisions. We find that farmers do not effectively weight probabilities and that the weighting of probabilities in turn affects the uptake of adaptive mechanisms. Improved access to extension services can help farmers understand weather and climate risk, probabilities of loss, and technologies and other adaptive strategies. We also find that low incomes discourage the uptake of resilient crop types, both in the form of naturally drought-resistant crops and technologically modified improved seeds. This signals the need for proactive measures to guarantee access to a minimum package of assets to poor farmers.JEL Codes: Q16, Q1

Abalone conservation in the presence of drug use and corruption: Implications for its management in South Africa

The illegal exploitation of wild abalone in South Africa has been escalating since 1994, despite increased enforcement, leading to collapse in some sections of its range. South Africa banned all wild abalone fishing in 2008 but controversially reopened the fishery in 2010. This paper formulates a poacher's model, taking into account the realities of the abalone terrain in South Africa - the high-value of abalone, use of recreational drugs, the prevalence of bribery, and corruption - to explore why poaching has not subsided. The paper suggests two additional measures that might help ameliorate the situation: eliminating the demand side through targeted enforcement on organised crime, and ceding the resource to the local coastal communities. However, local communities need to be empowered to deal with organised crime groups. Complementary measures to bring back community patriotism will also be needed given the tattered social fabric of the local coastal communities

Risk aversion: Experimental evidence from South African fishing communities

We estimate the risk attitudes of a large sample of individuals from various fishing communities along the west coast of South Africa. Female fishers and rights holders are found to be more risk averse than their male counterparts, while rights holders are found to be less risk averse relative to subjects without fishing rights. Risk attitudes are found to be correlated with compliance with fisheries regulations. In particular, a greater degree of risk aversion translates into a reduction in compliance. Furthermore, in the case of gender, female fishers and rights holders are more likely to comply with fisheries regulations