Conservation Payments under Risk: A Stochastic Dominance Approach

Conservation payments can be used to preserve forest and agroforest systems. To explain landowners’ land-use decisions and determine appropriate conservation payments, it is necessary to focus on revenue risk. Marginal conditional stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally-preferred land use dominates. An empirical application to shaded-coffee protection in the biologically important Chocó region of West-Ecuador shows that conservation payments required for preserving shaded-coffee areas are much higher than those calculated under risk-neutral assumptions. Further, the extant distribution of land has strong impacts on the required payments.agroforest systems, conservation payments, land allocation, portfolio diversification, risk, stochastic dominance

Conservation Payments under Risk: A Stochastic Dominance Approach

Conservation payments can be used to preserve forest and agroforest systems in developing countries. To explain landowners’ land-use decisions and determine the appropriate conservation payments, it is necessary to focus on risk associated with agricultural price and yield volatility. A theoretical framework is provided for assessing land-use allocation problems under risk and setting risk-efficient conservation payments when returns are not necessary normally distributed. Stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally-preferred land use dominates, even when land uses are not considered to be mutually exclusive. An empirical application to shaded-coffee protection in the biologically important El Chocó region of West Ecuador shows that conservation payments required for preserving shaded-coffee areas are much higher than those calculated under the assumption of risk-neutrality. Further, the extant distribution of land has a strong impact on the required conservation payments.risk, conservation payments, land allocation, stochastic dominance, agroforest systems, portfolio diversification

The valuation of forest ecosystem services as a tool for management planning – A choice experiment

Forest owners and managers deal with an increasing demand for forest ecosystem services (ES). In addition, a recent change can be observed from a governmental top-down approach to bottom-up initiatives, including efforts of the local population to have a say in forest management decisions. Matching supply and demand is seen as a basic condition for the sustainable utilization of forest ES. Against this background, we address the following research questions: (i) How can the preferences on the supply and demand side of forest ES be consistently determined? (ii) In how far do these preferences vary due to regional and societal differences? (iii) How can the supply and demand of forest ES be matched by forest management alternatives? We conducted a survey in Switzerland with foresters and the wider population to compare attitudes and preferences of the supply and demand side of forest ES. The core of the study is a choice experiment (CE) to elicit the population’s willingness to pay (WTP) for specific forest management alternatives, and the respective will- ingness to accept (WTA) on the foresters’ side. To address spatial and societal heterogeneity, we compare different geographic forest zones and settlement areas

The economics of hydro-meteorological disasters: approaching the estimation of the total costs

21 p.Hydro-meteorological disasters have caused increasing losses in recent years. Efficient risk reduction policies require accurate assessment approaches, with careful consideration of costs, beyond direct tangible costs, which are commonly used in practice. Faced with possible risk reduction scenarios, limited financial resources require an improvement in the quality of cost estimation, thereby contributing to an efficient allocation of resources. This paper focuses on the concept of total costs of hydro-meteorological disasters, based on direct and indirect as well as tangible and intangible cost categories. These categories are defined and explained, supported by a comprehensive review of economic valuation methods. Based on this information, practice relevant suggestions are made concerning the most appropriate methods for different cases in terms of scale, availability of data and of technical resources. Our survey also provides critical insights to drawbacks of flood risk estimation, which need to be addressed and carefully dealt with in any future research in this area

Public preferences for the Swiss electricity system after the nuclear phase-out : a choice experiment

Energy transition towards a sustainable system comprising various energy sources is a major challenge. We conducted a representative survey in the German-speaking part of Switzerland to elicit the population's preferences for electricity from solar, wind or natural gas under different institutional and site-specific conditions. Based on a choice experiment we found a consistent preference for electricity based on solar energy and - to a lesser degree - wind energy, built in existing industrial and commercial areas. We identified five distinct population groups, three of which have a very pronounced profile concerning energy attributes: ‘Pro Renewables', ‘Pro Switzerland’, and ‘Pro Landscape’. The largest two groups, 'Moderates' and ‘Contra Status Quo’ value attributes fairly equally. All groups except Pro Landscape prefer electricity from Switzerland, and all groups except Pro Switzerland accept imports of renewable electricity, preferably from plants operated by Swiss firms. We suggest that unfamiliarity rather than nationalism is at the root of opposition to imports of renewables. An energy mix focusing on renewables and including border-crossing electricity infrastructure could pave the way for a cost-efficient energy transition towards a sustainable and resilient electricity system. Our results show that it would also be publicly acceptable by the majority of the Swiss population

Socioeconomic comparison between organic and traditional coffee growers in Puyango, Loja Province, Ecuador

147 p.This study is concerned with comparisons between organic and traditional coffee growing in Puyango, Ecuador, in social and economic terms. The main social variables considered were housing, education, health and migration; and the financial and economic indicators analyzed were variable costs, gross margin and net present value (NPV) and its sensitivity under risk using Latin Hypercube simulation analysis. Through a regression analysis using a Probit model it was determined that the perception of farmers influences positively the adoption; organic farmers think that organic coffee is more profitable, helps the environment and is healthier than traditional coffee. Meanwhile total coffee hectares and technical education influence negatively the adoption process. The analysis of cost of production showed higher costs for organic production, and it is more labor intensive than the traditional system. The financial analysis for a 10 year period indicates that organic coffee presents higher net present value than traditional coffee. This results hold true with or without inclusion of additional income derived from other tree crops planted in the coffee plantation. It was found that the additional income from other tree crops is very important for both type of growers, and that these tree crops reduce overall income risk irrespective of growing system. The Latin Hypercube simulation analysis demonstrates that organic coffee carries less risk than the traditional coffee. The frequency of agricultural risk faced by farmers is similar, except for the production risk for which organic farmers said they are faced more frequently by such risk. As for the coping measures, differences were found for off-farm work, belt tightening and holding of liquid assets. However, for diversification, use of savings and use of loans no significant differences between the two types of coffee growers were found. The variables housing, health and migration show similar distribution among the two types of farmers, suggesting that the higher income from organic coffee production has not yet impacted these measures of living standard

An agent-based model of wood markets: Scenario analysis

We present an agent-based model of wood markets. The model covers softwood and hardwood markets for sawlogs, energy wood, and industrial wood. Our study region is a mountainous area in Switzerland that is close to the border, and therefore partially depends on the wood markets of the adjacent countries. The wood markets in this study region are characterized by many small-scale wood suppliers, and a mix of private and publicowned forests. The model was developed to investigate the availability of wood in the study region under different market conditions. We defined several scenarios that are relevant to policy makers and analyzed them with a focus on the two most important assortments of wood in the study region, namely, sawlogs softwood and energy wood softwood. The development of the prices and amounts sold in the scenarios are compared to a business-as-usual scenario. The scenarios were designed to investigate i) the influence of intermediaries, ii) the influence of the profit-orientation of forest owners, iii) the influence of the exchange rate, and iv) the consequences of set-asides in the study region. The presented model has a large potential to support the planning of policy measures as it allows capturing emergent phenomena, and thereby facilitates identifying potential consequences of policy measures planned prior to their implementation. This was demonstrated by discussing the scenario findings with respect to Switzerland's forestry policy objective of increasing the harvested amount of wood to the sustainable potential. We showed that a higher profit-orientation of forest owners would be beneficial for this objective, but also revealed potential conflicts of different economic goals

Economic analysis of afforestation projects for carbon sequestration: a case study in Patagonia, Argentina

89 p.La mitigación del calentamiento global en forma eficiente es una de las prioridades de las acciones a escala mundial. Los Mecanismos de Desarrollo Limpio (MDL) del Protocolo de Kioto podrían mitigar el cambio climático y a su vez beneficiar a las comunidades locales. Sin embargo, dada la actual incertidumbre sobre el precio del CO2 para créditos temporales y el alto nivel de costos de transacción, proyectos MDL de pequeña escala podrían no ser factibles. Este estudio aspira a determinar el costo y la rentabilidad de secuestrar carbono por medio de plantaciones de Pinus ponderosa en sitios de calidad medio-alta en el sur de Argentina. La cantidad de certificados de reducción de emisiones (CERs) expedidos se estimó utilizando el método de los créditos temporales (TCER) y el método de créditos a largo plazo (LCER). Por otra parte, los puntos críticos del proyecto para distintas variables, se calcularon como los valores a partir de los cuales los ingresos obtenidos por la venta de CERs cubren los costos de transacción. Los resultados muestran que la producción conjunta - madera y CERs - incrementa la rentabilidad del proyecto comparada con la producción de madera únicamente. Ambos métodos de contabilizar carbono han demostrado casi el mismo funcionamiento, sin embargo, la mayor diferencia surge en la distribución de los pagos en el flujo neto efectivo. Bajo un escenario medio (8,2 €/CER, i=8%), la superficie mínima obtenida para proyectos rentables es de 200 ha usando el método TCER, o 220 ha aplicando el método LCER. Por otra parte, se encontraron ventajas comparativas en el costo de fijación de CO2 a través de plantaciones de pino ponderosa en Patagonia. El valor presente del costo de secuestro de CO2 es 5,3 $/t CO2, y el costo de producción de CERs es 6,2$/TCER y 8,3 $/LCER, siempre a valor presente. El uso de un esquema de financiamiento local para desarrollar carteras de proyectos podría ser una posible alternativa para reducir el problema de escala de los mismos. Como la escala tiene un fuerte impacto sobre la rentabilidad de los proyectos, éstos podrían ser llevados a cabo por medio de la asociación de pequeños productores e inversores. En consecuencia, tanto los riesgos como los beneficios del proyecto serían compartidos entre sus participantes y el atractivo del mismo se vería incrementado. Por lo tanto, bajo los escenarios asumidos, pequeños proyectos de forestación en el marco de los MDL en Patagonia no solo serían viables sino que también ventajosos. SUMMARY The mitigation of global warming in a cost-efficient way is one of the global action priorities. Clean Development Mechanisms of the Kyoto Protocol could mitigate the climate change and to benefit local communities as well. However, given the current uncertainty about carbon prices for temporary credits and the high level of transaction costs, CDM forestry projects of small scale could be unfeasible. This study aims to determine the cost and profitability of sequestering CO2 in Pinus ponderosa plantations on average to high quality sites in the South of Argentina. The number of certified emission reductions (CERs) to be issued is estimated using temporary credits (TCER) and long-term credits (LCER). Furthermore, critic points - for different variables - are calculated as the values where the revenues from sales of CERs cover the transaction costs. Results show that the conjoint production –timber plus CER sales- increases projects profitability compared to timber production alone. Different accounting approaches used have almost the same performance, even though, the major difference is originate in the cash flow payment distribution. Under an average scenario (8,2 €/CER, i=8the minimum size achieved for profitable projects is 200 ha or 220 ha using the TCER or LCER approach respectively. Furthermore, comparative advantages are found in the costs of sequestering carbon dioxide by Ponderosa pine plantations in Patagonia. The present value of carbon sequestration costs is 5,3$/t CO2, and the CERs production costs is 6,2 $/ TCER and 8,3$/ LCER, always in present value. Using a local financial scheme to prepare project portfolios could be a possible alternative to cope with project scale. As the area has a strong impact on the project profitability; these could be carried out by the association of small farmers or investors. Consequently, both the risk and the project benefits would be shared among the participants and the attractiveness of the project increased. Therefore, small scale CDM afforestation projects in Patagonia under the scenarios assumed would not only be feasible but also advantageous

The economics of hydro-meteorological disasters: approaching the estimation of the total costs

21 p.Hydro-meteorological disasters have caused increasing losses in recent years. Efficient risk reduction policies require accurate assessment approaches, with careful consideration of costs, beyond direct tangible costs, which are commonly used in practice. Faced with possible risk reduction scenarios, limited financial resources require an improvement in the quality of cost estimation, thereby contributing to an efficient allocation of resources. This paper focuses on the concept of total costs of hydro-meteorological disasters, based on direct and indirect as well as tangible and intangible cost categories. These categories are defined and explained, supported by a comprehensive review of economic valuation methods. Based on this information, practice relevant suggestions are made concerning the most appropriate methods for different cases in terms of scale, availability of data and of technical resources. Our survey also provides critical insights to drawbacks of flood risk estimation, which need to be addressed and carefully dealt with in any future research in this area

A manual and an automatic TERS based virus discrimination

Rapid techniques for virus identification are more relevant today than ever. Conventional virus detection and identification strategies generally rest upon various microbiological methods and genomic approaches, which are not suited for the analysis of single virus particles. In contrast, the highly sensitive spectroscopic technique tip-enhanced Raman spectroscopy (TERS) allows the characterisation of biological nano-structures like virions on a single-particle level. In this study, the feasibility of TERS in combination with chemometrics to discriminate two pathogenic viruses, Varicella-zoster virus (VZV) and Porcine teschovirus (PTV), was investigated. In a first step, chemometric methods transformed the spectral data in such a way that a rapid visual discrimination of the two examined viruses was enabled. In a further step, these methods were utilised to perform an automatic quality rating of the measured spectra. Spectra that passed this test were eventually used to calculate a classification model, through which a successful discrimination of the two viral species based on TERS spectra of single virus particles was also realised with a classification accuracy of 91%