RATE OF COSTS ON INVESTMENT CAPITAL IN EMERGING MARKETS

To date, there is no adequate methodology for calculating the discount rate that would satisfy most financial analysts. The most common approach to determining the discount rate is to use the weighted average cost of capital (WACC) algorithm. The calculation of capital costs (discount rates) in emerging market countries (EM) is characterized by a number of problems related to the information inefficiency of the capital market, instability of demand for products, inflation, macroeconomic and legal uncertainty and a lack of proper payment discipline. Even more complex are the corresponding calculations during the financial crisis, accompanied by hyperinflation, a fall or significant fluctuations in the rate of the national monetary unit, trade wars, and the collapse of the banking system.Especially problematic for emerging markets is the calculation of the cost of equity (investment) capital. In developed markets, the classical CAPM model is used for these purposes. Taking into account the lack of an effective capital market in EM-related countries, it is quite difficult to determine the standard parameters of the model (risk-free rate of return, market risk premium, beta factor). Significant problems also lie in the sources and shadow schemes for paying high premiums for the risks of investing capital in EM. The aim of the paper is to substantiate recommendations on the procedure for calculating the rate of costs for own (investment) capital, taking into account the specifics of corporate activities in countries related to EM.

Changing seasonality of the Baltic Sea

Changes in the phenology of physical and ecological variables associated with climate change are likely to have significant effect on many aspects of the Baltic ecosystem. We apply a set of phenological indicators to multiple environmental variables measured by satellite sensors for 17–36 years to detect possible changes in the seasonality in the Baltic Sea environment. We detect significant temporal changes, such as earlier start of the summer season and prolongation of the productive season, in several variables ranging from basic physical drivers to ecological status indicators. While increasing trends in the absolute values of variables like sea-surface temperature (SST), diffuse attenuation of light (Ked490) and satellite-detected chlorophyll concentration (CHL) are detectable, the corresponding changes in their seasonal cycles are more dramatic. For example, the cumulative sum of 30 000 W m−2 of surface incoming shortwave irradiance (SIS) was reached 23 days earlier in 2014 compared to the beginning of the time series in 1983. The period of the year with SST of at least 17 °C has almost doubled (from 29 days in 1982 to 56 days in 2014), and the period with Ked490 over 0.4 m−1 has increased from about 60 days in 1998 to 240 days in 2013 – i.e., quadrupled. The period with satellite-estimated CHL of at least 3 mg m−3 has doubled from approximately 110 days in 1998 to 220 days in 2013. While the timing of both the phytoplankton spring and summer blooms have advanced, the annual CHL maximum that in the 1980s corresponded to the spring diatom bloom in May has now shifted to the summer cyanobacteria bloom in July

Simple sediment model : a tool to estimate nutrient regeneration in Baltic Sea sediments

Sisältää myös kaksi muuta artikkelia: Matti Mälkki: Distribution of sediments and suspended matter in the Gulf of Finland - the Central Baltic Proper transect with a particular emphasis of transportation: minerogenic evidence Stanislav Denisenko: Long-term changes of zoobenthos biomass in the Barents Se

Modelling the effects of benthic fauna on carbon, nitrogen and phosphorus dynamics in the Baltic Sea

Even though the effects of benthic fauna on aquatic biogeochemistry have been long recognized, few studies have addressed the combined effects of animal bioturbation and metabolism on ecosystem-level carbon and nutrient dynamics. Here we merge a model of benthic fauna (BMM) into a physical-biogeochemical ecosystem model (BALTSEM) to study the long-term and large-scale effects of benthic fauna on nutrient and carbon cycling in the Baltic Sea. We include both the direct effects of faunal growth and metabolism and the indirect effects of its bioturbating activities on biogeochemical fluxes of and transformations between organic and inorganic forms of carbon (C), nitrogen (N), phosphorus (P) and oxygen (0). Analyses of simulation results from the Baltic Proper and Gulf of Riga indicate that benthic fauna makes up a small portion of seafloor active organic stocks (on average 1%-4 % in 2000-2020) but contributes considerably to benthic-pelagic fluxes of inorganic C (23%-31%), N (42%-51%) and P (25 %-34 %) through its metabolism. Results also suggest that the relative contribution of fauna to the mineralization of sediment organic matter increases with increasing nutrient loads. Further, through enhanced sediment oxygenation, bioturbation decreases benthic denitrification and increases P retention, the latter having far-reaching consequences throughout the ecosystem. Reduced benthic-pelagic P fluxes lead to a reduction in N fixation and primary production, lower organic matter sedimentation fluxes, and thereby generally lower benthic stocks and fluxes of C, N and P. This chain of effects through the ecosystem overrides the local effects of faunal respiration, excretion and bioturbation. Due to large uncertainties related to the parameterization of benthic processes, we consider this modelling study a first step towards disentangling the complex ecosystem-scale effects of benthic fauna on biogeochemical cycling.Peer reviewe

Adaptive Algorithms for Relatively Lipschitz Continuous Convex Optimization Problems

Recently there were proposed some innovative convex optimization concepts, namely, relative smoothness [1] and relative strong convexity [2,3]. These approaches have significantly expanded the class of applicability of gradient-type methods with optimal estimates of the convergence rate, which are invariant regardless of the dimensionality of the problem. Later Yu. Nesterov and H. Lu introduced some modifications of the Mirror Descent method for convex minimization problems with the corresponding analogue of the Lipschitz condition (so-called relative Lipschitz continuity). By introducing an artificial inaccuracy to the optimization model, we propose adaptive methods for minimizing a convex Lipschitz continuous function, as well as for the corresponding class of variational inequalities. We also consider an adaptive "universal" method, applicable to convex minimization problems both on the class of relatively smooth and relatively Lipschitz continuous functionals with optimal estimates of the convergence rate. The universality of the method makes it possible to justify the applicability of the obtained theoretical results to a wider class of convex optimization problems. We also present the results of numerical experiments

Re-thinking the “ecological envelope” of Eastern Baltic cod (Gadus morhua): conditions for productivity, reproduction, and feeding over time

Hypoxia is presently seen as the principal driver behind the decline of the former dominating Eastern Baltic cod stock (EBC; Gadus morhua). It has been proposed that both worsening conditions for reproduction and lower individual growth, condition, and survival are linked to hypoxia. Here, we elucidate the ecological envelope of EBC in terms of salinity stratification, oxygen content, and benthic animal biomasses, and how it has affected EBC productivity over time. The spawning conditions started deteriorating in the Gotland Deep in the 1950s due to oxygen depletion. In contrast, in the Bornholm Basin, hydrographic conditions have remained unchanged over the last 60 years. Indeed, the current extent of both well-oxygenated areas and the frequency of hypoxia events do not differ substantially from periods with high EBC productivity in the 1970s–1980s. Furthermore, oxygenated and therefore potentially suitable feeding areas are abundant in all parts of the Baltic Sea, and our novel analysis provides no evidence of a reduction in benthic food sources for EBC over the last 30 years. We find that while reproduction failure is intricately linked to hydrographic dynamics, a relationship between the spread of hypoxia and the decline in EBC productivity during the last decades cannot be substantiated.Peer reviewe

Opportunities to reduce nutrient inputs to the Baltic Sea by improving manure use efficiency in agriculture

While progress has been made in reducing external nutrient inputs to the Baltic Sea, further actions are needed to meet the goals of the Baltic Sea Action Plan (BSAP), especially for the Baltic Proper, Gulf of Finland, and Gulf of Riga sub-basins. We used the net anthropogenic nitrogen and phosphorus inputs (NANI and NAPI, respectively) nutrient accounting approach to construct three scenarios of reduced NANI-NAPI. Reductions assumed that manure nutrients were redistributed from areas with intense animal production to areas that focus on crop production and would otherwise import synthetic and mineral fertilizers. We also used the Simple as Necessary Baltic Long Term Large Scale (SANBALTS) model to compare eutrophication conditions for the scenarios to current and BSAP-target conditions. The scenarios suggest that reducing NANI-NAPI by redistributing manure nutrients, together with improving agronomic practices, could meet 54-82% of the N reductions targets (28-43 kt N reduction) and 38-64% P reduction targets (4-6.6 kt P reduction), depending on scenario. SANBALTS output showed that even partial fulfillment of nutrient reduction targets could have ameliorating effects on eutrophication conditions. Meeting BSAP targets will require addressing additional sources, such as sewage. A common approach to apportioning sources to external nutrients loads could enable further assessment of the feasibility of eutrophication management targets.Peer reviewe