Optimal Conservation Policy under Imperfect Intergenerational Altruism

In this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.Imperfect altruism, Real Options, Hyperbolic Discounting, Time Inconsistency, Natural Resources Management, Resource /Energy Economics and Policy, D81, C70, Q23, Q58,

Profit Sharing under the Threat of Nationalization

A government bargains a mutually convenient agreement with a multinational corporation to extract a natural resource. The corporation bears the initial investment and earns as a return a share on the profits. The host country provides access and guarantee conditions of operation. Being the investment totally sunk, the corporation must account in its plan not only for uncertainty on market conditions but also for the threat of nationalization. In a real options framework where the government holds an American call option on nationalization we show under which conditions a Nash bargaining is feasible and leads to attain a cooperative agreement maximizing the joint venture surplus. We find that the threat of nationalization does not affect the investment time trigger but only the feasible bargaining set. Finally, we show that the optimal sharing rule results from the way the two parties may differently trade off rents with option value.Real Options, Nash Bargaining, Expropriation, Natural Resources, Foreign Direct Investment

Profit Sharing under the Threat of Nationalization

A multinational corporation engages in foreign direct investment for the extraction of a natural resource in a developing country. The corporation bears the initial investment and earns as a return a share of the profits. The host country provides access and guarantees conditions of operation. Since the investment is totally sunk, the corporation must account in its plan not only for uncertainty in market conditions but also for the threat of nationalization. In a real options framework, where the government holds an American call option on nationalization, we show under which conditions a Nash bargaining leads to a profit distribution maximizing the joint venture surplus. We find that the threat of nationalization does not affect the investment threshold but only the Nash bargaining solution set. Finally, we show that the optimal sharing rule results from the way the two parties may differently trade of rents with option values.Real Options, Nash Bargaining, Expropriation, Natural Resources, Foreign Direct Investment, International Relations/Trade, Resource /Energy Economics and Policy, C7, D8, K3, F2, O1,

Investing in Biogas: Timing, Technological Choice and the Value of Flexibility from Inputs Mix

In a continuous-time framework we study the technology and investment choice problem of a continuous co-digestion biogas plant dealing with randomly fluctuating relative convenience of input factor costs. Input factors enter into the productive process together mixed according to a given initial rule. Being inputs relative convenience stochastically evolving, a successive revision of the initial rule may be desirable. Hence, when the venture starts the manager may or may not install a flexible technology allowing for such option. Investment is irreversible and flexibility is costly. The problem is solved determining in the light of future prospects the optimal revision and then playing backward fixing the investment timing rule.factor proportions, technological choice, flexibility, real options, alternative energy source

Investing in Biogas: Timing, Technological Choice and the Value of Flexibility from Inputs Mix

In a continuous-time framework we study the technology and investment choice problem of a continuous co-digestion biogas plant dealing with randomly fluctuating relative convenience of input factor costs. Input factors enter into the productive process together mixed according to a given initial rule. Being inputs relative convenience stochastically evolving, a successive revision of the initial rule may be desirable. Hence, when the venture starts the manager may or may not install a flexible technology allowing for such option. Investment is irreversible and flexibility is costly. The problem is solved determining in the light of future prospects the optimal revision and then playing backward fixing the investment timing rule.Factor Proportions, Technological Choice, Flexibility, Real Options, Alternative Energy Source

An Equilibrium Model of Habitat Conservation under Uncertainty and Irreversibility

In this paper stochastic dynamic programming is used to investigate habitat conservation by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We analytically determine the impact of uncertainty and optimal policy conversion dynamics and discuss different policy scenarios on the basis of the relative long-run expected rate of deforestation. Finally, some numerical simulations are provided to illustrate our findings.Optimal Stopping, Deforestation, Payments For Environmental Services, Natural Resources Management

Land Conversion Pace under Uncertainty and Irreversibility: too fast or too slow?

In this paper stochastic dynamic programming is used to investigate land conversion decisions taken by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We study the impact of uncertainty on the optimal conversion policy and discuss conversion dynamics under different policy scenarios on the basis of the relative long-run expected rate of deforestation. Interestingly, we show that uncertainty, even if it induces conversion postponement in the short-run, increases the average rate of deforestation and reduces expected time for total conversion in the long run. Finally, we illustrate our findings through some numerical simulations.Optimal Stopping, Deforestation, Payments for Environmental Services, Natural Resources Management

Farmer Participation in the Conservation Reserve Program and Bio-fuel Production under Uncertainty and Irreversibility

Crop Production/Industries, Land Economics/Use, Resource /Energy Economics and Policy,

Rural land development under hyperbolic discounting

This article presents a simple model of land development under uncertainty and hyperbolic discounting. Land kept in rural use pays an uncertain rent, while net returns from land development are known and constant. The landowner is viewed here as a sequence of infinite autonomous selves with time-inconsistent preferences. We solve the underlying noncooperative intra-personal stopping time game under both naïve and sophisticated beliefs about the landowner's time-inconsistency and show that i) land development is accelerated due to his present-biased time preferences and ii) a higher acceleration is associated with sophistication

A Unified Framework for Constrained Visual-Inertial Navigation with Guaranteed Convergence

This Thesis focuses on some challenging problems in applied Computer Vision: motion estimation of a vehicle by fusing measurements coming from a low-accuracy Inertial Measurement Unit (IMU) and a Stereo Vision System (SVS), and the robust motion estimation of an object moving in front of a camera by using probabilistic techniques. In the first problem, a vehicle supposed moving in an unstructured environment is considered. The vehicle is equipped with a stereo vision system and an inertial measurements unit. For the purposes of the work, unstructured environment means that no prior knowledge is available about the scene being observed, nor about the motion. For the goal of sensor fusion, the work relies on the use of epipolar constraints as output maps in a loose-coupling approach of the measurements provided by the two sensor suites. This means that the state vector does not contain any information about the environment and associated keypoints being observed and its dimension is kept constant along the whole estimation task. The observability analysis is proposed in order to define the asymptotic convergence properties of the parameter estimates and the motion requirements for full observability of the system. It will be shown that the existing techniques of visual-inertial navigation that rely on (features-based) visual constraints can be unified under such convergence properties. Simulations and experimental results are summarized that confirm the theoretical conclusions. In the second problem, the motion estimation algorithm takes advantage from the knowledge of the geometry of the tracked object. Similar problems are encountered for example in the framework of autonomous formation flight and aerial refueling, relative localization with respect to known objects and/or patterns, and so on. The problem is challenged with respect to the classical literature, because it is assumed that the system does not know a priori the association between measurements and projections of the visible parts of the object and reformulates the problem (usually solved via algebraic techniques or iterative optimizations) into a stochastic nonlinear filtering framework. The system is designed to be robust with respect to outliers contamination in the data and object occlusions. The approach is demonstrated with the problem of hand palm pose estimation and motion tracking during reach-and-grasp operations and the related results are presented