The Economics of Water Resource Allocation: Valuation Methods and Policy Implications

In this chapter a ‘watershed economics approach’ that could be applied in Cyprus is proposed which is composed of two important stages. In Stage I economic valuation techniques are used to establish the economic value of the competing demands for surface and groundwater, incorporating where necessary an analysis of water quality. The valuation exercise allows the objective balancing of demands based upon the equi-marginal principle to achieve economic efficiency. In Stage II a policy impact analysis is proposed which addresses issues of social equity and the value of water for environmental/ecological purposes. The analysis is undertaken within the confines of the watershed; the most natural unit for the analysis of water allocation and scarcity since it determines the hydrological links between competing users and thus the impacts of one user upon another. The methodology is encapsulated by a case study of the Kouris watershed in Cyprus

Using Economic Incentives to Conserve CITES-listed Species: A Scoping Study on ITQs for Sturgeon in the Caspian Sea

Resource /Energy Economics and Policy,

New estimates of the elasticity of marginal utility for the UK

This paper provides novel empirical evidence on the value of the elasticity of marginal utility, η, for the United Kingdom. η is a crucial component of the social discount rate (SDR), which determines the inter-temporal trade-offs that are acceptable to society. Using contemporaneous and historical data, new estimates are obtained using four revealed-preference techniques: the equal-sacrifice income tax approach, the Euler-equation approach, the Frisch additive-preferences approach and risk aversion in insurance markets. A meta-analysis indicates parameter homogeneity across approaches, and a central estimate of 1.5 for η. The confidence interval excludes unity, the value used in official guidance by the UK government. The term structure of the SDR is then estimated. The result is a short-run SDR of 4.5% declining to 4.2% in the very long-run. This is higher and flatter than the UK official guidance. The difference stems from incorrect calibration of social welfare and estimation of the diffusion of growth. Other things equal, the results suggest that current UK guidance might need to be updated

Cost-effective provision of environmental services: the role of relaxing market constraints

Ferraro and Simpson (2002) argue that when markets are competitive, payments for environmental services (PES) are more cost-effective in achieving environmental goals than more indirect approaches such as subsidies to capital. However, when eco-entrepreneurs face non-price rationing in input or output markets, as is typical for credit in developing countries for example, we show that interventions which relax constraints can be more cost-effective than PES. One corollary of this is that such indirect approaches are preferred to PES by interveners (e.g., donors) and eco-entrepreneurs alike. Both of these outcomes are more likely when constraints are severe. This has implications for schemes with dual environment and poverty alleviation objective

Reflections on the Dasgupta Review on the economics of biodiversity

The Dasgupta Review provides a rich overview of the economics of biodiversity, paints a bleak picture of the current state of biodiversity, and is a call to arms for action in anticipation of the CBD COP 15. The Review takes a global perspective aimed at the high level of international and national policy on biodiversity, while elucidating the very local nature of biodiversity threats and values. The approach is orthodox in its diagnosis via the language of externalities, natural capital, shadow pricing, asset returns, and the suite of remedial policies that follow. Yet, at its centre is an ‘unorthodox’ perspective: the economy is embedded in the environment and growth is limited. We offer reflections on this framing in light of its objectives for biodiversity. The limits to growth message will be criticised and applauded in equal measure by different economists. The central place of valuation and the aggregated concept of biodiversity will draw criticism from outside the discipline. Yet the Review provides a foundation for biodiversity economics, and its largely orthodox framing may invoke the intended step change in the mainstream approach to economic growth

Reynolds number dependence of turbulence induced by the Richtmyer-Meshkov instability using direct numerical simulations

This paper investigates the Reynolds number dependence of a turbulent mixing layer evolving from the Richtmyer-Meshkov instability using a series of direct numerical simulations of a well-defined narrowband initial condition for a range of different Reynolds numbers. The growth rate exponent of the integral width and mixed mass is shown to marginally depend on the initial Reynolds number Re0, as does the minimum value of the molecular mixing fraction. The decay rates of turbulent kinetic energy and its dissipation rate are shown to decrease with increasing Re0, while the spatial distribution of these quantities is biased towards the spike side of the layer. The normalised dissipation rate and scalar dissipation rate are calculated and are observed to be approaching a high Reynolds number limit. By fitting an appropriate functional form, the asymptotic value of these two quantities is estimated as 1.54 and 0.66. Finally, an evaluation of the mixing transition criterion for unsteady flows is performed, showing that even for the highest Re0 case the turbulence in the flow is not yet fully developed. This is despite the observation of a narrow inertial range in the turbulent kinetic energy spectra, with a scaling close to -3/2

Does deterrence change preferences? Evidence from a natural experiment

The deterrent effects of counter-violence initiatives could backfire if they cause preferences to change so that the perceived gains from violent actions increase. We test the preference-change hypothesis in a quasi-experimental design exploiting the random location of segments of the wall between the West Bank and Israel, an initiative intended to deter armed resistance. We undertake incentivised decision tasks with Palestinians to measure key individual traits that determine the valuation of political actions: preferences for risk, uncertainty and time delay. We show that people living close to the wall become more risk-tolerant, ambiguity averse and impatient than those unexposed to the wall, and this effect is amplified for people both exposed to and isolated (from the West Bank) by the wall. Preference-change could explain how repressive initiatives appear to perpetuate cycles of violence and resistance