The new economy of nature：can carbon pay for nature conservation？ The case of the Hong Kong Country Parks

The Country Parks of Hong Kong occupy 40%of the total landmass of Hong Kong,and consists of vast areas of secondary woodlands,scrublands,grasslands,and reservoirs.That vegetation-and the soil underneathsubtract carbon from the atmosphere,which has a market value.The aim of this paper is to estimate the value of that carbon,to assess whether that value would be sufficient to pay for the upkeep of the Country Parks,and to compare that value to the costs of alternative ways to reduce atmospheric carbon dioxide.To do this,we compare the land cover of 1978,1991,1997 and 2004 using remote sensing,and identify the three predominant land covers（woodlands,scrublands,grasslands） .We then estimate the amount and value of the carbon sequestered by the vegetation and soil of the Country Parks,and compare it to the budget available to the Agriculture,Fisheries and Conservation Department to run the Country Parks（HK$234 million in 2009/2010） .We extrapolate our results over 50 years,from 1978 to 2028.We conclude that by 2028 the carbon sequestered would be valued over HK$800 million,but the value of the additional carbon subtracted yearly would only cover approximately 7%of the total budget needed to run the Country Parks.We also conclude that because of the large budget allocated to the Country Parks,alternative methods of carbon sequestration-represented by the EU ETS price of carbon-are much cheaper.     

Can price regulation increase cost-efficiency?

This paper examines the possibility that price regulation increases a monopolist's cost-efficiency. When the firm's choice of cost-reducing effort depends on the output supplied, a binding price-cap, by compelling the monopolist to produce more, results in lower costs. On the basis of a two-period asymmetric information model, the paper demonstrates that price regulation increases efficiency when the elasticity of demand is sufficiently low, even assuming very conservative preferences of the regulator and asymmetric information. Moreover, contrary to previous findings and conventional wisdom, we find that a periodical rate base review may increase productive efficiency through the positive effect on future cost-reducing effort, counterbalancing its well known adverse effect on the current level of effort.     

Strategic foresight in corporate organizations: Handling the effect and response uncertainty of technology and social drivers of change

Today many companies in many industries put a lot of efforts into monitoring and investigating emerging drivers of change in their business environment, particularly in relation to new technologies and events in the social, economic, political and ecological landscapes which surround their industry. So far scholars in the literature on foresight and future studies focused on the techniques and practices for analysing the “state” uncertainty about the likely path of evolution of emerging drivers of change. Anyway, less attention was devoted to the “effect” uncertainty about the impact of drivers of change on the competitive position of the firm and to the “response” uncertainty about how to take advantage of these drivers. These are the main issues we take into account, through a field research on firms that, notwithstanding they were able to properly assess the likely evolution (state uncertainty) of relevant drivers of change in their industry, either were successful or dramatically failed in handling the effect and response uncertainty of these drivers. Moreover, we carried out multiple case studies of some large companies that have established an organizational unit dedicated to strategic foresight. Overall, the results of our research may contribute to improve the effectiveness of strategic foresight and to increase its value added to the planning process of corporate firms, while providing helpful insight to public organizations that promote foresight exercises for enhancing the competitiveness of local firms.     

Spatial spillovers in emerging market spreads

We use novel spatial econometrics techniques to explore spillovers in the sovereign bond market for 24 emerging economies during 1995–2010. The article extends the previous literature focusing on spillover effects from advanced to emerging economies by analyzing transmission of shocks across emerging markets. After controlling for the impact of global factors, we find strong evidence of spillovers from both sovereign spreads and macroeconomic fundamentals in neighboring emerging economies. In addition to the geographical proximity, the channels of spatial transmission include trade and financial linkages. The results of the article highlight the importance of accounting not only for spillovers from advanced economies to emerging markets but also across emerging markets when analyzing sovereign spreads.     

Computing value at risk with high frequency data

We compare the computation of value at risk with daily and with high frequency data for the Deutsche mark–US dollar exchange rate. Among the main points considered in the paper are: (a) the comparison of measures of value at risk on the basis of multi-step volatility forecasts; (b) the computation of the degree of fractional differencing for high frequency data in the context of a Fractionally Integrated Generalized Autoregressive Conditional Heteroskedasticity (FIGARCH) model; and (c) the comparison between deterministic and stochastic models for the filtering of high frequency returns.     

Liquidity Constraints,Competition, and Markup Cyclicality

This article provides evidence on the relation among financial constraints, competition, and the cyclicality of markups. Based on a long series of industry data from a large number of countries, we find that markups increase in conjunction with the business cycle in environments with higher short‐term financial constraints (liquidity constraints) and more competition. The evidence also suggests that these two elements complement each other: the procyclicality of markups in firms facing both high competition and high liquidity constraints is higher than that explained by each determinant independently.