The optimal diffusion of mitigation options for environmental management

A new direction for evaluating pollution policy is proposed, focused on optimal investment pathways for mitigation capital. The approach allows practitioners to draw directly from key principles in the diffusion literature. A two‐stage, policy‐development framework is introduced. The first stage consists of empirical modelling to assess optimal diffusion pathways for diverse mitigation options. The second involves determining the relative strengths of different policy actions to address diffusion rates or maximum levels of adoption that diverge from optimal levels. The advantages of this new approach are demonstrated in an agri‐environmental context, concerning the off‐site impacts of intensive agriculture on water quality. The viewpoint provided by the novel approach establishes the importance of adoptability – alongside the traditional measures of abatement effectiveness and cost – for mitigation practices in policy assessment. The key role that durable mitigation capital plays in addressing dynamic externalities is demonstrated, alongside the importance of structured diffusion cascades for alternate mitigation options.     

UNCERTAINTY,IRREVERSIBILITY AND THE LOSS OF AGRICULTURAL LAND

In the past, evaluations of the transfer of agricultural land to other uses have generally failed to incorporate the issues of uncertainty and irreversibility into the analysis. This can lead to an overestimation of development values. The paper commences with a brief review of the approaches which have been adopted in the assessment of the loss of agricultural land. It is then demonstrated that uncertainty relating to the rate of change of agricultural values through time requires the adoption of a more conservative decision criterion in the evaluation of irreversible land use changes than would otherwise be applied. This is followed by a numerical example and sensitivity analysis. The paper concludes with a discussion of these results.     

Evaluating Input Standards for Non‐Point Pollution Control under Firm Heterogeneity

The efficacy and cost of input standards for reducing nitrate pollution from New Zealand dairy production are evaluated. In contrast to previous studies, firm heterogeneity is explicitly considered through the novel integration of efficient techniques for the calibration and decomposition of large optimisation models. Nitrogen fertiliser application should not be targeted by policy given its minor role in determining emissions. In contrast, livestock intensity is an appropriate base for regulation given its strong correlation with pollutant load. Abatement cost increases as stocking rate declines, but this can be offset at low levels of regulation through utilising slack feed resources to improve per‐cow milk production. Both uniform and differentiated input standards based on livestock intensity achieve substantial decreases in pollutant load at moderate cost. However, because of disparity in the slopes of abatement cost curves across firms, a differentiated policy is more cost‐effective at the levels of regulation required to achieve key societal goals for improved water quality.     

Evaluating environmental policies under uncertainty through application of robust nonlinear programming

Environmental policy evaluation is characterised by a paucity of information. The novel technique of robust mathematical programming is introduced as a means to proactively account for this uncertainty in policy analysis. The procedure allows identification of expected bounds on the range of abatement costs associated with environmental policy. It also has the advantage of not limiting conclusions to realisations of specific point estimates or probability distributions. Empirical insights are provided in an application to a New Zealand inland lake threatened by nitrate pollution from dairy farming. Overall, this novel framework is demonstrated to have several key advantages, including explicit treatment of severe uncertainty, capacity to bound the range of expected abatement costs accruing to a given policy instrument, and the opportunity to identify robust plans that are immune to parametric variation.     

Irrigation Externalities and Agricultural Sustainability in South‐eastern Nigeria

Agricultural intensification by irrigation is increasingly regarded as the key to solving food supply problems in Sub‐Saharan Africa. Conversely, mounting empirical evidence suggests that irrigation externalities might preclude long‐term sustainability of arable agriculture. Choosing between intensive irrigation schemes and less intensive farming systems is therefore, problematic. The paper examines the implications of irrigation intensification in south‐eastern Nigeria using adjacent rain‐fed farms as the counterfactual. The analyses found mixed results. When first introduced, the irrigation scheme increased marginal factor productivity and gross margins but this has subsequently declined to the extent that the marginal factor product of land has become negative. The annual yields of the irrigated farms were also less stable than those of the less intensive rain‐fed farms. These results indicate the dilemma that irrigation externalities present to sustainable agricultural policy and suggest a need to look again at the potential for developments in rain‐fed systems.     

Liberalising communication services in South Africa

There is a broad consensus that for the communications industry to flourish in a country, it must be opened to private competition. However, countries have adopted varied approaches to liberalisation, some more cautious than others. This paper critically assesses South Africa's approach to liberalising its communications industry. It argues that although there have been some gains from the current phased approach, these fall short of the potential gains that could have been achieved had more competition been introduced sooner. It also argues that, with hindsight, some of the fears that gave rise to the approach adopted in the country may have been misplaced. It concludes that there is still considerable scope within the current regulatory arrangements to bring about some of those additional gains now.     

Cash Flow Immediacy and the Value of Investment Timing

In a model with stochastic interest rates, irreversible investment, and two investment dates, the value of investment delay has two components: the expected gain from committing now to investment at a future date and the potential gain from the ability to reverse this commitment. Holding net present value constant, we show that the values of both these components are increasing in the proportion of project cash flows that accrue in the more distant future. Our results emphasize the importance of the interaction between cash flow immediacy and interest rate uncertainty for the optimal investment policy.     

Accounting academic elites: The tale of ARIA

“Golden age” accounting theorists Robert Sterling, George Staubus, Yuji Ijiri and Arthur Thomas joined together to create an elite organisation, the Accounting Researchers International Association (ARIA) in 1974, with its chief instigator Robert “Bob” Sterling serving as its first President. Written correspondence between the early members, in conjunction with oral testimony, suggest that ARIA’s formation was motivated by a desire to protect and advance normative-based research. The early members also shared a mutual zeal for intellectual progress and a common passion to rid accounting practices of its defects. They shared a conviction that bringing together a well-recognised, dedicated group of scholars would create an environment in which individual differences would wilt under the pressure of scholarship.