The estimation of agricultural policy effects on soil erosion—An application for the bio-economic model MODAM

As agricultural policies affect land use, they have effects on the amount of soil erosion in agricultural regions through changes of the economic conditions of agricultural production. Prices of inputs and outputs, regulations and incentives can change, forcing or encouraging farmers to adopt new crop rotations. This paper shows how a bio-economic model can be used to describe and estimate the effects of policies on agricultural production and the risk of soil erosion at the example of a region in North-Eastern Germany. The model uses both an assessment tool that is based on a fuzzy-logic approach for the estimation of soil erosion risk of cropping practices, and a linear programming model, that simulates farmers’ economic behaviour under the assumption of gross margin maximisation being the main goal of farmers’ actions.The analysed policy options were both a targeted and an untargeted incentive programme for reduced tillage, and a restriction option where high erosive crops are not allowed on high erodible field types. The results show that policy changes can have an impact on soil erosion. Furthermore, soil conservation policies are shown to have different levels of efficiency in terms of reduced soil erosion related to the costs of the policy. In the case of this study, a restriction option was more efficient than the incentive options. The results of such simulations can serve as a decision support for the development of soil conservation policies and help to foresee the effects of general changes of agricultural policies.     

Testing time-homogeneity of rating transitions after origination of debt

When modelling rating transitions as continuous-time Markov processes, in practice, time-homogeneity is a common assumption, yet restrictive, in order to reduce the complexity of the model. This paper investigates whether rating transition probabilities change after the origination of debt. Accordingly, we develop a likelihood-ratio test for the hypothesis of time-homogeneity. The alternative is a step function of transition intensities. The test rejects time-homogeneity for rating transitions observed over 7 years in a real corporate portfolio. Especially 1-year transition probabilities increase over the first year after origination. This time effect suggests that banks should manage their credit portfolios with respect to the age of debt.      

The Italian airport industry in transition: a performance analysis

This paper analyzes the impacts of Italian government actions on the efficiency of 36 airports between 2001 and 2003. The changes have included privatization, enlargement of the services provided directly by airport management companies, through the modification of the concession agreements, and the creation of two hubs. The analysis, using the consolidated two-stage data envelopment analysis with bootstrapping, indicates that airports with a majority public holding are on average more efficient and the presence of two hubs is source of inefficiency.