Natural resource accounting in theory and practice: A critical assessment

In this paper an extensive review of the theoretical and applied literature on natural resource accounting (NRA) is provided. The review begins by explaining the economic theory that underpins NRA, contrasting welfare and sustainability as policy goals, and presenting various distinct conceptions of national income. The state of play regarding official revisions to the system of national accounts (SNA) with respect to natural resources and the environment is presented and controversial areas are highlighted. Finally, the economic literature on proposed revisions, and applied studies that have proceeded using these methods, is summarised and critiqued. We argue that much of the literature proceeds with weak conceptual foundations, and that typical case studies produce results that are ambiguous in interpretation. Moreover, we highlight fundamental tensions between economic theory and national accounting methodology, and conclude that one outcome of this has been the insufficient attention paid by economists to the revisions to the SNA; instead devoting time and effort to 'freelance' NRA case studies utilising sometimes ad hoc methods from the economic literature.     

Moral Hazard and Risk Management in Agri‐environmental Policy

This paper develops the key finding of Ozanne, Hogan and Colman (2001) that risk aversion among farmers ameliorates the moral hazard problem in relation to agrienvironmental policy compliance. It is shown that risk averse farmers who face uncertainty in their production income are more likely to comply with such a policy as a means of risk management. In addition, it is shown that a principal who has control over both the level of monitoring and the size of penalty, if detected, can reduce non‐compliance by adjustments to these instruments which increase the variance of farmers' income but leave the expected penalty unchanged. It is concluded that risk management by both principals and agents has the potential to diminish the moral hazard problem, especially given proposed developments in agri‐environmental policy in the European Union.     

A METHOD FOR EVALUATING SUPPLY RESPONSE TO PRICE UNDERWRITING

In this paper a method for evaluating the supply response of individual producers to a price underwriting scheme is presented. The method includes precise formulae to take account of the impact of price underwriting on the producer's uncertain conditions. The Australian Wheat Board's guaranteed minimum price scheme is taken as a specific example of price underwriting in practice. Results show the scheme to lead to only relatively small supply responses. The impact on producer behaviour of an increase in price uncertainty in the presence of an underwriting scheme is also demonstrated in the paper.     

Regulating Insider Trading In Betting Markets

Although trading in securities in conventional financial markets on the basis of inside information is restricted by law, the rules against such trading in betting markets are rather more ambiguous. It is argued in this paper that, since insider trading in betting markets imposes a cost on the great majority of bettors, tighter strictures against such trading would benefit all but the insiders. This case is supported by the use of empirical evidence which shows that betting markets which are characterized by tighter controls against insider activity are also characterized by a significantly lower incidence of such activity.     

Responses to industrial closure

From a high point in the early seventies resistance to plant closure, especially in the form of the occupation, progressively declined throughout the rest of the decade. This article attempts to explain this trend in terms of changing socioeconomic contexts and management strategies.     

Trade and invasive species risk mitigation: Reconciling WTO compliance with maximising the gains from trade

This paper analyses the issue of balancing the gains from trade with the risk of pest and disease transference. Two decision frameworks for determining whether or not to permit trade in a potentially invasive species-carrying good are presented. The first considers only the potential production losses resulting from an invasive species entering through a trade pathway, as is prescribed by WTO compliance. The second is a unilateral welfare-maximising approach which considers the consumer gains from trade, the loss of domestic producers’ market share and expected damage from the invasive species. It is shown that these alternative decision frameworks can be reconciled such that they produce the same outcome regarding whether or not trade is to be permitted. The key parameters which influence these decisions are also highlighted.     

House Prices, Fundamentals and Bubbles

Abstract:  This paper studies actual (real) house prices relative to fundamental (real) house values. Such a focus is warranted since housing constitutes a large fraction of most household portfolios, and its characteristics are such that, in contrast to what prevails in financial markets, arbitrage will be limited and hence correction toward 'true' value is likely to be a prolonged process. Using UK data and a time-varying present value approach, our results preclude the existence of an explosive rational bubble due to non-fundamental factors. We further find that intrinsic bubbles have an important role to play in determining actual house prices although price dynamics appear to impact, particularly in periods of strong deviation from fundamental value. Price dynamics are found to be driven by momentum behaviour.