An Option-Pricing Approach to the Costs of Export Credit Insurance

This article investigates the relationship between a debtor country's external financial indicators and the costs associated with the insurance of export credits to that country. For this purpose a stylized model of export credit insurance (ECI) is developed, the central idea being that ECI is similar to a contingent claim such as a European put option. Thus, tools from option pricing theory were used to calculate the price of ECI, implying that not only the current financial position but also the volatility of the changes in that position determine such costs. The empirical results of a statistical analysis of the premium rates for ECI, applied by a private export credit insurer to seventy-seven developing countries during 1993, provide some support for these hypotheses. In particular, the reserves-over-imports ratio of a debtor country and the volatility of the rates of change of this ratio appear to contribute significantly to the premium rates that apply to that country. Thus, the article provides evidence that option pricing parameters do play role in practical insurance pricing, even if this pricing is not explicitly based on these parameters. Premium rates are set as if an underlying option market operated. Thus, the trade of countries with volatile external financial positions is saddled with higher costs than that of countries with more stable positions.     

Retail pricing: Does channel length matter?

The number of intermediary levels between a manufacturer and the final market in a distribution channel varies from industry to industry. In some cases, none are used (i.e. the distribution function is vertically integrated), while several middleman levels are used in other cases (e.g. the use of a wholesaler, a jobber, and a retailer in the distribution of meat). In this paper we examine the effect of competition on the profit-maximizing length of the distribution channel. We find that the optimal number of middleman levels increases with the substitutability of products in the market, but that there are institutional limits on the maximum number of levels in a channel. The analysis also suggests that differences in the objectives of channel members (e.g. the maximization of total channel profit versus the maximization of each member's individual profit) affect optimal channel length: a goal of total channel profit maximization produces a channel at least as long as one of individual (non-co-operative) member profit maximization. The work thus complements existing research focusing on intra-channel (e.g. cost-based) explanations of channel length, using a framework similar to those investigating competitive incentives for vertical integration in distribution.     

EFFECTS OF THE FARMER SUPPORT PROGRAMME AND CHANGES IN MARKETING POLICIES ON MAIZE PRODUCTION IN SOUTH AFRICA

This article analyses the effects of action aimed at narrowing the gap between South Africa's ‘two agricultures’, specifically the effects of the Farmer Support Programme (FSP) on structural aspects of maize production under different marketing policies. This is done by assembling a sectoral linear programming model of the South African summer-rainfall grain-producing area. The emphasis is on the inclusion of supply, demand and production risk. Results show that the effects of a successful FSP on specific interest groups, e.g. consumers of a specific product, or producers in a specific region, depend on the marketing policy followed, as well as on the effectiveness of the FSP. The analysis accentuates the interrelationships in South African crop production and illustrates how past policies ignored regional comparative advantages, distorted regional development and affected social welfare.     

Ozone micro-bubble disinfection method for wastewater reuse system.

Reuse of wastewater is regarded as one important way to deal with the world's shortage of potable water. The authors focused on a disinfection system using micro-bubbles and evaluated its capability for wastewater reuse. This paper reports experimental results from examination of the basic characteristics of micro-bubbles and disinfection of secondary effluent by air or ozone micro-bubbles. The results suggest that when micro-bubbles are applied in an ozonation system it is possible to reduce the reactor size, the amount of ozone decomposition equipment needed and the ozone dose rate.     

Preliminary studies using hybrid mediated electrochemical oxidation (HMEO) for the removal of persistent organic pollutants (POPs).

This study investigates the hybrid mediated electrochemical oxidation (HMEO) technology, which is a newly developed non thermal electrochemical oxidation process for organic destruction. A combination of ozone and ultrasonication processes to the mediated electrochemical oxidation (MEO) process is termed as hybrid mediated electrochemical oxidation. The electrochemical cell was developed in this laboratory. In the present study, several organic compounds, such as phenol, benzoquinone and ethylenediaminetetraacetic acid (EDTA), were chosen as the model organic pollutants to be destructed by the hybrid process. The organic destruction was monitored based on the CO2 generation and total organic carbon (TOC) reduction. The HMEO process was found to be extremely effective in the destruction of all the target organics chosen in this study. The information obtained from this study will provide an insight in adopting this technique for dealing with more recalcitrant organics (POPs).     

Removal of E. coli and helminth eggs in UASB: Polishing pond systems in Brazil.

Ponds following anaerobic reactors, such as Upflow Anaerobic Sludge Blanket (UASB) reactors, have been termed polishing ponds in the literature. The present paper analyses the removal of E. coli and helminth eggs in five UASB-polishing pond systems in Brazil. Since there were ponds in series, the total number of ponds was 10. The ponds had average retention times varying from 2 to 21 days, and depths ranging from 0.40 to 2.00 m. The shallow ponds in series, even with low retention times, were able to produce effluents complying with the coliform WHO guidelines for unrestricted irrigation (< or = 1000 MPN/100 ml). An equation for the coliform decay coefficient was proposed: Kb (dispersed flow) = 0.710H(-0955) (20 degrees C). The equation highlights the inverse relationship between the pond depth and the decay coefficient. All polishing pond systems were able to produce effluents with helminth eggs concentrations predominantly equal to zero, and satisfying the WHO guidelines for unrestricted and restricted irrigation (< or = 1 egg/L, arithmetic mean). The approximate range of helminth eggs removal efficiency was predicted satisfactorily.     

Effects of solid retention time on the performance of submerged anoxic/oxic membrane bioreactor.

In this study, four similar bench-scale submerged Anoxic/Oxic Membrane Bioreactors (MBR) were used simultaneously to investigate the effects of solids retention time (SRT) on organic and nitrogen removal in MBR for treating domestic wastewater. COD removal efficiencies in all reactors were consistently above 94% under steady state conditions. Complete conversion of NH(4+)-N to NO(3-)-N was readily achieved over a feed NH(4+)-N concentration range of 30 to 50 mg/L. It was also observed that SRT did not significantly affect the nitrification in the MBR systems investigated. The average denitrification efficiencies for the 3, 5, 10 and 20 days SRT operations were 43.9, 32.6, 47.5 and 66.5%, respectively. In general, the average effluent nitrogen concentrations, which were mainly nitrate, were about 22.2, 27.6, 21.7 and 13.9 mg/L for the 3, 5, 10 and 20 days SRT systems, respectively. The rate of membrane fouling at 3 days SRT operation was more rapid than that observed at 5 days SRT. No fouling was noted in the 10 days and 20 days SRT systems during the entire period of study.     

Rapid and comprehensive indicator for evaluation of performance of treatment processes and of river waters.

Naturally occurring UV active compounds, commonly present in almost all source waters, can be rapidly monitored by their ultraviolet absorbance at 260 nm (E260). Herein, the extent of correlation between the E260 and the removal efficiency of the hazardous contaminants, endocrine disrupters and dioxins, were investigated using various treatment and river source waters. The detection of various types of hazardous contaminants using sophisticated analytical methods, such as high resolution gas chromatography (HRGC)/high resolution mass spectrometry (HRMS) and high performance liquid chromatography (HPLC)/inductively coupled plasma (ICP)/mass spectrometry (MS), as well as various short-term bioassays, can require hours or even days for results to be obtained. The removal of the E260 correlated well with those of individual contaminants, such as endocrine disruptor chemicals and dioxins, with the various treatment processes employed. In the plots of the endocrine disrupters against the DOC/E260, a correlation was found with the endocrine activity of the Korean/Japanese river waters employed in this study.