Rio reconstruction and flood prevention in Brazil

Until the Rio Flood Reconstruction and Prevention Project, disaster-related projects funded by the World Bank focused primarily on reconstruction, especially immediate, short-term recovery. The Rio de Janeiro project was notable as a targeted effort to reduce disaster vulnerability by promoting long-term multisectoral development strategies. It taught that reconstruction projects must address specific disaster vulnerabilities as well as cross-sectoral needs in Improving urban environmental management. The project represents a significant step towards developing a strategy for long-term prevention and mitigation of natural disasters and environmental degradation. It is also a good example of an effort to develop support for long-term environmental policies by strengthening indigenous managerial and planning capabilities—something that was not possible in short-term recovery projects.     

The short-run underpricing of initial public offerings in the Sri Lankan stock market

This study investigates underpricing of IPOs in Sri Lanka. On average, IPOs are underpriced by 34%. Small issues are more underpriced than large issues, and privatization issues are more underpriced than conventional issues. Investor sentiment is positively related with underpricing and affects small and large issues similarly. Small privatization issues are more underpriced than large privatization issues and partially explain the asymmetry in underpricing between small and large issues. However, even after controlling for investor sentiment, privatization, hot-market conditions, underwriter-size, and industry, small issues remain more underpriced than large issues. The results strongly support the uncertainty hypothesis for larger underpricing of small issues, and privatization issues.     

Protecting the ozone layer

Stratospheric ozone layer depletion has been recognized as a problem by the Vienna Convention for the Protection of the Ozone Layer and the 1987 Montreal Protocol (MP). The ozone layer shields the earth from harmful ultraviolet radiation (UV-B), which is more pronounced at the poles and around the equator. Industrialized countries have contributed significantly to the problem by releasing chlorofluorocarbons (CFCs) and halons into the atmosphere. The effect of these chemicals, which were known for their inertness, nonflammability, and nontoxicity, was discovered in 1874. Action to deal with the effects of CFCs and halons was initiated in 1985 in a 49-nation UN meeting. 21 nations signed a protocol limiting ozone depleting substances (ODS): CFCs and halons. Schedules were set based on each country's use in 1986; the target phaseout was set for the year 2000. The MP restricts trade in ODSs and weights the impact of substances to reflect the extent of damage; i.e., halons are 10 times more damaging than CFCs. ODS requirements for developing countries were eased to accommodate scarce resources and the small fraction of ODS emissions. An Interim Multilateral Fund under the Montreal Protocol (IMFMP) was established to provide loans to finance the costs to developing countries in meeting global environmental requirements. The IMFMP is administered by the World Bank, the UN Environmental Program, and the UN Development Program. Financing is available to eligible countries who use .3 kg of ODS/person/year. Rapid phaseout in developed countries has occurred due to strong support from industry and a lower than expected cost. Although there are clear advantages to rapid phaseout, there were no incentives included in the MP for rapid phaseout. Some of the difficulties occur because the schedules set minimum targets at the lowest possible cost. Also, costs cannot be minimized by a country-specific and ODS-specific process. The ways to improve implementation in scheduling and incremental costs are indicated.     

The relation between trades of domestic and foreign investors and stock returns in Sri Lanka

This study investigates the relation between equity flows and returns in Sri Lanka using daily trade data categorized by investor classes. The results show that purchases and sales of domestic and foreign investors, both institutional and individual, are positively related with past returns, except during crisis periods, when they are negatively related. Domestic institutional and foreign individual purchases lead to higher future returns whereas domestic individual purchases lead to lower future returns. Foreign institutional purchases do not impact future returns. Sales by domestic investors have no impact on future returns while sales by foreign investors lead to higher future returns.     

Natural Resource Management and Economywide Policies in Costa Rica: A Computable General Equilibrium (CGE) Modeling Approach

A computable general equilibrium (CGE) model is used to tracethe effects of government policies on Costa Rican forests inthe presence of incomplete markets. The results indicate thatcorrecting the market failure would, as expected, reduce deforestation.More interestingly, in the presence of the market failure, loweringthe tax on unskilled labor reduces deforestation because peoplegain employment in other parts of the economy. Taxation of otherproduced goods changes the incentives for deforestation. Forexample, a tax on agricultural products elevates the relativeprice of capital and shifts resources away from the capital-intensiveindustrial sector toward the agricultural and forest sectors;as a result, such a tax increases deforestation.     

Stock market liberalization and return volatility: Evidence from the emerging market of Sri Lanka

This study examines the impact of liberalization of the Sri Lankan stock market on return volatility. We specify GARCH and TGARCH models of volatility, and estimate them using 16 years of weekly returns for the period from 1985 to 2000. The results show that liberalization of the market to foreign investors significantly increased the return volatility in the Colombo Stock Exchange. Both conditional and unconditional volatility measures are the highest in the liberalization period. Negative return shocks lead to lower volatility suggesting that there is no leverage effect, and this appears to reflect the very low levels of leverage used by Sri Lankan companies.     

Rural Electrification: International Experience and Policy in Indonesia

This paper analyses the international experience in rural electrification (RE) over the past few decades. The current status of RE is reviewed, and demonstrated benefits are identified. A case study of RE policy analysis in Indonesia is presented. The recommendations should be helpful to decision makers formulating an RE Policy for Indonesia. Finally, some general prerequisites for successful formulation and implementation of an RE strategy are summarized