International coal prices

The place coal will occupy among the world's energy supplies depends on many factors, including its price trends. This paper reviews recent price trends and supports the thesis that future coal prices are independent of oil prices, and that they will fluctuate between two limits which are based on production and transport costs in the USA and Australia.     

Strategic metal markets : Prospects for producer cartels

The OECD area is a major consumer and importer of strategic metals. Assurance of a steady supply of these critical materials at reasonably stable prices has for a long time been an important policy issue in the industrialized market economies. The present study addresses one aspect of supply security. The purpose is to explore the prospects for and strength of price-raising cartel action in selected strategic metal markets, mounted by producers outside the OECD countries.     

EFFICIENCY IN THE USE OF WATER FOR IRRIGATION: THE ROLE OF PRICES AND REGULATIONS

Efficiency in the use of water for irrigation is normally defined in a physical sense - engineering and agronomic; and it is often assumed that higher efficiency is desirable. However, in an economic sense, there is an optimum range in the level of physical efficiency. Normally it can be said that as water prices increase, it becomes more rational to increase physical efficiency by selecting and adopting improved methods of controlling, measuring and applying water, and to design systems of pricing and regulations that will promote optimal allocation and efficient use. However, the value of water is often extremely low, in which case there may be little economic incentive to improve physical efficiency unless forced by physical factors that affect production and productivity such as soil characteristics, waterlogging or nutrient leaching.
The combination of regulations and prices that are used to allocate irrigation water reflect the conflicting goals of redistribution of income in favor of agriculture and needs to encourage efficient use of water. Regulations and pricing systems also depend on the value of water, the dependability of supplies, systems of delivery and the extent to which flows can be regulated.
Using examples and case studies, this paper discusses physical and economic efficiencies and their interrelationships. It emphasizes the role of pricing and regulations and provides general guidelines.     

The ‘new’ economics of iron and steel

The author commences his analysis of the iron and steel industry by examining the historical background of the industry, and discusses its importance for the world economy. He examines the implications for the world industry of the successful development of the steel industry in Japan, and traces the evolution of a commodity cartel in the iron ore market, analysing the price levels of the commodity in the ‘free’ and ‘controlled’ markets. Following a discussion of the role of energy and coking coal supplies in the industry, the author examines the evolution of this industry in the less developed countries, with particular reference to the role of technology in the industry's development. He concludes that there have been important structural changes in the world industry, embraced by the concept of ‘partial demise’.     

Economic rationale for Canada's future uranium policy

After the dramatic increase in prices for uranium over the 1972–1975 period, prices have declined in real terms. This article examines the future supply, demand and price trends for uranium, and predicts that a situation of excess supply will result in the 1980s, bringing a continuing decline in real prices, unless Canada and other net exporters, most importantly Australia, agree to restrict supplies in order to maintain the price of uranium at its present level in real terms. Such a policy would have substantial benefits for Canada and other net exporters of uranium.     

USING A CHOICE MODELLING APPROACH FOR CUSTOMER SERVICE STANDARDS IN URBAN WATER1

ABSTRACT: A series of reforms in the water industry in Australia has created a demand from the industry and regulators for objective methodologies to evaluate incremental changes in the customer service standards. In this paper, the use of choice modeling for estimating implicit prices associated with urban water supply attributes is explored. Results from multinomial logit (MNL) and random parameters logit (RPL) models show that increases in annual water bills and the frequency of future interruptions were the most important attributes. Implicit price confidence intervals based on the best models suggest that people are willing to pay positive amounts to achieve a water supply that is less frequently interrupted. The provision of alternative water supplies during an interruption and notification of the interruption were found to be unimportant to respondents. Choice modeling proved to be a useful technique and provided the industry and regulators with additional information for standard setting.     

Mine capacity and mineral price

The loss of foreign mineral supplies may affect domestic supply and price. To investigate the assumption that prices, a simple mine investment model that relates mine capacity to deposit attributes is used. A test of the model to see how well it approximates industry investment practice illustrates its accuracy. The model suggests that price changes can substantially affect the optimal capacity of planned or existing mines as well as the mineral supply in the USA.     

POTENTIAL ECONOMIC IMPACTS OF CHANGES IN WATER AVAILABILITY ON AGRICULTURE IN THE TRUCKEE AND CARSON RIVER BASINS,NEVADA, USA1

ABSTRACT: Effects of climate change are likely to be detected in nearly all sectors and regions of the economy, with both winners and losers. One of the consequences of climatic changes could be altered regional water supplies. This paper presents an investigation of regional agricultural implications of changes in water availability. Specifically, using a profit maximization approach, the economic consequences of altered water availability in the Great Basin of Nevada are analyzed in terms of the effects on net returns of agricultural producers. Under the scenarios analyzed in this paper, it is found that with adequate water systems, increase in streamflow and consequent increase in water availability could significantly benefit agricultural producers of this region. Net returns to irrigators could increase by 8 to 13 percent, not taking into account the possibility of changes in crop yields and prices. It is also shown that the benefits from increased water availability are sensitive to likely crop yield and price changes. The potential for adverse effects of climatic changes on water supply is also considered by analyzing the effects of decreased water availability. Under decreased water availability scenarios, farmer net returns decrease substantially.     

WATERSHEDS AS THE BASIC ECOSYSTEM: THIS CONCEPTUAL FRAMEWORK PROVIDES A BASIS FOR A NATURAL CLASSIFICATION SYSTEM1

ABSTRACT: A scheme is outlined to classify watersheds as ecosystems, based on their natural attributes. Two physical factors of the environment, climate and geology, are selected as state factors. Climate is the master factor that supplies energy and water to all ecosystems; geologic structure supplies the materal from which the forces of climate carve landforms to establish ecosystems. At the next lower level, soil and vegetation interact in a succession of transactions to produce a mosaic of tesseras within each watershed. It is these interacting tesseras that moderate climate and store energy within the ecosystem that influences the embedded stream. At the bottom of the scale is the stream with its passive role and inability to interact with the higher factors of the ecosystem. Thus, we have a controlling force consisting of two elements (climate and geology), a reacting force (soil and vegetation) that responds by circular conditioning to controlling forces, and at the lowest level, the stream which responds to all factors of the living system within its watershed.     

Relative Value of Water for Hydropower and Municipal Supply in Southeastern Reservoirs

Population growth in the Southeast has driven withdrawals for municipal water beyond the limits of local supplies. With few options left for development of virgin sources, a number of urban areas are looking toward demand management and additional supplies by reallocating storage in reservoirs that were built primarily or in part for hydropower. Hydropower has become a lesser part of the mix of energy sources, and the question arises as to value of water for that purpose relative to its value for municipal use. Three cases are used to examine the issue. Effects of withdrawal for municipal water supply on output of electric energy are estimated. Benefits of foregone energy are evaluated using the least cost alternative for replacement, and benefits for municipal water are estimated using costs for development of new sources. Benefits for use as municipal water are found to be considerably higher than benefits for hydroelectric energy at existing prices, even higher than the least cost alternative for replacement. Given the spatial distribution of the cases, that finding would appear to hold in general across the region.     

Shortfalls in minerals investments

The international minerals industry continues to have a substantial investment shortfall. The widening exploration and mineral development gaps, not only in the lesser developed countries but also in the developed nations, are sowing the seeds for future mineral supply disruptions and conflicts. Mutuality of interests demands concerted initiatives, individual as well as collective, to reverse the investment trends established by international mineral finance and the multinational corporations in order to pave the way for secure mineral supplies in the future at acceptable prices.     

WATER AUCTIONS AS AN ALLOCATION MECHANISM IN VICTORIA,AUSTRALIA1

ABSTRACT: During recent years many countries have moved to rationalize the management of state owned or state controlled resources. In Victoria, Australia, water, in particular, has received a great deal of attention. Subsidies to construct, operate, and rehabilitate irrigation facilities have been reduced, and there have been numerous consolidations of small water supply authorities to achieve economies of scale. In addition, Victoria has taken the unusual step of using auctions to allocate new irrigation water entitlements. The six water auctions that took place during 1988 and early 1989 were perceived as an efficient and equitable mechanism to allocate limited water supplies to their highest value use. While the agricultural areas where the different auctions occurred were similar, there was substantial variation in the prices paid, which reflects varying demands for additional irrigation water. This paper will discuss the following topics: the auction process used and the results of the auctions, the efficiency of the auction procedures, and the factors influencing the demand for additional irrigation water in the different auctions. In addition, the implications of using auctions to allocate water supplies for future water management in Victoria will be discussed.     

An econometric model of the international bauxite-aluminium economy

This simultaneous equation model emphasizes oligopolistic and vertical integration features, and conflict between companies and some bauxite producer country governments. Estimates do not support Koyck lags, or big gaps between long- and short-term elasticities. Strongest influence is industrial activity in advanced countries. Price and substitution elasticities are low. With an 11 year horizon, cartelization gains are high. In the longer term, Australia's participation in, or exclusion from the cartel, and cartelization gains, are strictly interdependent, and dependent on Australia following policies as a bauxite producer, or, more realistically, as an aluminum producer (which makes cartel perspectives poor).     

Chinese resource security policies and the restructuring of the Asia-Pacific iron ore market

This paper reviews the restructuring of the Asia-Pacific iron ore market in the wake of the rise of the Chinese steel industry. Prior to the 2000s, this market was characterised by two key features—high firm-level concentration on both the producer and consumer sides, and price determination through annually negotiated benchmark pricing between Australian mining and Japanese steel firms. However, owing to rapid growth in the Chinese steel industry and its emergence as the region's principal iron ore consumer, the Asia-Pacific iron ore market has been dramatically restructured during the last decade. This process has been accelerated since 2005 by Chinese governmental resource security policies, which have sought to address current record high iron ore prices through the use of foreign investment to sponsor new market entrants and the formation of an import cartel amongst the Chinese steel firms. This paper evaluates how these policies have driven restructuring in the Asia-Pacific iron ore market, through an analysis of the growth of China's steel industry, Chinese resource security policies aimed at lowering iron ore import costs, and their effects upon the regional market's ownership structure and price determination mechanisms. It argues that while Chinese investment and cartelisation policies have catalysed significant changes to the ownership and pricing structures of the Asia-Pacific iron ore market, they have carried only mixed benefits for the Chinese steel industry's resource security.     

FARM-LEVEL MANAGEMENT OF DEEP PERCOLATION EMISSIONS IN IRRIGATED AGRICULTURE1

ABSTRACT: Source control costs for deep percolation emissions from irrigated agriculture are analyzed using a farm-level model. Crop area, irrigation system and applied water are chosen to maximize the net benefits of agricultural production while accounting for the environmental damages and disposal costs of those emissions. Deep percolation is progressively reduced as environmental and disposal costs are increased. This occurs primarily through the adoption of more efficient irrigation technology and reductions in applied water for a given technology Higher surface water prices, such as through irrigation reform and constrained surface supplies, are additionally considered in light of the drainage problem, as are the effects, both short- and long-term, on ground water use.     

VALUING URBAN WATER ACQUISITIONS1

ABSTRACT: Municipalities typically seek additional water supplies whenever prospective population and economic growth suggests the inadequacy of currently available water supply. The benefit of supply enhancement is usually construed as avoiding debilitating water scarcity. A more effective approach to planning is to compare the benefits and costs of supply augmentation. The net present value of benefits for a supply increase in a representative Texas community is calculated for alternative scenarios relating to population growth, rate growth, and the temporal distribution of the increased supply. Consumer surplus measures are sensitive to all three of these factors and vary from $0 to over $4000 per acre-foot. A notable finding is that the added supply may offer zero values in cases where real water prices increase at an annualized rate of 4 percent (or greater) which is half the rate occurring in Texas from 1981–1985.     

A TEST OF ALTERNATIVES FOR MEETING PUBLIC POTABLE WATER REQUIREMENTS1

ABSTRACT The relative economic costs of meeting projected public potable water demands through increasing the supply, controlling the demand, and increasing the capacity for interagency water transfers are explored. These alternatives and combinations are evaluated with the aid of a linear programming model in northeastern New Jersey, a major metropolitan region of over 4.5 million people, for the years 1975 to 2000. After more than 30 model tests it was found that a combination of increased interagency transfers and added water supplies was the least expensive solution.     

Agreement about commodity agreements?

In spite of the shifts in global economic power the scope for increased intervention in commodity markets remains restricted. We have witnessed the beginnings of some changes with the increased willingness of the richer countries to discuss the commodity issue. The interest in individual commodity agreements is likely to be extended as consumers place a higher valuation on security of supplies but commodity agreements can only secure moderate and limited objectives. They represent only one of a number of tools which are available in the attempt to secure a new world economic order and they will need to be used in conjunction with increased flows of foreign aid, trade liberalisation, and schemes of compensatory finance. The integrated approach to commodities seems fraught with difficulties as does any realistic scheme for the indexation of commodity prices.     

Influence of production costs and inventories on mineral prices

The purpose of this article is to broaden understanding of the factors which exert major influences on prices for industrial metals beyond the widely recognized tendency for prices and inventories to move in opposite directions. Specifically, the relationship between inventory levels and price volatility is examined. In addition, the relationship between prices and production costs is also examined. A few thoughts are expressed on the relationship between prices and industry structure. The paper includes a qualitative discussion about why a link should exist between prices and production costs, a graph illustrating the relationship between prices and inventories, and econometric equations quantifying the relationship between prices, production costs and inventories.     

World supply of non fuel minerals: The geological constraints

The feasibility of trebling production of essential non fuel minerals by AD 2000 is considered in relation to a rise in world population to 6 billion (10⁹). Adequate supplies of common bulk ‘minerals’ like sand and gravel, brick clays and saline deposits, are assured, but mining will place additional strains on local environments. Ores of the metals that can be regarded as available in sufficient quantities include iron, aluminium, chromium, titanium, copper and nickel, and possibly also lead and zinc. In spite of the geological constraints imposed by complexity of geometry and genesis, reasoned resource estimates are possible for these, but they may not be feasible for rarer necessary minerals, such as those of the precious metals, mercury, niobium and flourine. The extraction of even the commonest of the non fuel minerals is conditioned by the availability of abundant energy at economic prices – this should be regarded as the critical factor.