The prospects of tropical timber plantation investment funds

As financial markets start to acknowledge the significance of environmental issues, it is interesting to analyse how they combine finance and sustainable development. Dutch investment funds participating in tropical forest plantations project high expected returns. However, they carry huge financial risks, in particular country risk, currency risk, price risk and credit risk. The environmental and developmental returns appear to be positive but rather small. In addition, the environmental and developmental risks do not appear to be very large, as most plantations are established on former farmland and the quantitative impact of the plantations is still limited.     

中国煤电企业环境压力测试

中国煤电行业的发展伴随着各种环境风险,本文以典型煤电企业为例,在产能过剩、能效标准提高、环境保护税、全国碳市场、水资源税和非水可再生能源规划目标的风险约束下,建立环境成本内部化和环境风险分析工具,考虑不同压力情境下对煤电企业价值的影响,构建环境风险影响财务成本的压力测试框架。结果表明,对单个风险而言,产能过剩和碳市场风险对企业价值的影响是大多数地区在不同情景中面临的主要风险驱动因素。对于综合风险压力测试而言,各地区1 000MW超超临界机组乐观情景及悲观情景的企业价值距合理回报预期企业价值相差小,而300MW和600MW亚临界机组因能效水平低、经营成本高等原因在环境风险压力下企业价值偏离合理回报较多。随着环境风险严重程度的不断增加,环境压力测试有助于煤电企业和金融机构了解环境风险对企业财务状况的影响,从而对投资决策产生影响。     

Design considerations for financing a national trust to advance the deployment of geologic CO2 storage and motivate best practices

This paper explores how the widely held public policy view of the evolution of the risk profile associated with geologic carbon dioxide (CO₂) storage profoundly influences the public policy dialogue about how to best address the long-term risk profile for geologic storage. Evidence emerging from research and pilot scale field demonstrations of CO₂ storage demonstrates that, with proper site characterization and sound operating practices, retention of stored CO₂ will increase with time thus invalidating the premise of an ever growing risk. The authors focus on key issues of fit, interplay, and scalability associated with the ability of a trust fund funded by a hypothetical $1 per tonCO₂ tipping fee for each ton of CO₂ stored in the United States under WRE450 and WRE550 climate policies to manage such risks in an economically efficient and environmentally effective manner. The authors conclude there is no intrinsic value – in terms of risk management or risk reduction – in creating a trust fund predicated solely on collecting a universally applied tipping fee that does not take into account site-specific risk profiles. If left to grow unchecked, a trust fund that is predicated on a constant stream of payments unrelated to each contributing site's risk profile could result in the accumulation of hundreds of billions to more than a trillion dollars contributing to significant opportunity cost of capital. Further, rather than mitigating the financial consequences of long-term CCS risks, this analysis suggests a blanket $1 per tonCO₂ tipping fee, if combined with a concomitant limitation of liability may increase the probability and frequency of long-term risk by eliminating financial incentives for sound operating behavior and site selection criteria—contribute to moral hazard. At a minimum, effective use of a trust fund requires: (1) strong oversight regarding site selection and fund management, and (2) a clear process by which the fund is periodically valued and funds collected are mapped to the risk profile of the pool of covered CCS sites. Without appropriate checks and balances, there is no a priori reason to believe that the amount of funds held in trust will map to the actual amount of funds needed to address long-term care expenses and delimited compensatory damages. For this reason, the authors conclude that financing a trust fund or other risk management instrument should be based on a site delimited estimate of potential future expected financial consequences rather than on the random adoption of a fixed funding stream, e.g., a blanket $1 per ton, because it “sounds” reasonable.     

Due diligence assessment of non-financial risk: Prophylaxis for the purchaser

Most large mining companies grow by acquisition and conduct due diligence assessments in order to identify the opportunities and risks associated with potential acquisitions.Due diligence assessment is usually restricted to considering the financial aspects of an asset, and often overlooks the non-financial risks that may compromise the economic viability or operability of a project. However, experience has shown that neglecting non-financial risk areas such as environmental, socio-economic and sustainability performance may be problematic and, under extreme circumstances, potentially disastrous, particularly in a developing world context.This paper examines the due diligence process and identifies the limitations of conventional assessments based solely on financial risk. It presents practical recommendations on structuring due diligence assessments to consider non-financial risk so that the full risk profile of an asset can be identified.     

新安江流域生态补偿财政支出效率研究

在水环境保护长期受到高度重视的背景下,开展流域生态补偿试点是我国保护流域水环境的重要手段。目前我国多为政府主导型流域生态补偿,补偿资金全部来源于财政资金,提高财政支出效率可以让有限的财政资金发挥其最大效用。为明确流域生态补偿试点中的财政支出效率,本文以我国首个跨省界流域生态补偿试点——新安江流域生态补偿试点为案例对象,构建流域生态补偿财政支出效率评价模型,并建立评价指标体系。通过选取试点在2012—2017年的生态补偿财政支出进行效率测算与效率评价,结果显示,财政支出纯技术效率6年均值处在0.9以上的高水平,总体表现较好,但仍有改进空间;规模效率值较低是造成财政支出效率表现不佳的主要原因,生态补偿财政资金的配置规模急需完善。建议提高财政资金的管理水平,有针对性地实施生态补偿项目,建立流域和区域相结合的流域治理体系。     

Environmental risk and liability management and its influence on profitability

Managing environmental risk and liability for corporations and consultants requires a prudent combination of insurance techniques, company risk control plans, pollution prevention, and the proper allocation of retention funds. This article presents a review of current risk management techniques used to shield profits from limited and catastrophic loss scenarios. We recommend that corporations and consulting firms integrate insurance and risk management planning to mitigate environmental liabilities, navigate business risks, and safeguard corporate performance..© 1999 John Wiley & Sons, Inc.     

Protecting asset value and driving performance with a dynamic,risk-based contingency fund

We present a risk-based contingency fund management methodology to mitigate the impact of external risks on asset value and performance. Many asset intensive industries, such as water and energy utilities, are significantly affected by external risks such as extreme weather events. We put the case for a centrally held risk-based contingency fund that would mitigate against ‘medium’ impact ‘medium’ probability events that fall outside of large losses covered by insurance and smaller ‘normal’ operating losses. Our risk-based contingency approach is appropriate for short-term business planning (1–5 years) and would complement longer term planning, for example climate change adaptation and mitigation strategies. Our approach offers a risk-based methodology to manage contingency that is explicit and defensible. Critically, our methodology allows contingency to be managed dynamically as risk probabilities and impacts change, creating a mechanism for contingency funds to be periodically released if risk exposure reduces. The long-term benefit of dynamic, risk-based contingency is to reduce the impact of external risks and support long-term sustainability.     

Info-Gap Decision Theory for Assessing the Management of Catchments for Timber Production and Urban Water Supply

While previous studies have examined how forest management is influenced by the risk of fire, they rely on probabilistic estimates of the occurrence and impacts of fire. However, nonprobabilistic approaches are required for assessing the importance of fire risk when data are poor but risks are appreciable. We explore impacts of fire risk on forest management using as a case study a water catchment in the Australian Capital Territory (ACT) (southeastern Australia). In this forested area, urban water supply and timber yields from exotic plantations are potential joint but also competing land uses. Our analyses were stimulated by extensive wildfires in early 2003 that burned much of the existing exotic pine plantation estate in the water catchment and the resulting need to explore the relative economic benefits of revegetating the catchment with exotic plantations or native vegetation. The current mean fire interval in the ACT is approximately 40 years, making the establishment of a pine plantation economically marginal at a 4% discount rate. However, the relative impact on water yield of revegetation with native species and pines is very uncertain, as is the risk of fire under climate change. We use info-gap decision theory to account for these nonprobabilistic sources of uncertainty, demonstrating that the decision that is most robust to uncertainty is highly sensitive to the cost of native revegetation. If costs of native revegetation are sufficiently small, this option is more robust to uncertainty than revegetation with a commercial pine plantation.     

Sources of funds for developing country petroleum development

The Third World debt crisis has drastically altered the options open to Third World countries to fund petroleum development. Restricted access to international capital markets means that developing countries are having to reconsider alternative financial options to achieve a satisfactory rate of petroleum development. Of these, only foreign direct investmentis capable of compensating for the loss of more traditional sources of funds. To this end, developing countries are revising and harmonizing prior restrictive direct investment rules and tax codes, with recent financial innovations further underwriting the process.     

气候变化风险互联网络及系统性管理

气候变化风险能够在部门内与部门间进行传递和放大,形成多个复杂嵌套的风险互联网络,导致了系统性风险的产生。对气候变化风险互联网络的刻画能够帮助理解风险产生与演化的过程,削减气候变化对社会经济系统的直接物理风险,及碳达峰与碳中和建设过程中可能伴随的转型风险。本文识别了四类典型的气候变化风险互联网络,涵盖食品—能源—水系统、公共健康、宏观经济和金融市场、社会安全等四类部门或领域。针对每一类网络,分别总结了主要的气候变化风险传递路径及当前的研究进展和局限,并概述了开展系统性风险管理的建议。     

CAN STATE AND LOCAL GOVERNMENTS ASSUME MORE OF THE COSTS OF WATER DEVELOPMENT?1

ABSTRACT As availability of funds in the federal budget for water development has decreased recently, pressure has increased for state and local governments to pay a larger share of the costs. In this situation a difficult question immediately arises-what is the capability of state and local governments to pay a larger share? Of course, there is no easy answer. Expenditures of public funds are policy outcomes of a government's political process in which political, economic, legal and other factors are involved in complex relationships. The traditional sources of capital funds for state and local governments include bond proceeds, tax revenues, and federal financial aid (state aid is also a major source of local government funds). The issuing of bonds is hampered by a variety of legal debt limitations, but there are means for circumventing the limitations. State and local governments vary widely in amounts of taxable resources available and in the extent to which these resources have been tapped. More effective use of revenue resources could be made in some cases. New sources of capital funds for water development ought to be considered-a fee on the use of water per se, for example. Costs associated with water use currently are imposed to cover development costs, but a state might impose additional use fees earmarked for a state water development fund.     

Oil Funding and International Financial Arrangements

The traditional source of funds for exploration and development of petroleum resources has been privately-owned petroleum companies. However, many of these same companies have recently borrowed heavily to finance their acquisitions of other petroleum companies. This may limit the ability of those companies to finance future exploration and development efforts, particularly in developing countries. Special financial arrangements may be needed if the funds required are to be available. The form of such arrangements is discussed, and emphasis is placed on the need to reconcile the differing needs of borrowers and lenders.     

Financing energy development in the 1990s

Energy finance has resurfaced as a major issue in energy and energy policy debates. These concerns arise from the recent dismal performance of the private oil industry, and the growing financial demands of the former Soviet Union and other emerging markets. These growing financial imbalances are seen as jeopardizing the continued smooth growth of the world's petroleum industry. However, this paper stresses that the financial difficulties being experienced by publicly held oil companies are due, primarily, to the current economic recession. As economic growth recovers, and owing to recent substantial cost reductions, the balance sheets of the private oil industry will improve. Among state energy companies, recent structural and financial reforms mean that such companies will be able to retain more cash flow than was true historically. Moreover, many national oil companies are again able to access funds on international financial markets and generally at increasingly attractive spreads. And finally, there is the growing importance of financial innovation that is already having a positive impact on the level and pace of petroleum development worldwide.     

Financing energy transformation: The role of renewable energy equity indices

The support of financial markets for the transformation of the energy system to a low carbon society seems critical for its success. But will they support this transformation on the basis of market incentives alone? This study analyses how equity indices that try to capture renewable energy investments perform compared to conventional benchmark indices. Especially financial market investors—such as pension funds, insurance companies, and mutual funds—use these to assess and guide their renewable energy investments. As such, we take the perspective of financial market participants, which mainly only indirectly invest in renewable energy. We also analyze whether renewable energy indices are to be regarded as an example of market environmentalism. We find that the renewable energy indices’ risk-adjusted return is very poor and suggests renewables is not a financially attractive portfolio investment yet. We also argue that renewable energy equity indices can be regarded as an example of market environmentalism, especially with respect to commodification and frame-shifting.     

From Iran: Does Improvement in Corporate Environmental Performance Affect Corporate Risk Taking?

Superior corporate environmental performance (CEP) has become essential to the competitive advantage and financial success of businesses. However, the main reasons managers pay attention to environmental performance are improved reputation in the capital market and profitability, as well as reductions in operating costs and risks. This article describes the findings of a study that examines the relationship between CEP, using a reduction of carbon dioxide (CO₂) emissions as a measure, and corporate risk taking. In addition to indicating a significant negative relationship between CEP and firm risk, the study results also show that a 1% improvement of CEP decreases corporate risk by 3%.     

环保企业应对金融危机的对策

对于全球金融危机，环保企业面临着机遇与挑战，应依靠技术创新，提升企业竞争力；调整结构，务实企业发展基础；建设企业文化，提高企业员工素质；多渠道融资，增强企业发展后劲；加强管理，提升企业核心竞争力。     

Risks and opportunities for foreign investment in the mineral sectors of the Central Asian Republics: Kazakstan,Kyrgyzstan, Tajikistan and Uzbekistan

With the dissolution of the former Soviet Union in 1991, the nations of Central Asia gained independence and began the transition to market driven economies. Both the political and economic transformations of the Central Asian Republics (CARs) (Kazakstan, Kyrgyzstan, Tajikistan and Uzbekistan) have been difficult primarily because of a holdover of various centrally planned `command and control' approaches to national development. The extensive mapping and exploration of the CARs during the Soviet era (approximately 1921–1991) led to the discovery of several hundreds of mineral deposits that were subsequently evaluated, and it is this `pool' of known, but undeveloped, deposits which is of major interest to foreign and domestic companies. However, foreign investment in the mineral sectors of the CARs is at best quite modest and there are very few positive signs that foreign investment will increase dramatically in the near term. The major risks that the mining industry faces as it works in the CARs arise primarily from the fact that the nations are transitional economies which lack both a comprehensive legal framework and experience in dealing with foreign mining corporations and their practices. The major risks are political, economic, financial, infrastructure, contractual, environmental, social and cultural and workforce related. If all individual risk factors are weighted equally, the relative ranking of the countries (from least risk to most risk for mineral development) would be Kyrgyzstan, Kazakstan, Uzbekistan and Tajikistan respectively. However, such a classification scheme does not effectively weight the importance of mineral potential. If the risk criteria are weighted with respect to geologic potential, the ranking of the countries would be (from least risk to most risk) Kazakstan, Uzbekistan, Kyrgyzstan and Tajikistan, respectively.     

典型发达国家适应气候变化资金机制及对中国的启示

气候变化是全人类面临的严峻挑战,我国受到气候变化的不利影响更为显著,加快采取雄心勃勃的适应气候变化行动显得尤为重要,但资金机制一直是我国适应进程中的主要障碍,亟须借鉴国际经验构建完善适应气候变化的资金机制。基于此,本文首先简要分析国际适应气候变化资金机制的基本情况,然后选取适应进程较为完善的美、英、德、日等典型发达国家,分别从适应政策体系、国内适应资金和国际援助资金等三个方面梳理总结各国适应气候变化资金机制,最后分析我国适应气候变化资金机制及存在的问题,并提出对我国适应气候变化资金机制的启示。研究发现,《联合国气候变化框架公约》及其气候变化国际谈判进程是各国推进适应气候变化资金机制的主要动因,发达国家重视适应政策的法制化,但政策力度和运行模式有所不同,公共部门是各国适应资金的主要来源,私人资金潜力尚待挖掘,国际气候援助注重减缓与适应并重,但援助力度有待加强。未来我国应从完善适应气候变化顶层设计、建立适应气候变化资金保障机制、提高适应气候援助力度、加强国际交流与合作等方面完善我国适应气候变化资金机制。     

我国开发性金融部门绿色投资价值的气候影响和风险研究

为应对气候变化,我国开发性金融部门探索绿色投资倒逼其低碳转型之路,相应的气候变化对其绿色投资的影响和风险值得深入研究。运用气候压力测试模型、WITCH模型和气候VaR对我国开发性金融机构绿色投资的气候冲击影响、气候风险进行实证研究。研究发现,极端气候冲击会对我国的开发性金融机构的投资价值及其投资表现产生负面影响;我国开发性金融机构绿色债券的票面利率受气候变化影响程度各异,国家开发银行随着气温的上升而增加,中国农业发展银行随着气温的下降而减少;我国开发性金融机构绿色投资气候风险各异,中国农业发展银行绿色投资的气候风险相对较大。研究成果为我国开发性金融部门应对气候变化的低碳转型和绿色投资的风险管理提供决策参考。     

乡镇经济生态化与生态环境协调发展研究——以浙江省丽水市为例

丽水市乡镇工业崛起迅速,乡镇经济发展成绩明显,但经济增长方式仍以粗放型为主,环境污染出现了蔓延。技术落后、自主创新能力不足,资金短缺、融资困难,行政生态环境有待完善三方面因素阻碍了丽水市乡镇经济生态化建设。为了促进乡镇经济生态化与生态环境协调发展,针对上述问题提出了以优化产业结构、完善金融服务、加快服务型政府建设为基础,以循环经济、特色经济、生态旅游等生态经济化为发展模式,以生态资源有偿使用、生态环境补偿机制为保障的对策。