Search Results (11)

This work proposes a simple model to take into account the annual volatility of the mortality level observed on the scale of a country like France in the construction of prospective mortality tables. By assigning a frailty factor to a basic hazard function, we generalise the Lee–Carter model. The impact on prospective life expectancies and capital requirements in the context of a life annuity scheme is analysed in detail. Full article

The consistently missing demand for catastrophe insurance and for coverage of other low-probability–high-consequence risks is often referred to as the catastrophe insurance puzzle. People show reluctance to insure low-probability–high-consequence events, even with some disastrous consequences, yet insure against small high-probability–low-consequence events. There has been no convincing explanation of this puzzle to this date. This article points out that the underlying rationale may be that individuals interpret insurance contracts with low payout probability as an investment with negative expected net present value. While premium payments start with the conclusion of the contract, usually there is only one loss payment in the near or far future. Using a simple annuity model with fixed annual premiums and expected indemnity payouts, it is found that even an individual characterized by the degree of risk aversion found in the literature is unlikely to purchase insurance with these characteristics. To alleviate this unfavorable insurance purchase syndrome, combining a low-probability with a high-probability loss insurance contract may be a way to incentivize individuals to purchase catastrophe risk coverage. Full article

Longevity is without a doubt on the rise throughout the world due to advances in technology and health. Since 1960, Ghana’s average annual mortality improvement has been about 1.236%. This poses serious longevity risks to numerous longevity-bearing assets and liabilities. As a result, this research investigates the effect of mortality improvement on pension annuities related to a particular pension scheme in Ghana. Different stochastic mortality models (Lee–Carter, Renshaw–Haberman, Cairns–Blake–Dowd, and Quadratic Cairns–Blake–Dowd) are used to forecast mortality improvements between 2021 and 2030. The results from accuracy metrics indicate that the quadratic Cairns–Blake–Dowd model exhibits the best fit to the mortality data. The findings from the study demonstrate that mortality for increasing ages within the retirement period was declining, with increasing improvement associated with increasing ages. Furthermore, the forecasts were used to estimate the associated single benefit annuity for a GHS 1 per annum payment to pensioners, and it was discovered that the annuity value expected to be paid to such people was not significantly different regardless of the pensioner’s current age. Full article

It is very common for ships to have electric power systems comprised of generators of the same type. This uniformity allows for easier and lower-cost maintenance. The classic way to select these generators is primarily by power and secondarily by dimensions and acquisition cost. In this paper, a more comprehensive way to select them, using improved cost indicators, is proposed. These take into account many factors that have a significant impact in the life-cycle cost of the equipment. A realistic and detailed profile of the ship’s electric load spanning a full year of her operation is also developed to allow for a solution that is tailor-made to a specific case. The method used is highly iterative. All combinations of genset quantities and capacities are individually considered to populate a power plant, taking into account the existing redundancy requirements. For each of these and for every time interval in the load profile, the engine consumption is Lagrange-optimized to determine the most efficient combination to run the generators and the resulting cost. The operating cost throughout the year is thus derived. In this way, the method can lead to optimal results as large data sets regarding ship operation and her power system’s technical characteristics can be utilized. This intense calculation process is greatly accelerated using memorization techniques. The reliability cost of the current power plant is also considered along with other cost factors, such as flat annual cost, maintenance, and personnel. The acquisition and installation cost are also included, after being distributed in annuities for various durations and interest rates. The results provide valuable insight into the total cost from every aspect and present the optimum generator selection for minimal expenditure and maximum return of investment. This methodology may be used to enhance the current power-plant design processes and provide investors with more feasible alternatives, as it takes into consideration a multitude of technical and operational characteristics of the examined ship power system. Full article

To combat desertification and land degradation in arid and semi-arid zones, the government has adopted an approach of rehabilitation of pasturelands through forage plantations. This program was launched at the beginning of the 1990s and, to date, there has been no global or national study on the sustainability of the program, particularly its economic profitability. Our work’s principal objective was to perform an economic analysis of the forage plantation program across the different periods since the creation of the program until the year 2020, focusing on the economic evaluation parameters of the projects, such as mean annual net income, net present value, annuity of the net present value, profitability index and payback period, based on the data collected from the official institutions. The results showed that the forage plantation program significantly contributes to sustainable development in steppe areas. Full article

Storage technologies are an increasingly crucial element in the continued expansion of renewable energy production. Micro-hydro storage using a pump as a turbine is a potentially promising solution in certain cases, for example, for extending existing photovoltaic systems (PV) and thus reducing grid load and enabling economically beneficial self-consumption of the energy produced. This paper gives an overview of various operating strategies and their technical and economic efficiencies. The evaluation was based on a simulation model of a system that uses measured characteristic maps of both the pump and turbine operations. An optimizer was employed to vary the essential system parameters, which made it possible to determine the optimal economical operation of the pump as a turbine in combination with a PV system. This in turn enabled us to determine the conditions under which the system can be operated most profitably. It was then possible to make precise calculations of the stored energy quantities, total efficiency (${\mathsf{\eta }}_{\mathrm{tot}}$ = 42% with speed control), and many other values critical to each operating strategy. Based on the technical findings, the economic analysis resulted in a levelized cost of energy of 0.63 €/kWh for the micro-hydro storage when using speed control. Full article

In Northern Europe, climate change may facilitate the prevalence of Scots pine, yet also promote the spread of pathogens attacking this species. A common biotic risk for Scots pine in nurseries and young stands is Lophodermium needle cast, primarily caused by Lophodermium seditiosum, which negatively affects the survival and growth of saplings. Reduced tree growth has been observed several years after damage by Lophodermium needle cast. However, for decision-making in protection or resistance breeding, an estimate of financial loss is important. Thus, the study aimed to assess the long-term influence of Lophodermium needle cast on the growth and financial value of Scots pine stands. The effect of needle cast damage during the sixth growing season on growth at the age of 17 years was evaluated in a control-crossed Scots pine progeny trial, and the results indicated a significantly negative effect on the height and diameter of the trees. A significant family effect also existed on the severity of the needle cast damage. Long-term simulations indicated that severely damaged Scots pines had a reduced equivalent annual annuity (EAA) of almost 100% at the final harvest. More intensive early management to reduce stand density could partly compensate for losses caused by needle cast. A higher EAA for the most resistant group of trees regardless of the stand management scenarios suggests an economically justified potential for improved resistance. Strong negative (−0.62 to −0.70) correlations of height and survival with the proportion of severely affected trees at the family mean level implies that resistant genotypes can be selected along with improved growth in progeny trials, which are affected by needle cast. Full article

Windstorms are a significant disturbance in northern European Scots pine forests. Mechanistic models for assessment of their impact have been developed. The aim of our study was to assess the impact of windstorms on the financial value of Scots pine (Pinus sylvestris L.) stands. Wind damage probability in stands with certain dimensions (linked to age and site index) and the reduced value retrieved from salvage logging instead of planned harvest in undamaged stands were used for calculation. Equivalent annual annuity with interest rates of 3%, 4%, and 5%, three different commercial thinning regimes, and different planting densities were used to assess the mean influence. Wind damage risk had a notable and significant negative effect on the financial value of Scots pine forest stands. Equivalent annual annuity decreased sharply with stand age, especially in the most productive sites (SI 36). The negative financial impact could be reduced by selection of a lower initial planting density (1000–2000 trees ha⁻¹ instead of 3000) and by reducing the rotation period, for example, by using target diameter as the criteria for the time of final harvest. Full article

Service life estimate is crucial for evaluating the economic and environmental sustainability of projects, by means—adopting a life cycle perspective—of the Life Cycle Cost Analysis (LCCA). Service life, in turn, is strictly correlated to maintenance investment and planning activities, in view of building/building component/system/infrastructure products’ durability requirements, and in line with the environmental-energy policies, transposed into EU guidelines and regulations. Focusing on the use-maintenance-adaptation stage in the constructions’ life cycle, the aim of this work is to propose a methodology for supporting the “optimal maintenance planning” in function of life cycle costs, assuming the presence of financial constraints. A first research step is proposed for testing the economic sustainability of different project options, at the component scale, which imply different cost items and different maintenance-replacement interventions over time. The methodology is based on the Annuity Method, or Equivalent Annual Cost approach, as defined by the norm EN 15459-1:2017. The method, poorly explored in the literature, is proposed here as an alternative to the Global Cost approach (illustrated in the norm as well). Due to the presence of uncertainty correlated to deterioration processes and market variability, the stochastic Annuity Method is modeled by introducing flexibility in input data. Thus, with the support of Probability Analysis and the Monte Carlo Method (MCM), the stochastic LCCA, solved through the stochastic Equivalent Annual Cost, is used for the economic assessment of different maintenance scenarios. Two different components of an office building project (a timber and an aluminum frame), are assumed as a case for the simulation. The methodology intends to support decisions not only in the design phases, but also in the post-construction ones. Furthermore, it opens to potential applications in reinforced concrete infrastructures’ stock, which is approaching, as a considerable portion of the building stock, its end-of-life stage. Full article

A district heating (DH) system is one of the most important components of infrastructures in cold areas. Proper DH network design should balance the initial investment and the heat distribution cost of the DH network. Currently, this design is often based on a recommended value for specific pressure loss (R = ∆P/L) in the main lines. This will result in a feasible network design, but probably not be optimal in most cases. The paper develops a novel optimization model to facilitate the design by considering the initial investment in the pipes and the heat distribution costs. The model will generate all possible network scenarios consisting of different series of diameters for each pipe in the flow direction of the network. Then, the annuity on the initial investment, the heat distribution cost, and the total annual cost will be calculated for each network scenario, taking into account the uncertainties of the material prices and the yearly operating time levels. The model is applied to a sample DH network and the results indicate that the model works quite well, clearly identifying the optimal network design and demonstrating that the heat distribution cost is more important than the initial investment in DH network design. Full article

Building a social security system to ensure Singapore residents have peace of mind in funding for retirement has been at the top of Singapore government’s policy agenda over the last decade. Implementation of the Lifelong Income For the Elderly (LIFE) scheme in 2009 clearly shows that the government spares no effort in improving its pension scheme to boost its residents’ income after retirement. Despite the recent modifications to the LIFE scheme, Singapore residents must still choose between two plans: the Standard and Basic plans. To enhance the flexibility of the LIFE scheme with further streamlining of its fund management, we propose some plan modifications such that scheme members do not face a dichotomy of plan choices. Instead, they select two age parameters: the Payout Age and the Life-annuity Age. This paper discusses the actuarial analysis for determining members’ payouts and bequests based on the proposed age parameters. We analyze the net cash receipts and Internal Rate of Return (IRR) for various plan-parameter configurations. This information helps members make their plan choices. To address cost-of-living increases we propose to extend the plan to accommodate an annual step-up of monthly payouts. By deferring the Payout Age from 65 to 68, members can enjoy an annual increase of about 2% of the payouts for the same first-year monthly benefits. Full article