Search Results (47)

This paper presents a quantitative framework for assessing and managing public-safety risks around dams. The framework integrates a hazard–event–objective–control structure with the Analytic Hierarchy Process (AHP) to transform qualitative judgments into quantitative risk measures. Likelihoods, consequences, and overall risk are expressed on a ratio scale, allowing results to be aggregated, compared, and communicated in monetary terms. Probabilistic simulation accounts for uncertainty and generates outputs such as Value-at-Risk (VaR), loss-exceedance curves, and societal F–N charts, providing a clear picture of both expected and extreme outcomes. Optimization identifies control portfolios that achieve the greatest risk reduction for available budgets. A hypothetical dam case study demonstrates the framework’s application and highlights its ability to identify high-value safety investments. The framework offers dam owners and regulators a transparent, data-driven basis for prioritizing public-safety improvements and supports both facility-level (micro) and program-level (macro) decision-making consistent with international risk-tolerability and ALARP principles. Full article

As a form of long-term asset allocation, pension fund investment necessitates accurate estimation of both asset returns and associated risks over extended time horizons. However, long-term asset returns are significantly influenced by macroeconomic factors, whereas variance-based risk measures cannot account for the directional nature of deviations from expected returns. To address these issues, we propose a novel CVaR-based Black–Litterman model incorporating macroeconomic cycle views (CVaR-BL-MCV) for optimal asset allocation of pension funds. This approach integrates macroeconomic cycle dynamics to quantify their impact on asset returns and utilizes Conditional Value-at-Risk (CVaR) as a coherent measure of downside risk. We employ a Markov-switching model to identify and forecast the phases of economic and monetary cycles. By analyzing the economic cycle with PMI and CPI, economic conditions are categorized into three distinct phases: stable, transitional, and overheating. Similarly, by analyzing the monetary cycle with M2 and SHIBOR, monetary conditions are classified into expansionary and contractionary phases. Based on historical asset return data across these cycles, view matrices are constructed for each cycle state. CVaR is used as the risk measure, and the posterior distribution of the Black–Litterman (BL) model is derived via generalized least squares (GLS), thereby extending the traditional BL framework to a CVaR-based approach. The experimental results demonstrate that the proposed CVaR-BL-MCV model outperforms the benchmark models. When the risk aversion coefficient is 1, 1.5, and 3, the Sharpe ratio of pension asset allocation using the CVaR-BL-MCV model is 21.7%, 18.4%, and 20.5% higher than that of the benchmark models, respectively. Moreover, the BL model incorporating CVaR improves the Sharpe ratio of pension asset allocation by an average of 19.7%, while the BL model with MCV achieves an average improvement of 14.4%. Full article

This study asks whether Ethereum’s proof-of-stake (PoS) incentives not only make economic sense on paper but also feel attractive to real validators who may be loss-averse and sensitive to risk. We take a canonical Eth2 slot-level model of rewards, penalties, costs, and proposer-conditional maximal extractable value (MEV) and overlay a prospect-theoretic valuation that captures reference dependence, loss aversion, diminishing sensitivity, and probability weighting. This Prospect-Theoretic Incentive Mechanism (PT-IM) separates the “money edge” (expected accounting return) from the “felt edge” (behavioral value) by mapping monetary outcomes through a prospect value function and comparing the two across parameter ranges. The mechanism is parametric and modular, allowing different MEV, cost, and penalty profiles to plug in without altering the base PoS model. Using stylized numerical examples, we identify regions where cooperation that pays in expectation can remain unattractive under plausible loss-averse preferences, especially when penalties are salient or MEV is volatile. We discuss how these distortions may affect validator participation, economic security, and the tuning of rewards and penalties in Ethereum’s PoS. Integrating behavioral valuation into crypto-economic design thus provides a practical diagnostic for adjusting protocol parameters when economics and perception diverge. Full article

Traditional linear models struggle to capture the complex behavior of financial markets. This study revisits RMB exchange rate volatility through a nonlinear perspective based on G-expectation and multifractal theory. Using multifractal detrended fluctuation analysis (MF-DFA), we examine the scaling properties and efficiency of RMB volatility. We further apply multifractal detrended cross-correlation analysis (MF-DCCA) to explore nonlinear linkages among different RMB exchange rate volatilities. Mixing and phase randomization are employed to identify the sources of multifractality. The results reveal that adverse shocks weaken market efficiency and amplify multifractality. Significant cross-correlations are detected across RMB volatilities, with the Hurst exponent and multifractal spectrum indicating persistent long-range dependence and fat-tailed distributions. Moreover, USDCNY volatility exhibits stronger multifractality than other RMB pairs, underscoring its dominant role in volatility transmission. The time-varying Hurst exponent effectively captures nonlinear and memory effects, offering predictive value for exchange rate trends. These findings deepen our understanding of RMB exchange rate dynamics and provide implications for monetary regulation and risk management under uncertainty. Full article

This study presents an economic risk evaluation of buildings in Samoa exposed to extreme sea level (ESL)-driven episodic flooding and permanent inundation from relative sea level (RSL) rise. A spatiotemporal risk analysis framework was applied at the building object level to calculate monetary loss, expressed as the exceedance probability loss (EPL) and average annual loss (AAL). Economic risk was enumerated at national and district levels between the period 2020 and 2140 based on RSL projections for medium confidence Shared Socioeconomic Pathways (SSPs). Over this century, national AAL for buildings from ESL flooding in 2020 is expected to double by 2100 (USD 47–51 million). Under high emissions scenarios SSP3-7.0 and SSP5-8.5, AAL rates decelerate after 2100 as permanent inundation loss increases. District level risk variability is evident. For example, Tuamasaga on Upolu Island accounted for 44% of national 100-year annual recurrence interval losses, while AAL for Aiga-i-le-Tai and Va’a-o-Fonoti over this century reaches 8% of total district building replacement values. Our model approach has potential future applications to evaluate spatiotemporal risk distribution for a broader range of socioeconomic impacts that may occur beyond directly affected flood inundation areas. Full article

The urban forest canopy provides critical ecosystem services, including carbon storage and sequestration. Healthy, well-managed trees in an urban setting can provide these services in a way comparable to forests managed for production or as nature preserves. Disturbance events threaten these benefits by reducing canopy cover and biomass. A tornado struck Ruston, Louisiana, on 25 April 2019, resulting in severe canopy damage through a swatch of the city. We used iTree Canopy to obtain estimates of ecosystem services (carbon sequestration, etc.) and converted this to a per-pixel value before interpolating for the study area. Fractional vegetation estimates obtained from spectral unmixing were obtained from pre- and post-tornado images using Sentinel-2 data and applied to weight damage. Pre- and post-tornado assessments revealed that Ruston’s urban forest canopy sequestered 85% of its pre-storm capability, with an estimated decline in social value of approximately $36,000. Assessing disturbance-based landscape changes, and subsequently calculating fractional changes in biomass and corresponding monetary impacts, will increasingly be looked to as ecosystem services and severe weather events are expected to become more commonplace in the future. The methodology employed demonstrates a cost-effective way to assess disturbance impacts in small urban areas, offering a framework to small municipalities to monitor canopy dynamics. Full article

The optimum choice of safety measures (SMs) within constraints is necessary for effective risk management in occupational health and safety (OHS). The stochastic nature of safety interventions is frequently overlooked by traditional approaches such as deterministic models and risk matrices. This study presents a novel stochastic knapsack model that maximizes the overall expected benefit during a risk assessment period considering budgetary constraints and the interdependencies between risks and safety measures. Two models are developed as follows: a one-to-one relationship model assuming independent risks and a multiple-relationship model accounting for interdependent safety measures. The suggested model’s real-world implementation is illustrated through a case study in the retail industry. The results demonstrate the model’s ability to efficiently prioritize SMs, showing an 18% reduction in objective function value and an average risk reduction of 29.5 per monetary unit invested, compared to 26.2 for the deterministic model. A more realistic and flexible framework for safety investment planning is offered by the analysis, which emphasizes the benefits of including stochastic components and interdependencies in decision-making. By addressing the significant drawbacks of deterministic models and providing a flexible, data-driven framework for safety optimization, this study adds to the body of literature. The suggested model is in line with the United Nations Sustainable Development Goals (SDGs), specifically SDGs 3, 8, 9, and 12. Its adaptability contributes to achieving SDG 13, emphasizing possible uses in risk management for climate change. This study shows how decision-making that is structured and aware of uncertainty can support safer, more sustainable industrial processes. Full article

In the past, South African monetary policy aimed to protect the external value of the domestic currency (Rand); however, these efforts failed. Later, its monetary policy approach changed to allow the foreign exchange rate market to determine the exchange rates. In such a change, the South African Reserve Bank (SARB) aimed to stabilize the demand for the Rand in the foreign exchange market by providing information to stabilize market expectations and create favorable market conditions. However, South African policymakers have struggled with currency depreciation since the early 60s, increasing the uncertainty of South African exports. This study aims to examine the effect of currency depreciation on exports using the Threshold Autoregressive (TAR) model. Additionally, this study created and validated the supply chain activity/disruption index to capture the sea trade activity. The sample period for the analysis is 2009 to 2023. The study finds that currency depreciation does not improve trade between South Africa and its trading partners over time. Furthermore, the currency depreciation was found to be asymmetric to the effect of international trade across the different regimes. The supply chain activity index shows that the effect of supply chain activity/disruption on exports is regime-dependent. This implies that the effect on exports is dependent on the economic environment. Full article

Balancing ecological conservation and economic development is a significant global challenge, particularly in developing countries where rich natural resources often coincide with impoverished areas. This study used the Yunhe Terrace as a case, integrating remote sensing data and statistical analysis to quantify the ecosystem asset value and its changes before and after ecological conservation efforts. Additionally, we assessed the nonmaterial service value and conducted a questionnaire survey to explore the impact of nonmaterial service value on the socio-economic development of local residents. The key findings are as follows: (1) The ecosystem assets of the Yunhe Terrace include four main types: forests, grasslands, wetlands, and cultivated land. In 2020, the Yunhe Terrace ecosystem was primarily composed of forest (56.79%) and cultivated land (36.61%), showing a balance between natural and modified landscapes. (2) The monetary value of ecosystem assets was calculated based on the economic net benefits of ecosystem assets over their expected useful lifespan (20 years in this study). The value of the Yunhe Terrace ecosystem before and after it became a scenic spot was assessed. Results showed that the total value of ecosystem assets increased from 265 million CNY to 523 million CNY over a 20-year period, representing an increase of 257 million CNY. (3) The value of nonmaterial services, represented here by net revenues from eco-tourism, was calculated from 2018 to 2022, covering the period before and after ecological conservation efforts began in 2019. Results showed the value of nonmaterial services rose from 3.07 million CNY in 2018 to 8.90 million CNY in 2022, a growth of 189.77% after ecological conservation. (4) Field surveys and questionnaire analysis of stakeholders’ income sources suggest that ecological conservation and recreational development in the Yunhe Terrace ecosystem have increased household income in terms of both the number of income sources and monetary value. This study demonstrates that ecological conservation and tourism can enhance household welfare, contributing to a better understanding of the dynamics between conservation and economic development. Full article

This study evaluates the cost of heat-related mortality using economic impacts and mortality data from the COVID-19 pandemic in Belgium as a proxy. By examining the economic loss measured by gross domestic product (GDP) decline and excess mortality during the first COVID-19 wave (March–June 2020), a new estimate for avoided heat-related mortality is derived. The results show that the cost per avoided death is EUR 377,000 ± EUR 222,000, significantly lower than numerical values of the commonly used Value of a Statistical Life (VSL). However, when this cost is divided by the expected remaining (eight) life years at the age of death, the resulting monetary value for a saved life year, in a EUR 47,000 ± EUR 28,000 range, aligns well with commonly used values for the Value of a Life Year (VOLY). Thus, the present study contributes to the ongoing debate on the most appropriate methods for valuing human life in the context of heat-related mortality. By comparing our results with both VSL and VOLY, we underscore the limitations of VSL in the context of heat-related mortality and advocate for VOLY as a more accurate and contextually relevant metric. These findings may offer useful insights for policymakers in evaluating and prioritizing investments in heat-related mortality-prevention strategies. Full article

The development of new dishes in the catering services market requires an understanding of consumers’ needs, expectations, and motivations for their choices. The effect of the serving method of a dessert on customers’ perceptions of its visual appeal, portion size, energy value, and expected price was evaluated. The study involved the presentation of desserts on plates of various sizes, shapes, and colors. The study was carried out among 1005 respondents using the CAWI method. Our findings revealed that along with an increasing plate size from a diameter of ϕ24–27 cm to ϕ31 cm, the ratings of the dish’s perceived appearance (p ≤ 0.001), portion size (p ≤ 0.001), and energy value (p ≤ 0.01) decreased. Plate shape influenced the perceived appearance of the dessert. When placed on a square platter, round desserts were considerably (p ≤ 0.05) less appealing. The color of the plate had a significant influence (p ≤ 0.001) on the dish’s perceived appearance and estimated monetary value, and it evoked more sensory–hedonic impressions. Red-plate and white-plate desserts were liked less than black-plate desserts, but color-plated desserts were perceived as more expensive than those served on white dishes. Consumers perceived bright desserts on white plates as traditional, natural, and boring; those on black plates as modern, appetizing, and aesthetic; and those served on red plates as artificial, unsightly, and unappetizing. Higher consumer food neophobia led to a lower rating related to appearance and price perceptions, but elevated perceptions of portion size and energy value appraisal. Our results may be used in the marketing of gastronomic dishes. Full article

When nature-based solutions (NBS) are developed with a primary scope, they also provide simultaneous additional economic, social, and environmental benefits, i.e., Ecosystem Services. A monetary assessment that accounts for these additional benefits is provided by this work, with a focus on Europe. Specifically, this is intended to evaluate nine identified benefits of those wetlands and buffer strips designed to primarily address agricultural diffuse pollution, which must surely be listed among the negative externalities of economic activities that NBS can help resolve. The aim of developing a simplified value transfer methodology for a rapid evaluation of NBS benefits with the adjusted unit Value Transfer method is to create an accessible solution when time, funding, or other constraints prevent the use of highly technical primary monetization approaches. The developed exercise allows us to gather insights from several primary valuation studies and to appropriately transfer the monetary valuation outcomes to new policy sites. In order to reduce the distance from the expected and required concrete achievements of the economic valuations, the study has been integrated with an case study located in the Venice lagoon catchment in Northwestern Italy. The results obtained are to be considered sound, with existing evidence showing that the most valuable benefits of the considered NBS are both water quality and recreation and tourism, to which is added, in the case of wetlands, water supply. Full article

The aim of the paper is to analyze changes and peculiarities of behavior of economic agents with bounded rationality in the New Keynesian model, in which imported equipment and technology are one of the factors of production, and households consume only domestic products. The formation of output gap and inflation expectations by agents is based on stationary values of these variables and on extrapolation of the latest available data on inflation and the output gap. The weight shares of agents applying these rules change endogenously. Histograms of the frequency distribution of the degree of buoyancy and the impulse responses of monetary policy shocks and technology shocks to the variables under study show that a less open economy tends to go through an economic cycle with a smaller amplitude than a more rigid economy. Analyses of the trade-offs between the volatility of inflation and the output gap at different parameter values in the Taylor rule show their non-linear nature (in contrast to standard models with rational expectations). An important result obtained in this analysis is that the rational expectations hypothesis is more consistent with a closed economy than with an open one. Full article

Prevision bundles identifying expected returns on risky assets are established. A probability space associated with risky assets is defined. In this research work, the optimization principle is based on the notion of distance. This is because problems of an economic nature are not handled in an axiomatic or intrinsic way, but they are investigated with regard to a given coordinate system. The latter is shown to be invariant. The notion of mathematical expectation applied to summarizing both monetary values and utilities is treated. Such a notion is extended to study portfolios of financial assets. Objective conditions of coherence connected with the notion of mathematical expectation are extended. Rational behaviors towards risk are based on them. A model representing diagrams considered inside the same coordinate system is shown. Such a model identifies as many optimal choices as pair comparisons it is possible to take into account in order to obtain a multilinear measure. The latter is the expected return on a specific portfolio of financial assets. Full article

Economic valuations of ecosystem services often transfer previously estimated global unit values to the geographical setting of interest. While this approach produces quick results, its reliability depends on how representative the large-scale average unit values are for the given local context. Here, we estimate the values of three ecosystem services (ES)—water filtration, nutrient cycling, and carbon sequestration—in the Grand River watershed (GRW) of southern Ontario, Canada. The watershed covers nearly 7000 km², has a humid continental climate and a population of close to one million people. Land cover is dominated by agriculture. We compare ES valuations using locally derived (i.e., GRW-specific) unit values to valuations based on unit values from a regional database and those compiled in the global Ecosystem Services Valuation Database (ESVD). The regional database includes mean unit values from three case studies within southern Ontario and one boreal watershed in British Columbia. As expected, the regional database yields average monetary values for the three ES that are close to those obtained using the local unit values but with larger associated uncertainties. Using the ESVD, however, results in significantly higher monetary values for the ES. For water filtration, the ESVD value is more than five times higher than the regional and local estimates. We further illustrate the effect of the extent of aggregation of forested and agricultural land categories on the ES values. For example, by subdividing the forest category into three subcategories (deciduous, coniferous, and mixed forest), the estimated value of the carbon sequestration service from forested areas within the GRW decreases by 7%. Overall, our results emphasize the importance of critically assessing the origin of unit values and the land cover resolution in ES valuation, especially when ES valuation is used as a policy-guiding tool. Full article