EFFICIENT MANAGEMENT OF GROUNDWATER QUALITY

This work develops a theoretical framework that considers the pollution transport in groundwater in an optimization of social benefits from a groundwater resource, and provides a spatial and temporal allocation of the use of contaminating inputs. A space dependent social cost function is constructed, taking into account factors such as the wells' locations and emitting firms' locations, in addition to profits from polluting activities. The social optimization is formulated using the pollution concentrations as state variables and the pollution transport as state dynamics. This optimization yields a spatially differentiated shadow price which leads to optimal policy which is nonuniform in general, and uniform only for special cases.     

THE ROLE OF GROUNDWATER‐DEPENDENT ECOSYSTEMS IN GROUNDWATER MANAGEMENT

Ecosystems provide a wide range of services essential for a proper environmental, economic, and social performance. While the estimated global value of ecosystem services in 2014 is very significant, the annual loss of ecosystem services value is alarming. Our paper focuses on groundwater‐dependent ecosystems (GDEs), some very important to society, which are under threat due to groundwater overexploitation. Considering the ecosystem health/status function is essential for sound groundwater regulation policy. The paper assesses the conjunctive management of groundwater and GDEs both in theory and in a relevant case study, using a certain type of an ecosystem health function. The theoretical results demonstrate how the change in the slope values of a general ecosystem health function affects the optimal groundwater management policy. The analysis also suggests a change in groundwater management strategies as a function of the value of the ecosystem. The theoretical findings are corroborated with data from an aquifer in Spain and its associated GDE—the Tablas de Daimiel Wetland. The paper highlights theoretically and empirically the necessity for a better understanding of GDEs behavior. It calls for groundwater regulation to protect these resources.     

Optimal integrated production and inventory control of an assemble-to-order system with multiple non-unitary demand classes

We study a pure assemble-to-order system subject to multiple demand classes where customer orders arrive according to a compound Poisson process. The finished product is assembled from m different components that are produced on m distinct production facilities in a make-to-stock fashion. We show that the optimal production policy of each component is a state-dependent base-stock policy and the optimal inventory allocation policy is a multi-level state-dependent rationing policy. Using numerical experimentation, we first study the system behavior as a function of order size variability and order size. We show that the optimal average cost rate is more sensitive to order size variability than to order size. We also compare the optimal policy to the first-come first-serve policy and show that there is great benefit to inventory rationing. We also propose two simple heuristics and show that these can effectively mimic the optimal policy which is generally much more difficult to determine and, especially, to implement.     

Farm households’ rice production behavior in China under a separability assumption: A metaheuristic optimization approach

The production behavior of farm households has been a topic of interest for a long time. We explore the optimal production strategies from a household's perspective under the assumption of separability between consumption and production. The data used for this study come from farm households located in five provinces of China. To identify the impacts of various parameters on farmers' production behavior, optimal solutions and the households' actual production behaviors are compared. Results show that most of the households overinvested on farm land, labor force, materials, and machinery. Compared to existing production efficiency estimates, households, regardless of size, and exhibit different degrees of nonseparability. The sensitivity analysis shows a similar result, but finds that large households become more efficient if they have a higher production coefficient. The optimized result obtained in this paper not only provides farmers with decision‐support information on efficient resource allocation, but also helps policymakers to formulate better agricultural policies. Recommendations for Resource Managers A household production model is constructed to assess whether production and consumption behaviors are different among Chinese farmers. A genetic algorithm that belongs to a metaheuristic cluster is applied to search for the optimal solution, given the parameters obtained from using a ridge regression model. The following implications could be recommended based on the findings of the paper:

• The goodness of the convergence of the algorithm helps to find the optimal rice production decision, when facing a large number of input variables.
• The evidence that can support the separability among farm household's production behavior which to some degree supports nonseparability.
• As some of the external parameters, such as nonagricultural income, as well as farm scale, are increased, the optimal solution shows the separability among some households.
• Unless farm size is increased substantially, there is a need to support farmers in production behavior so that they can be efficient and profitable rather than just subsistent.

     

单部件可修系统的一个几何过程维修模型

本文研究了单部件、一个修理工组成的可修系统的最优更换问题,假定系统不能修复如新,以系统年龄T为策略,利用几何过程求出了最优的策略T^*,使得系统经长期运行单位时间内期望效益达到最大,并求出了系统经长期运行单位时间内期望效益的显式表达式。在一定条件下证明了T^*的唯一存在性。最后还证明了策略T^*比文献[6]中的策略T^*优。     

一个可修系统的最优更换模型

本文考虑了单部件、一个修理工组成的可修系统，在故障系统不能“修复如新”的前提下，我们利用几何过程，以系统年龄Ｔ为策略，选择最优的Ｔ使得系统经长期运行单位时间的期望效益达到最大．本文还在一定的条件下证明了最优更换策略Ｔ的唯一存在，且求出了系统经长期运行单位时间的最大期望效益的明显表达式．     

Optimal preventive maintenance of a production system with an intermediate buffer

In this paper we consider a model consisting of a deteriorating installation that transfers a raw material to a production unit and a buffer which has been built between the installation and the production unit. The deterioration process of the installation is considered to be nonstationary, i.e. the transition probabilities may depend not only on the working conditions of the installation but on its age as well. The problem of the optimal preventive maintenance of the installation is considered. Under a suitable cost structure it is shown that, for fixed age of the installation and fixed buffer level, the optimal policy is of control-limit type. When the deterioration process is stationary, an efficient Markov decision algorithm operating on the class of control-limit policies is developed. There is strong numerical evidence that the algorithm converges to the optimal policy. Two generalizations of this model are also discussed.     

Price subsidies and guaranteed buys of a new technology

We consider a problem of a government that wishes to stimulate the adoption of a new technology in order to replace an older, environmentally less desirable, technology. The new technology is manufactured by a monopolist firm which has learning-by-doing in its production process. The firm sells the new product to both private households and government institutions and wishes to determine an optimal pricing policy. The government has at its disposal two instruments: subsidizing the consumer price and making purchases of the new technology from the firm. We assume profit maximization on the part of the firm. The government wishes to maximize the cumulative number of units of the new technology sold to private households by the terminal date of the government program. The problem is set up as a Stackelberg differential game in which we identify an open-loop equilibrium, supposing that the government can credibly precommit to its subsidy and buying program.     

退化可修系统最优更换数学模型研究

研究了单部件组成的退化可修系统,在假定故障部件“修复非新”的条件下,以系统中部件的故障次数N为更换策略进行了研究,我们推导出系统经长期运行后,单位时间内期望效益的明显表达式,而且在一定条件下证明了最优策略N*是所有更换策略中最优的.最后还通过几何过程对此进行了讨论.     

Optimal production planning in pull flow lines with multiple products

The paper is concerned with the problem of optimal production planning in deterministic pull flow lines with multiple products. The objective is to specify the production policy that minimizes the total inventory and backlog costs overtime. Assuming constant product demands and non-decreasing unit holding costs along the flow, an algorithm which obtains the optimal production policy is developed. This algorithm works for the discounted-cost function as well. The HJB equation is used to verify the optimality of the policy, and the computational complexity of the algorithm is discussed. Some illustrative examples are also included.     

WILDLIFE LOSSES IN KENYA: AN ANALYSIS OF CONSERVATION POLICY

ABSTRACT. Despite massive conservation efforts backed bysignificant international support, Kenya has lost some 44% of its large mammal fauna over the last 17 years. This catastrophic example of resource degradation stems from a mixture of policy, institutional and market failures. Policy failures include an over‐reliance on Command and Control (prohibition on consumptive use of wildlife, prohibition on use of resources within Protected Areas) without the ability to enforce compliance; subsidies to agricultural and livestock production which, by reducing marginal production costs to below social opportunitycosts, has caused the over‐conversion of rangelands to livestock and agricultural production at the expense of conservation objectives and values; and the establishment of tourism cartels which divert wildlife generated benefits awayfrom landowners. The fundamental institutional failure is the lack of property rights and use rights of landowners over wildlife. Fundamental market failures reflect the absence of financial incentives to landowners to conserve their wildlife resource, thus setting marginal depletion costs to zero, and competing production incentives. The Kenya Wildlife Service (KWS) is reintroducing financial incentives to landowners by permitting some consumptive use of wildlife, bymaking substantial direct grants to landowners and communities who support wildlife and bysidelining the tourism cartels and encouraging private sector tourism on private land. However, investment in conservation is still being hampered by the continuing prohibition of high value activities such as sport hunting, and by over regulation and vacillation. Furthermore, positive net benefits to landowners from wildlife operations are not in themselves adequate to guarantee economic incentives to conserve the resource. First, significant negative externalities are associated with wildlife in that they add greatly to the production costs of livestock and agriculture; second, opportunity costs (in terms of foregone benefits of development) of leaving land undeveloped for conservation are gradually increasing in response to growing populations, expanding markets and new agricultural technology; and third, some policies are having the perverse impacts of creating poverty traps. Wildlife conservation policy must accordingly be much wider in scope and use a much broader range of economic, financial and market instruments, possibly including differential land use taxes, conservation subsidies and easements, and lease back agreements. Simply creating positive net benefits from wildlife is not enough.     

Intergenerational risk sharing in closing pension funds

We model intergenerational risk sharing in closing funded pension plans. Specifically, we consider a setting in which in each period, the pension fund’s investment and indexation policy is the outcome of a bargaining process between representatives of the then living generations. Because some generations might be under- or overrepresented in the board, we use the asymmetric Nash bargaining solution to allow for differences in bargaining powers. In a numerical study, we compare the welfare that the generations derive from the outcome of this repeated bargaining to the welfare that they would derive if a social planner’s optimal policy would instead be implemented. We find that as compared to the social optimum, older generations benefit substantially from the repeated bargaining, even if all generations are equally well-represented in the board. If older generations are relatively over-represented, as is sometimes argued, these effects are attenuated.     

ENVIRONMENTAL COMPLIANCE AND OPTIMAL OIL AND GAS EXPLOITATION

This paper examines the impacts of environmental regulations on firms in the oil and gas industry. A model is developed using optimal control theory, which extends the existing models by incorporating the environmental compliance costs into the exploration and production stages. An approach for measuring the cumulative impacts of these regulations on the firm's exploration and production is presented. The results indicate that rising environmental compliance costs lead to reductions in investment and production, and the alteration of investment and production profiles. This implies that less resources will be developed and associated economic benefit will decline. Therefore, it is vital for policy makers to consider carefully whether the perceived environmental benefits derived from these regulations justify associated compliance costs.     

Modeling volatility and dependency of agricultural price and production indices of Thailand: Static versus time-varying copulas

Volatility and dependence structure are two main sources of uncertainty in many economic issues, such as exchange rates, future prices and agricultural product prices etc. who fully embody uncertainty among relationship and variation. This paper aims at estimating the dependency between the percentage changes of the agricultural price and agricultural production indices of Thailand and also their conditional volatilities using copula-based GARCH models. The motivation of this paper is twofold. First, the strategic department of agriculture of Thailand would like to have reliable empirical models for the dependency and volatilities for use in policy strategy. Second, this paper provides less restrictive models for dependency and the conditional volatility GARCH. The copula-based multivariate analysis used in this paper nested the traditional multivariate as a special case (Tae-Hwy and Xiangdong, 2009) [13]. Appropriate marginal distributions for both, the percentage changes of the agricultural price and agricultural production indices were selected for their estimation. Static as well as time varying copulas were estimated. The empirical results were found that the suitable margins were skew t distribution and the time varying copula i.e., the time varying rotate Joe copula (270°) was the choice for the policy makers to follow. The one-period ahead forecasted-growth rate of agricultural price index conditional on growth rate of agricultural production index was also provided as an example of forecasting it using the resulted margins and time-varying copula based GARCH model.     

Optimal production time and number of maintenance actions for an imperfect production system under equal-interval maintenance policy

This paper deals with the optimal production/maintenance (PM) policy for a deteriorating production system which may shift from the in-control state to the out-of-control state while producing items. The process is assumed to have a general shift distribution. Under the commonly used maintenance policy, equal-interval maintenance, the joint optimizations of the PM policy are derived such that the expected total cost per unit time is minimized. Different conditions for optimality, lower and upper bounds and uniqueness properties on the optimal PM policy are provided. The implications of another commonly used policy, to perform a maintenance action only at the end of the production run, are also discussed. Structural properties for the optimal policy are established so that an efficient solution procedure is obtained. In the exponential case, some extensions of the results obtained previously in the literature are presented. A numerical example is provided to illustrate the solution procedure for the optimal production and maintenance policy.     

可再生能源发电商最优减排补贴政策的激励效应研究

针对传统减排补贴激励政策的突出矛盾, 本文借助委托代理理论并从激励相容约束和参与约束条件的角度出发解析政府如何有效地设计优化减排补贴政策, 以此为基础分析了政府最优减排补贴政策的激励效应:首先, 基于最优发电量的最大减排量确定政府对增加环境经济效益和节约电煤消耗量的社会福利的平衡系数在减排水平对电能生产强弱敏感条件下的最大临界值和最小临界值; 其次, 以临界最值为基准, 基于发电商最优收益分析在强弱敏感条件下减排补贴政策存在负向激励效应的合理性和可靠性; 最后, 基于政府最优减排补贴成本分析在强弱敏感条件下减排补贴政策对发电商所产生的正向激励效应。研究结论为燃煤发电区域政府科学引导可再生能源发电商积极参与减排合作而制定有效的减排补贴激励政策提供了决策依据和管理启示。     

Joint control of production,remanufacturing, and disposal activities in a hybrid manufacturing–remanufacturing system

To generate insights into how production of new items and remanufacturing and disposal of returned products can be effectively coordinated, we develop a model of a hybrid manufacturing–remanufacturing system. Formulating the model as a Markov decision process, we investigate the structure of the optimal policy that jointly controls production, remanufacturing, and disposal decisions. Considering the average profit maximization criterion, we show that the joint optimal policy can be characterized by three monotone switching curves. Moreover, we show that there exist serviceable (i.e., as-new) and remanufacturing (i.e., returned) inventory thresholds beyond which production cannot be optimal but disposal is always optimal. We also identify conditions under which idling and disposal actions are always optimal when the system is empty. Using numerical comparisons between models with and without remanufacturing and disposal options, we generate insights into the benefit of utilizing these options. To effectively coordinate production, remanufacturing, and disposal activities, we propose a simple, implementable, and yet effective heuristic policy. Our extensive numerical results suggest that the proposed heuristic can greatly help firms to effectively coordinate their production, remanufacturing, and disposal activities and thereby reduce their operational costs.     

Environmental safety stock: The impacts of regulatory and voluntary control policies on production planning,inventory control,and environmental performance

This paper analyzes the impacts of different pollution control policies on a firm’s decisions of production planning and inventory control. Based on a stochastic model with both demand and environmental uncertainties, we derive the optimal policies of production planning and inventory control under both regulatory and voluntary pollution control approaches, and investigate their operational and environmental effects. We establish that the conventional wisdom which suggests that reduction of environmental waste at the end of a production process also decreases the stock and throughput levels of a production system is not necessarily true. Rather, a regulatory environmental standard that limits the total amount of waste may induce the firm to raise its planned stock level, which would lead to a higher expected amount of environmental wastes before the standard is enforced as well as environmental risks at other stages of the production process. The additional planned stock level, which is termed “environmental safety stock,” can be reversed by using the voluntary control approach that provides the firm with the flexibility to occasionally exceed the environmental standard. We also conduct numerical experiments to analyze the effects of different values of model parameters under different control approaches. The analytical results provide new insights to the impacts of a firm’s production and inventory decisions on the natural environment as well as to the choices of pollution control approaches by decision makers in both the private and public sectors.     

A bargaining model with asymmetric information for a single supplier–single buyer problem

Banerjee’s joint economic lot size (JELS) model represents one approach to minimizing the joint total relevant cost of a buyer and a supplier by using a joint optimal order and production policy. The implementation of a jointly optimal policy requires coordination and cooperation. Should the buyer have the market power to implement his own optimal policy as that one to be used in the exchange process no incentive exists for him to choose a joint optimal policy. A joint policy can therefore only be the result of a bargaining process between the parties involved. The supplier may make some sort of concession such as a price discount or a side payment in order to influence the buyer’s order policy. A critical assumption made throughout in supply chain literature is that the supplier has complete knowledge about the buyer’s cost structure. Clearly, this assumption will seldom be fulfilled in practice. The research presented in this paper provides a bargaining model with asymmetric information about the buyer’s cost structure assuming that the buyer has the power to impose its individual optimal policy.     

HARA frontiers of optimal portfolios in stochastic markets

In this paper, we consider the optimal portfolio selection problem in continuous-time settings where the investor maximizes the expected utility of the terminal wealth in a stochastic market. The utility function has the structure of the HARA family and the market states change according to a Markov process. The states of the market describe the prevailing economic, financial, social and other conditions that affect the deterministic and probabilistic parameters of the model. This includes the distributions of the random asset returns as well as the utility function. We analyzed Black–Scholes type continuous-time models where the market parameters are driven by Markov processes. The Markov process that affects the state of the market is independent of the underlying Brownian motion that drives the stock prices. The problem of maximizing the expected utility of the terminal wealth is investigated and solved by stochastic optimal control methods for exponential, logarithmic and power utility functions. We found explicit solutions for optimal policy and the associated value functions. We also constructed the optimal wealth process explicitly and discussed some of its properties. In particular, it is shown that the optimal policy provides linear frontiers.