Risk Apportionment Research Articles

Source and health risk apportionment for PM2.5 collected in Sha-Lu area, Taiwan

Many investigations have found that the effects of chemical composition of PM2.5 plays an important role on human health. This study develops an air pollution source reduction strategy that apportions health risk among different emission sources by combining the receptor model and human health risk assessment technique. The goal is to identify emission source of PM2.5 that have the greatest impact on human health. We establish a PM2.5 sampling station in Sha-Lu, Taiwan. Five PM2.5 pollution sources were identified in this study. They are steel industry, residual oil combustion, road dust and traffic, coal-fired power plant, and glass production industry. The results of health risk assessment indicated that the metal contributes the most cancer risk is arsenic, followed by hexavalent chromium. The emissions of these two metals are closely related to coal-fired power plant. We suggested that the power plants should use coal with a low As and Cr content of coal in order to reduce the health risk associated with exposure to PM2.5. The limitation of this study is that only a small fraction of compounds was measured in the samples. However, this study demonstrates that an analysis of the degree to which emission sources contribute to health risks is a useful technique. Most importantly, it provides valuable information for making environmental management decision.

THE RENAISSANCE OF FAIRNESS IN GROUND RISK ALLOCATION - THE NEW ITA/FIDIC EMERALD BOOK

Unfair contracting practices are a major contributor to the high cost, failed schedules, bankrupted Contractors and other abominations afflicting major subsurface projects in many countries. The new Emerald Book is an ITA/FIDIC joint initiative to create a fairer contractual framework for the construction of underground works and heralds an international recognition of the benefits of carefully apportioning ground conditions risk Inappropriate risk allocation contributes to the cost, schedule uncertainty, business risk and complexity of underground infrastructure delivery. In recent decades ill-informed allied professionals have wrongly guided Employers to specify irresponsible contractual terms that entirely place ground condition risk (sovereign risk) with the Contractors and then invite the market to enter a fierce commercial battle in which the lowest bidding Contractor assumes the sovereign‟s ground risk. Financiers are advantaged by such risk apportionment but rarely is this motivation for such practices acknowledged or discussed. Under the new Emerald Book, FIDIC arrangements commercial tension is directed to the price for construction and associated works for the execution of the excavation and lining works including design and construction methods and the reaction of the ground to such methods. The Geotechnical Baseline Report sets out the allocation of the risk between the parties for such subsurface physical conditions. Under the new FIDIC/ITA Emerald Book arrangements the Contractor is expected to perform in accordance with its bid and is only compensated for the conditions encountered. For the Employer this means that they can rely upon the Contractor to perform as warranted under the Contract – demanding the competence, skill and expertise required to undertake the anticipated task. For the Contractor it means that where the encountered conditions and reaction of the ground is not as warranted by the Employer, there is a mechanism to adjust the terms of the Contract to compensate for the consequences of unanticipated conditions. The attraction of this new FIDIC/ITA Emerald Book Contract framework is that for the most part it draws upon the well-known normal FIDIC forms of contracting providing reassurance to Employers, Contractors and Banks that the allocation of risks, mechanisms for dispute and conduct of Contract management are sound, reliable and internationally understood. Innovative features of the new Emerald Book include a contractual mechanism to extend or shorten the time for completion, adjustments to remuneration and a focus on the expertise of the Contractor. Importantly these innovations are linked to Geotechnical Baseline Reports and therefore the rock. In this way rock beats paper because remuneration is based upon fact and not maneuvering for commercial variations and other elaborate desperate mechanisms.

Spatio-seasonal Concentrations, Source Apportionment and Assessment of Associated Human Health Risks of PM2.5-bound Polycyclic Aromatic Hydrocarbons in Delhi, India

ABSTRACT To characterize the polycyclic aromatic hydrocarbons (PAHs) in PM2.5 (particles with an aerodynamic diameter ≤ 2.5 µm) in Delhi, the national capital of India and one of the most polluted megacities in the world, we conducted a comprehensive field campaign at six sampling sites in different areas during winter and summer. Both the PM2.5 and PAH concentrations exhibited seasonal variations, with higher values during winter (356 ± 136 µg m–3 and 75.1 ± 50.2 ng m–3 for the PM2.5 and PAHs, respectively) than summer (268 ± 94 µg m–3 and 10.4 ± 8.5 ng m–3, respectively). Additionally, the maximum winter concentrations were found in the urban industrial-cum-residential area (430 ± 104 µg m–3 and 124.5 ± 70.7 ng m–3 for the PM2.5 and PAHs, respectively). Among the PAHs, benzo[ghi]perylene displayed the highest ambient concentration (14.3 ± 7.4 ng m–3 during winter), followed by indeno[1,2,3-cd]pyrene (13.1 ± 7.3 ng m–3 during winter), at the majority of the sampling sites. Additionally, based on the benzo[a]pyrene-equivalent concentrations at the six sites, we estimated the PAH-associated incremental lifetime cancer risk (ILCR) in the entire study area to be 423 per 1 million persons, which exceeds the World Health Organization (WHO) limit. Source apportionment performed with the Chemical Mass Balance Model version 8.2 (CMB8.2) revealed that emissions from vehicles, municipal waste burning and biomass burning contributed 62%, 15% and 11% to the total PAH mass, respectively. Our results indicate that PM2.5-bound PAHs in Delhi will continue to pose serious health risks without collective initiatives for pollution control from scientific, policy-making and regulatory bodies.

Risk apportionment: The dual story

By specifying new model free preferences towards simple nested classes of lottery pairs, we develop the dual story to stand on equal footing with that of (primal) risk apportionment. The dual story provides an intuitive interpretation, and full characterization, of dual counterparts of such concepts as prudence and temperance. The direction of preference between these nested classes of lottery pairs is equivalent to signing the successive derivatives of the probability weighting function within Yaari's (1987) dual theory. We explore implications of our results for optimal portfolio choice and show that the sign of the third derivative of the probability weighting function may be naturally linked to a self-protection problem.

Generalized Multiplicative Risk Apportionment

This work examines apportionment of multiplicative risks by considering three dominance orderings: first-degree stochastic dominance, Rothschild and Stiglitz’s increase in risk and downside risk increase. We use the relative nth-degree risk aversion measure and decreasing relative nth-degree risk aversion to provide conditions guaranteeing the preference for “harm disaggregation” of multiplicative risks. Further, we relate our conclusions to the preference toward bivariate lotteries, which interpret correlation-aversion, cross-prudence and cross-temperance.

Risk aversion, prudence and temperance: An experiment in gain and loss

We characterize the individual's attitude towards risk, prudence and temperance in the gain and loss domains. We analyze the links between the three features of preferences for a given domain and between domains for each feature of preferences. Consequently, the reflection effect, the mixed risk aversion and the risk apportionment, are key concepts of our study. We also display some determinants for risk aversion, prudence and temperance in each domain. To do this, we conducted a lab experiment with students eliciting risk aversion, prudence and temperance in the two domains, and collected information about each subject's characteristics.

Health risk apportionment of arsenic from multiple exposure pathways in Paracatu, a gold mining town in Brazil

This study assessed various exposure pathways of arsenic and their health risk apportionment to the residents of Paracatu, a gold mining town in Brazil. We measured arsenic concentrations in 50 groundwater and surface town water samples from nearby residences, 38 surface soil dust from residential/commercial dwellings and roadside of Paracatu, and 600 airborne dust samples including PM10 and total suspended particulates (TSP), in additional to a previous reported food survey containing 90 samples from 15 major food categories. For the surface soil dust, bioaccessibility of arsenic as a surrogate of bioavailability was determined using an in vitro physiologically based extraction test (PBET). Rice and bean were found to contain the highest levels of arsenic in which the arsenic speciation was measured whereas the percentages of inorganic arsenic of other food items were taken from the literature for the risk apportionment calculation. The results show that the contribution of inhaled arsenic is ≤3% of the total daily intake, even assuming 100% BAC. The average bioaccessibility of arsenic in the surface soil dust was 3.4 ± 2.0% (n = 17) with a bioaccessible concentration of 4.1 ± 3.7 mg/kg. Food was the main contributor of the daily total intake of arsenic with rice and beans being the most significant ones. The total arsenic intake (ingestion + inhalation) is about 10% of the JECFA BMDL0.5 of 3 μg/kg b.w. per day, and the combined risk based on the cancer slope calculation is similar to the arsenic intake from the consumption of 2 L of water containing 10 μg/L of arsenic, a maximum concentration recommended by WHO. The holistic approach by addressing multiple pathways of exposure is considered a useful tool for health risk assessment throughout the life of mine including mine closure, and can be applied at legacy sites.

New Results for Additive and Multiplicative Risk Apportionment

We start by pointing out a simple property of risk apportionment with additive risks in the general stochastic dominance context defined by Eeckhoudt et al. (2009b). Quite generally, an observed preference for risk apportionment with additive risks in a specific risk environment is preserved when the decision-maker is confronted to other risk situations, so long as the total order of stochastic dominance relationships among pairs of risks remains the same. Our objective is to check whether this simple property also holds for multiplicative risk environments. We show that this is not the case, in general, but that the property holds and more strongly for the case of CRRA utility functions. This is due to a particular feature of CRRA functions that we unveil.

Measuring multivariate risk preferences in the health domain

We investigate univariate and multivariate risk preferences for health (longevity) and wealth. We measure attitudes toward correlation and attitudes toward higher order dependence structures such as cross-prudence and cross-temperance, making use of the risk apportionment technique proposed by Eeckhoudt et al. (2007). For multivariate gains, we find correlation aversion and cross-prudence in longevity and wealth. For losses, we observe correlation seeking and cross-imprudence. We do not find clear evidence for cross-temperance. Our results indicate that longevity and wealth are considered to be substitutes for gains, but not for losses. Second, univariate (higher order) risk preferences are comparable for longevity and wealth, although somewhat closer to linearity for wealth. Third, we find evidence that attitudes toward dependence structures in the health domain are sign-dependent.

Variance stochastic orders

Suppose that the decision-maker is uncertain about the variance of the payoff of a gamble, and that this uncertainty comes from not knowing the number of zero-mean i.i.d. risks attached to the gamble. In this context, we show that any n-th degree increase in this variance risk reduces expected utility if and only if the sign of the 2n-th derivative of the utility function u is (−1)n+1. Moreover, increasing the statistical concordance between the mean payoff of the gamble and the n-th degree riskiness of its variance reduces expected utility if and only if the sign of the (2n+1)-th derivative of u is (−1)n+1. These results generalize the theory of risk apportionment developed by Eeckhoudt and Schlesinger (2006). They are useful to better understand the impact on asset prices of stochastic volatility, which has recently been shown to be a crucial ingredient to solve the classical puzzles of asset pricing theory.

Potential cost implications of contracting risks – the views of bus operators in South Africa

In South Africa, like many countries internationally, public transport contracting costs are continuously being scrutinised in the light of tight economic circumstances. In designing public transport contracts it is important that an appropriate risk-share dispensation be considered to ensure that the relevant entity (the authority and/or operator) carries the risk that it is best suited to manage. Inappropriate risk-sharing arrangements can result in additional costs being factored into contract bids by operators thus increasing the overall cost of public transport for the authority. In addition, the design of the contract e.g. net cost versus gross cost (and associated risk apportionment) could have a bearing on the ultimate cost of the contract.This paper explores the risk views of 15 contracted bus operators representing 4950 buses in South Africa, based on their experiences of such contracts over several years of public transport contracting. The lessons learned from this research will assist contracting authorities in understanding how operators respond and view risks associated with various controllable and uncontrollable risks related to public transport contracting as it is the South African government's intention to embark on the next round of public transport contracting in 2018.

On the properties of high-order non-monetary measures for risks

This paper investigates how welfare losses for facing high-order risk increases change when the risk environment of the decision maker is altered. To that aim, we define the nth-order utility premium as a measure of pain associated with facing the passage of one risk to a more severe one and we examine some of its properties. Changes in risk are expressed through the concept of stochastic dominance of order n. The paper investigates more particularly welfare changes of merging increases in risk, first ignoring background risks, then taking them into account. Merging increases in risk may be beneficial or not, depending on whether background risks are considered and how. The paper also provides conditions on individual preferences for superadditivity of the nth-order utility premium. The results confirm the importance and usefulness of two analytical concepts: mixed risk aversion and risk apportionment.

Risk apportionment and multiply monotone targets

This short note proposes a new interpretation of risk apportionment, in the target-oriented decision-making model. It is shown that these risk attitudes translate into smaller targets, expressing the decision maker’s conservative behavior.

The Evolution of European CCS Policy

The European Carbon Capture and Storage (CCS) industry is still grasping for an effective policy structure which will support deployment of commercial CCS projects. This paper will consider the current context of CCS policy given three significant developments: (a) the agreement in 2014 for a technology neutral 2030 EU emissions reduction target; (b) a binding commitment at COP21 in Paris, Dec 2015, for a global emissions reduction target; (c) the collapse of the UK's CCS Commercialisation Programme in Nov 2015.The period 2010-2015 saw continued stagnation in the European CCS industry, with a series of projects proposed but then subsequently cancelled. This hints as three problems (1) an industry which is weak in communicating why CCS is important, and failed to engage a wider stakeholder base; (2) incumbent governments which are not willing to fund the initially high costs of the first CCS projects; (3) weak market based structures which force industrial consortia to rely on government subsidy, thus leaving projects vulnerable to political forces.The tension within the UK's Commercialisation Programme could still offer lessons for other potential CCS projects in Europe; and inform policy developments at the UK and European level. Namely (i) payment flows between the emitter / capture plant to the transport & storage provider, and the risk apportionment between those partners; (ii) the cost-benefit of oversized infrastructure and the challenges of a first project to finance the bulk of these costs.A recent report to the UK government on CCS recommended state-owned companies delivering all aspects of CCS, but such a recommendation makes it all too easy for a centre-right party focussed on smaller government and tight expenditure to dismiss CCS as “too difficult”. An alternative would be normal commercial and market arrangements for the power & capture section; and a regulated monopoly for the transport & storage infrastructure, backed by the state for risk and liabilities.

Source apportionment of fine particulate matter and risk of term low birth weight in California: Exploring modification by region and maternal characteristics

Previous studies have demonstrated associations between fine particulate matter (PM2.5) and risk of term low birth weight (TLBW; birth weight<2500g and gestational weeks≥37weeks). However, it remains unclear which PM2.5 sources mainly contribute to these associations, and which subgroups (e.g. by residential region and maternal characteristics) may be more susceptible to these exposures. Using California birth records and PM2.5 data from eight monitoring sites from 2002 to 2009, we examined the relationship between exposures to total PM2.5 and PM2.5 sources and risk of TLBW. Source apportionment was performed for each site using Positive Matrix Factorization, and five PM2.5 sources (i.e., secondary ammonium sulfate, secondary ammonium nitrate, vehicular emissions, biomass burning, and resuspended soil) were included in our analysis. Mean gestational and trimester exposures were calculated for mothers with ZIP codes located within a 20km radius of monitors (N=1,050,330). Logistic regression was conducted and adjusted for maternal age, race/ethnicity, and education, as well as gestational age, year of birth, apparent temperature exposure during gestation, and neighborhood level percentage of households below poverty level. Increased risks of TLBW associated with each interquartile range increase in exposure were 4.9% (95% confidence interval: 2.6, 7.3) for total PM2.5, 7.7% (4.7, 10.7) for secondary ammonium sulfate, 5.6% (3.5, 7.7) for resuspended soil, and 3.1% (1.3, 4.9) for secondary ammonium nitrate. Differences in associations were found between inland and coastal regions, and between northern and southern regions for several sources. Results also showed effect measure modification by maternal race/ethnicity and education, with the lowest risk of TLBW associated with PM2.5 exposures found in mothers with at least a college education and Asian mothers. Some PM2.5 sources may be more harmful than others, and a better understanding of the relative toxicity of PM2.5 from each source could lead to more targeted and cost-effective regulations to protect public health.

The Influence of Trust on Project Management Practice within the Construction Industry

Given that any construction project is inherently a human endeavour, it follows that issues of trust are significant in terms of the stakeholder interactions that deliver eventual project outcomes. Previous research indicates that the relational basis upon which projects are undertaken are intended to influence the likelihood of trusting relationships between stakeholders. Thus, experiences of trust in a construction project environment are likely to be influenced by the contextual specifics of respective transactional and relational contracting (RC) procurement mechanisms, given the divergent theoretical principles upon which they are founded. The influence of trust has therefore been examined through the lived experiences of construction practitioners. A phenomenological interview study consisting of thirty-five (35) participants was conducted with sensitivity to the procurement of experiences being recounted. Issues of trust were shown to be integral to stakeholder experiences in both procurement environments, with the benefits of trust acknowledged in many instances. However, little understanding was evident regarding methods for building and maintaining trust, nor for repairing trust when problems arose. Importantly, despite the differing principles that underpin transactional and relational procurement, and particularly the contention that relational procurement would increase trust between trading partners, this was not evident; with individual personalities and appropriate risk apportionment shown to be greater influences upon the likelihood of trusting relationships. It is reasonable to conjecture that relational contracts actually diminish the need for trust, given that the objective is to reduce uncertainty through formulaic approaches to risk distribution and reward; the absence of risk negates the need for trust. Ultimately, the potential to deliver improved project outcomes as a result of proactive approaches to developing and maintaining trust, as well as repairing trust after difficulties, was shown to apply under all procurement conditions.

On the Properties of Non-Monetary Measures for Risks

This paper investigates how welfare losses for facing risks change as the risk environment of the decision-maker is altered. To that aim, we define the risk apportionment of order n (RAn) utility premium as a measure of pain associated with facing the passage from one risk to a riskier one. Changes in risks are expressed through the concept of stochastic dominance of order n. Three configurations of risk exposures are considered. The paper first shows how the RAn utility premium is modified when initial wealth becomes riskier. Second, the paper provides conditions on individual preferences for superadditivity of the RAn utility premium. Third, the paper investigates welfare changes of merging increases in risks. These results offer new interpretations of the sign of higher derivatives of the utility function.

A note on risky targets and effort

This note examines the effort choice problem of a decision maker (DM) who has to meet a target. The more the DM spends on effort, the more likely the target is reached. Besides the risk of missing the target despite his effort, the DM faces additional uncertainty in that both the target and the status quo are subject to exogenous shocks that are beyond the DM’s control. We consider two cases: the additive case in which the DM’s effort affects solely the likelihood of achieving the target, and the multiplicative case in which the DM’s effort also has direct effect on the target and the status quo. Using the theory of monotone comparative statics and risk apportionment, we derive sufficient conditions under which the DM spends more on effort when the target experiences an improvement in risk via higher-order stochastic dominance.

Risk apportionment in target cost contracts

Much of the current literature on target cost contracts is approached from the perspective of the client–contractor relationship. While the financial risk of a project is shared between the parties, the share formula is predominantly set by the client, which demonstrates little evidence of collaboration. The contractor’s business risk is not explicitly taken into account outside of the fee percentage. However, from a contractor’s perspective, the risk in a target cost contract has to be taken into account on two levels: first, the shared risk of the target cost contract (i.e. the financial risk apportioned through the share formula) and, second, the contractor’s own risk in relation to their tender price (i.e. the business risk of the contractor that relates to their profit). The way that five NEC3 Engineering and Construction Contract option C target cost contracts in South Africa actually concluded in practice was examined as a means to develop a better understanding of how risk actually accrues to the parties. A decision-support framework that links project risk with contractor’s risk is proposed. The framework presents nine risk/reward scenarios that contractors tendering for target cost contracts can use as a basis for risk-pricing decisions.

Knock-for-knock clauses

English Court of Appeal lends further support to the contractual freedom of parties to agree broad exclusions of liability, including consequential loss In a recent judgment of real importance to offshore oil and gas exploration, the English court has rejected a challenge to the ‘knock-for-knock’ principle on which the drilling contractor business model is founded. Wide-ranging indemnities are common in offshore drilling contracts and are a way of creating certainty in respect of apportionment of risk. Under the ‘knock-for-knock’ principle, the basic premise is that each party bears its own risk. Therefore, although drilling contractors can incur reduced or zero day rates and be exposed to termination, they are otherwise often not thought to be liable for any delays and losses suffered by the oil company. In recent years, there have been a number of attempts to challenge that principle. In the main, those challenges were resolved through negotiation, but now in Transocean v Providence1 the Court of Appeal has decisively upheld the principle. Where the wording of exclusions of liability is clear, English courts will enforce ‘knock-for-knock’ clauses.