Conditional Payments Research Articles

Conditional payments for carbon sequestration as a local trading game — A case study from a Tanzanian village

The authors apply the game theory principal agent model in which the principal is a donor who seeks to reduce or sequester harmful emission through a system of conditional payments, whereas the agent is a village community. The purpose is to explore strategic interactions between the two actors in the case of Mlumbilo village in Tanzania. Whereas carbon sequestration at minimum cost is an objective for the principal, the village community aims at maximizing the net present value of income from all types of land use. The application of both a multi-objective bio-economic model with detailed biological data and a bargaining game theory model with asymmetric information revealed that the choice of reference level used as a performance benchmark had major implications for the negotiated prices for CO2. However, the choice of reference level did not affect the cost efficiency of carbon sequestration. Additionally, the outcome of the bargaining model was unique and efficient. The authors conclude that recipient discretion will yield efficient results when the agent trusts that the principal will pay for verified sequestration.

Application of direct payment clause 30A.0 of the Asian International Arbitration Centre (AIAC) Standard Form of Contract (with quantities)

Conditional payment such as “pay when paid” or “pay if paid” can create negative chain effect on the parties in construction projects, resulting in delay on the completion of a project, adversarialism and may affect a contractor’s reputation. Asian International Arbitration Centre (AIAC) has launched a standard form of contract which is Construction Industry Payment Adjudication Act (CIPAA) compliance with the aim to reduce payment issues. The aim of the research is to identify whether the clause for “direct payment under CIPAA 2012” of the new AIAC standard form of contract can facilitate problems in direct payment. In achieving the aim of the research, five legal cases were analysed and thirty questionnaires forms were distributed. Legal cases analysis findings highlighted that the major reasons of the direct payment issue being referred to court is due to the validity of the direct payment agreement between the disputant’s parties. Based on the cases heard before CIPAA enactment, the findings show that out of the three cases, the disputants went to litigation because of the legality of direct payment agreements. Most of the agreements were made orally. For cases analysed after CIPAA was enacted, the findings show that the disputant parties do not opt for adjudication and that the main contractors try to mitigate their responsibilities to the employer. The results from the questionnaires distributed established that, the direct payment clause could be successfully adopted for future use of the industry. Eventhough the AIAC standard form of contract has been formally introduced to the industry, but it is not widely used. From the findings of the questionnaire, it shows that with encouragement and support from the industry, direct payment clause of AIAC standard form of contract have the potential in reducing payment issues in the future. With the remodeling of standard form of contracts that are available in construction industry to be CIPAA compliance , it is hoped that this move may scale down the prevalent payment issues in Malaysian construction industry.

The politics of valuation and payment for regenerative medicine products in the UK

The field of regenerative medicine (RM) faces many challenges, including funding. Framing the analysis in terms of institutional politics, valuation studies and “technologies of knowledge”, the paper highlights growing debates about payment for RM in the UK, setting this alongside escalating policy debates about “value”. We draw on interviews and publicly available material to identify the interacting and conflicting positions of institutional stakeholders. It is concluded that while there is some common ground between institutional stakeholders such as industry and health system gatekeepers, there is significant conflict about reward systems, technology assessment methodologies and payment scenarios; a range of mostly conditional payment schemes and non-mainstream routes are being experimented with. We argue that current developments highlight a fundamental conflict between a concern for the societal value of medical technologies in a resource-limited system and a concern for engineering new reward and payment models to accommodate RM innovations.

Effectiveness of a REDD+ Project in Reducing Deforestation in the Brazilian Amazon

AbstractWe estimate the early effects of the pilot project to Reduce Emissions from Deforestation and forest Degradation (REDD+) in the Brazilian Amazon. This project offers a mix of interventions, including conditional payments, to reduce deforestation by smallholders who depend on swidden agriculture and extensive cattle ranching. We collected original data from 181 individual farmers. We use difference‐in‐difference (DID) and DID‐matching approaches and find evidence that supports our identification strategy. We estimate that an average of 4 ha of forest were saved on each participating farm in 2014, and that this conservation came at the expense of pastures rather than croplands. This amounts to a decrease in the deforestation rate of about 50%. We find no evidence of within‐community spillovers.

Medicare Secondary Payer and Settlement Delay

The Medicare Secondary Payer Act of 1980 and its subsequent amendments require that insurers and self‐insured companies report settlements, awards, and judgments that involve a Medicare beneficiary to the Centers for Medicare and Medicaid Services. The parties then may be required to compensate CMS for its conditional payments. In a simple settlement model, this makes settlement less likely. Also, the reporting delays and uncertainty regarding the size of these conditional payments are likely to further frustrate the settlement process. We provide results, using data from a large insurer, showing that, on average, implementation of the MSP reporting amendments led to a delay in the resolution of disputes involving auto accidents of about six months.

Experimental evidence on payments for forest commons conservation

Payments for Ecosystem Services (PES) represent a popular strategy for environmental protection, and tropical forest conservation in particular. Little is known, however, about their effectiveness. Many argue that even if PES increase conservation while payments last, they may adversely affect other motivations for pro-environmental behaviour in the longer term. We test whether conditional payments also encourage forest users to conserve shared forest resources after payments end. Using a framed field experiment with 1,200 tropical forest users in five countries, we show that (1) during the intervention, conditional payments increased conservation behaviour; (2) after payments stopped, users continued to conserve more on average than they did before the intervention, especially when they were able to communicate with each other; and (3) trust amplified the lasting conservation effects of the interventions. PES effectiveness may increase when interventions facilitate interpersonal communication and when implemented in contexts where forest users enjoy high levels of trust.

Development of Means for the Formation of a Corporate Distributed Register (Blockchain)

The problem of developing methods for forming the atoms of a corporate distributed register (blockchain), which provides secure distributed storage of data in an associated chain, is discussed; an example of the application of the proposed methods for the implementation of a conditional tax payment through a smart contract is considered.

Assessment of Non-Carcinogenic Risk and Body Responses for Oil Refinery Staff

The study is relevant due to the lack of methods for assessing risk to the staff health from exposure to various substances in the production environment, which would take into account the responses of the body. To date, the procedure for special assessment of working conditions allows assessing the risk only at the level of establishing a class of working conditions in order to subsequently establish an additional payment for harmful working conditions, but not quantify the risk to the staff health. In this regard, this paper aims to assess non-carcinogenic risk to the health of the oil refinery staff and to identify dependencies between the magnitude of the risk and incidence of this staff. The leading approach to study this problem is to take into account both separate action of non-carcinogenic substances on individual organs and systems of the human body, and their combined effect to consider the effect of the chemical factor and take into account the effect of potentiation. The paper provides information on substances present in the work area, information about their danger, detailed analysis of their effects on the human body. Three scenarios for calculating non-carcinogenic risk for the workplace of the technician pump operator are considered as an example, an algorithm for the dose-effect model was provided, 26 risk groups for the staff of oil refinery were formed, information was provided on incidence of the staff, groups of diseases were identified by unidirectional action of the substances, dependence equations of non-carcinogenic risk and four nosological forms of diseases (respiratory diseases, diseases of kidneys and genitourinary system, eyes and its appendages, cardiovascular system) were obtained, reliability of the obtained dependences was assessed. The materials of the paper are of practical value for the researchers of this issue, employees of the occupational safety departments of enterprises for assessing the risk from exposure to the chemical factor, establishing relation of working conditions with occupational diseases of the staff, identifying risk groups among the staff of the enterprise workshops, and developing measures to improve working conditions

Conditional Payments in the Indonesian Construction Industry

AbstractA healthy cash flow is the lifeblood of the construction business. As a result, payment has always been an important issue in construction industry practice. In a construction project, the ...

Estimating Smallholder Opportunity Costs of REDD+: A Pantropical Analysis from Households to Carbon and Back

Compensating forest users for the opportunity costs of foregoing deforestation and degradation was one of the original distinguishing features of REDD+ (Reducing Emissions from Deforestation and Degradation). In the early days of REDD+, such costs for tropical smallholders were believed to be quite low, but this has increasingly been questioned. A decade after the concept was proposed, direct payments to forest stakeholders remain rare, while concerns about safeguarding livelihoods are increasing. Households facing restrictions on forest-based activities will have to be compensated, yet evidence on actual costs to households, their distribution, and implications for efficiency and equity is limited. We estimate smallholder opportunity costs of REDD+ in 17 sites in six countries across the tropics. We use household data collected from multiple sites in multiple countries using a uniform methodology. We find that opportunity costs per tCO2 emissions from deforestation are less than the social costs of tCO2 emissions ($36) in 16 of the 17 sites; in only six of the sites, however, are opportunity costs lower than the 2015 voluntary market price for tCO2 ($3.30). While opportunity costs per tCO2 are of interest from an efficiency perspective, it is opportunity costs per household that are relevant for safeguarding local peoples’ income. We calculate opportunity costs per household and examine how these costs differ for households of different income groups within each site. We find that poorer households face lower opportunity costs from deforestation and forest degradation in all sites. In a system of direct conditional payments with no transactions costs to households, poorer households would earn the highest rents from a system of flat payments. Our findings highlight that heterogeneity and asymmetrical distribution of opportunity costs within and between communities bear important consequences on both equity and efficiency of REDD+ initiatives.

Pandora's Digital Box: The Promise and Perils of Digital Wallets

Digital wallets, such as ApplePay and Android Pay, are “smart” payment devices that can integrate payments with two-way, real-time communications of any type of data. Integration of payments with real-time communications holds out tremendous promise for consumers and merchants alike: the combination, in a single, convenient platform, of search functions, advertising, payment, shipping, customer service, and loyalty programs. Such an integrated retail platform offers consumers a faster and easier way to transact, and offers brick-and-mortar retailers an ecommerce-type ability to identify, attract, and retain customers. At the same time, however, digital wallets present materially different risks for both consumers and merchants than traditional plastic card payments precisely because of their “smart” nature.For consumers, digital wallets can trigger an unfavorable shift in the applicable legal regime governing the transactions, increase fraud risk, create confusion regarding error resolution, expose consumers to non-FDIC-insured accounts, and substantially erode transactional privacy. These risks are often not salient to consumers, who cannot distinguish them by digital wallet. Consumers’ inability to protect against these risks points to a need for regulatory intervention by the Consumer Financial Protection Bureau to ensure minimum standards for digital wallets.For merchants, digital wallets can deprive them of valuable customer information used for anti-fraud, advertising, loyalty, and customer service purposes. Digital wallets can also facilitate poaching of customers by competitors, impair merchants’ customer relationship management, deprive merchants of influence over consumers’ payment choice and routing, increase fraud risk, subject merchants to patent infringement liability, and ultimately increase the costs of accepting payments. Merchants are constrained in their ability to refuse or condition payments from digital wallets based on the risks presented because of merchant rules promulgated by credit card networks. These rules raise antitrust concerns because they foreclose entry to those digital wallets that offer merchants the most attractive valuation proposition, namely those wallets that do not use the credit card networks for payments.

Natural Shocks and Marriage Markets: Evolution of Mehr and Dowry in Muslim Marriages

We examine how mehr, a conditional payment from husbands to wives in the event of divorce, and dowry, a transfer from bride families to grooms at the time of marriage, have evolved through natural shocks. We develop a model of marriage market in which dowry acts as a groom price, whereas mehr serves to deter inefficient divorces. Our comparative statics results show that the value of mehr is increasing (decreasing) in shocks that raise (lower) income while the effect of such shocks on dowry is ambiguous; even if dowry increases (decreases), the magnitude will be smaller than the corresponding increase (decrease) in mehr. We then exploit several natural experiments in Bangladesh, that include the Green Revolution around the 1960s, the Independence War in 1971 and the famine of 1974, to explain fluctuations in the value of mehr and dowry observed in Muslim marriages. Using two household survey datasets in Bangladesh, we find support for our theoretical predictions. To rule out alternative explanations, in particular the effect of legal changes, we exploit another natural experiment from the Indian state of West Bengal that experienced the same natural shocks, but not any of the legal shocks affecting Bangladesh. These results demonstrate that natural shocks may influence the evolution of social institutions.

Pandora's Digital Box: Digital Wallets and the Honor All Wallets Rules

Digital wallets are poised to transform the world of retailing. These digital wallets, such as ApplePay and Android Pay, are “smart” payment devices that can integrate payments with two-way, real-time communications of any type of data. Integration of payments with real-time communications holds out tremendous promise for retailers: the combination in a single platform of search, advertising, payment, shipping, customer service, and loyalty programs. Such an integrated retail platform offers brick-and-mortar retailers a potentially superior ability to identify, attract, and retain customers, bringing eCommerce-type platforms into the brick-and-mortar environment. At the same time, however, digital wallets present materially different risks for merchants than traditional plastic card payments precisely because of their “smart” nature. Digital wallets can reallocate flows of consumer data from merchants to financial institutions, depriving merchants of valuable customer information used for anti-fraud, advertising, loyalty, and customer service purposes. Digital wallets can also facilitate poaching of customers by competitors, impair merchants’ customer relationship management, deprive merchants of influence over tender choice and payment routing, increase fraud risk, subject merchants to patent infringement liability, and ultimately increase the costs of accepting payments. All of this suggests that merchants would accept digital wallets only selectively, based on the overall package of risks and rewards offered by any particular wallet. Merchants, however, are highly constrained in their ability to refuse or condition payments from digital wallets because of “Honor All Wallets” rules promulgated by American Express, MasterCard, and Visa for merchants that accept payments with their network brands. The Honor All Wallets rules require merchants to accept all network-branded payments from any device that uses a communications technology accepted by the merchant — magnetic stripe, Near Field Communications, QR codes, Internet, etc. The Honor All Wallets rules thus tie acceptance of a card network’s payments via digital wallets to the acceptance of traditional plastic cards that use the same communications technologies. The Honor All Wallets rules force merchants to accept payments from all digital wallets utilizing a card network brand, irrespective of the wallet’s risks. Honor All Wallets presents merchants with a digital Pandora’s Box. The Honor All Wallets rules also skew the competitive landscape for digital wallets. By preventing merchants from accepting only certain brands of payments from digital wallets, the Honor All Wallets rules foreclose entry to digital wallets that offer the most attractive valuation proposition for merchants — those that make low-cost PIN-debit and ACH payments. The Honor All Wallets rules thus artificially increase the market shares of the high-cost credit and signature debt products of American Express, MasterCard, and Visa in the payment card network services market. By facilitating consumer use of high-cost wallets, the Honor All Wallets rules ironically impede the adoption of digital wallets altogether. Accordingly, this Article argues that the Honor All Wallets rules should invite serious antitrust scrutiny.

Global Patterns in the Implementation of Payments for Environmental Services.

Assessing global tendencies and impacts of conditional payments for environmental services (PES) programs is challenging because of their heterogeneity, and scarcity of comparative studies. This meta-study systematizes 55 PES schemes worldwide in a quantitative database. Using categorical principal component analysis to highlight clustering patterns, we reconfirm frequently hypothesized differences between public and private PES schemes, but also identify diverging patterns between commercial and non-commercial private PES vis-à-vis their service focus, area size, and market orientation. When do these PES schemes likely achieve significant environmental additionality? Using binary logistical regression, we find additionality to be positively influenced by three theoretically recommended PES ‘best design’ features: spatial targeting, payment differentiation, and strong conditionality, alongside some contextual controls (activity paid for and implementation time elapsed). Our results thus stress the preeminence of customized design over operational characteristics when assessing what determines the outcomes of PES implementation.

Impact of Hospital Operating Margin on Central Line-Associated Bloodstream Infections Following Medicare's Hospital-Acquired Conditions Payment Policy.

In October 2008, Medicare ceased additional payment for hospital-acquired conditions not present on admission. We evaluated the policy's differential impact in hospitals with high vs low operating margins. Medicare's payment policy may have had an impact on reducing central line-associated bloodstream infections in hospitals with low operating margins. Infect. Control Hosp. Epidemiol. 2015;37(1):100-103.

The Type of Payment and Working Conditions.

BackgroundThe type of payment is one of the important factors that has an effect on the health of employees, as a basic working condition. In the conventional research field of occupational safety and health, only the physical, chemical, biological, and ergonomic factors are treated as the main hazardous factors. Managerial factors and basic working conditions such as working hours and the type of payment are neglected. This paper aimed to investigate the association of the type of payment and the exposure to the various hazardous factors as an heuristic study.MethodsThe third Korean Working Conditions Survey (KWCS) by the Occupational Safety and Health Research Institute in 2011 was used for this study. Among the total sample of 50,032 economically active persons, 34,788 employees were considered for analysis. This study examined the relation between the three types of payment such as basic fixed salary and wage, piece rate, and extra payment for bad and dangerous working conditions and exposure to hazardous factors like vibration, noise, temperature, chemical contact, and working at very high speeds. Multivariate regression analysis was used to measure the effect of the type of payment on working hours exposed to hazards.ResultsThe result showed that the proportion of employees with a basic fixed salary was 94.5%, the proportion with piece rates was 38.6%, and the proportion who received extra payment for hazardous working conditions was 11.7%.ConclusionThe piece rate was associated with exposure to working with tight deadlines and stressful jobs. This study had some limitations because KWCS was a cross-sectional survey.

Green Microfinance for Ecosystem Services - An Empirical Quantitative Study of a Project's Results, the Variables Influencing Its Outcomes and the Effectiveness of the Related Conditional Payments

Recently there has been growing interest in green microfinance, referring to the role of microfinance to support environmental management by micro-enterprises and poor households. Worldwide, the number of green microfinance projects increases, yet there seems to be little discussion on how green microfinance interacts with rural development, and how effective it is in achieving its environmental goals. This paper aims to position itself in this debate as it assesses the role, outcomes and limitations of a green microfinance programme in biodiversity conservation and rural development.For our case study, we look at the first large-scale green microfinance programme for biodiversity conservation: Proyecto CAMBio (Central-American Markets for Biodiversity). It was implemented in five Central American countries in the period 2007-2013 and consisted of a combination of credits for agroforestry, silvopastoral practices or other environmentally friendly rural activities; technical assistance to support the adoption of these practices; and conditional payments for environmental services (PES) linked to a number of environmental objectives. We focus on its implementation in Nicaragua by the Microfinance Institution (MFI) Fondo de Desarrollo Local (FDL) and the NGO Nitlapan. We perform an in-depth econometric analysis on a database from a survey we conducted on a sample of 128 rural producers. We thereby assess the clients’ characteristics that influenced the evolution of the environmental value of their farm – as defined by the indicators we used – on a span of five years, and we assess Proyecto CAMBio’s possible role in this evolution. Moreover, we further look into the effectiveness of PES in rewarding environmental betterment.Our results underline the importance of the local territorial dynamics and the complexity of the socio environmental system, challenging a simple response to individual green credits or environmental rewards. It appears that – although the project was carefully implemented in line with the guidelines, and performed well financially – green microfinance programmes specifically designed to foster environmentally sustainable and economically rewarding rural practices do not necessarily manage to influence the evolution of the environmental value of the clients’ farm. Other factors, related to livelihoods pathways – such as the decision to change the main economic activities, or clients’ strategies or opportunities in land accumulation – have instead a significant influence on the evolution of the environmental value of the farm. Moreover, the PES does not seem to be able to reward environmental improvement. Embedded in the credit logic, it rewards the more credit-worthy activities, and it appears that it mostly benefited producers that plant fewer trees per hectare and have more access to land and credit.On the basis of this analysis, we call for a more proactive role of green microfinance, which aims to reshape existing livelihood strategies toward more socially inclusive and environmental friendly pathways, through a necessary articulation with local actors and broader territorial dynamics. At the practical level, specific policies for green credits should be integrated as fundamental tool in the green credit provision and allocation. These should aim to balance the social and environmental outcomes, going beyond a sole focus on the financial profitability or credit risk of the product and its participants.

Maximizing the Divestment Price of a Privately Held Company

While several studies have demonstrated that there is a relative price difference between companies listed on the stock market and privately held enterprises, no academic study has addressed the question of how this private enterprise discount can be reduced and the proceeds from a divestment can be maximized. This research project has focused on the seller’s perspective in the takeover process in order to answer the following research question: What factors influence the ability of sellers to extract value when divesting a privately held target and how can these factors be optimized? Based on the existing knowledge base, the following key success factors have been determined to be the main elements of the divestment process to be studied: Increasing negotiation power by creating competition; Initiating the sales process under favourable market conditions; Selecting a group of bidders with the highest potential synergies; Inviting financial investors to the bidding process; Increasing transparency of target company information; Controlling information dissemination to potential bidders; Articulating a compelling value and growth story for each buyer; Optimizing the auction process used in the divestment; Overcoming price differences using deferred or conditional payments; and identifying and mitigating potential deal breakers. Typically, M&A advisors are hired by the owners of privately held companies in order to create a market for their illiquid asset. A survey-based study validating the perceived importance of the key success factors has been conducted in addition to multiple case studies, where specialized M&A advisors and their clients have participated. The study of five selected cases involving a privately held target company during and after the divestment process has produced results with high significance to other researchers and professionals involved in mergers and acquisitions. From multiple case studies, the best possible practices regarding the optimization of the key success factors has been derived and used to reappraise the existing knowledge base. While based on a systematic analysis of the data obtained, the research question has been answered, further studies with a larger sample will be necessary to generalize findings and to validate the theory developed.

The role of behavioral economic incentive design and demographic characteristics in financial incentive-based approaches to changing health behaviors: a meta-analysis.

To evaluate the use of behavioral economics to design financial incentives to promote health behavior change and to explore associations with demographic characteristics. Studies performed by the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania published between January 2006 and March 2014. Randomized, controlled trials with available participant-level data. Studies that did not use financial incentives to promote health behavior change were excluded. Participant-level data from seven studies were pooled. Meta-analysis on the pooled sample using a random-effects model with interaction terms to examine treatment effects and whether they varied by incentive structure or demographic characteristics. The pooled study sample comprised 1403 participants, of whom 35% were female, 70% were white, 24% were black, and the mean age was 48 years (standard deviation 11.2 years). In the fully adjusted model, participants offered financial incentives had higher odds of behavior change (odds ratio [OR]: 3.96; p < .01) when compared to control. There were no significant interactions between financial incentives and gender, age, race, income, or education. When further adjusting for incentive structure, blacks had higher odds than whites of achieving behavior change (OR: 1.67; p < .05) with a conditional payment. Compared to lower-income participants, higher-income participants had lower odds of behavior change (OR: 0.46; p = .01) with a regret lottery. Financial incentives designed using concepts from behavioral economics were effective for promoting health behavior change. There were no large and consistent relationships between the effectiveness of financial incentives and observable demographic characteristics. Second-order examinations of incentive structure suggest potential relationships among the effectiveness of financial incentives, incentive structure, and the demographic characteristics of race and income.

Impact of the Centers for Medicare and Medicaid Services Hospital-Acquired Conditions Policy on Billing Rates for 2 Targeted Healthcare-Associated Infections.

The 2008 Centers for Medicare & Medicaid Services hospital-acquired conditions policy limited additional payment for conditions deemed reasonably preventable. To examine whether this policy was associated with decreases in billing rates for 2 targeted conditions, vascular catheter-associated infections (VCAI) and catheter-associated urinary tract infections (CAUTI). Adult Medicare patients admitted to 569 acute care hospitals in California, Massachusetts, or New York and subject to the policy. DESIGN We used an interrupted times series design to assess whether the hospital-acquired conditions policy was associated with changes in billing rates for VCAI and CAUTI. Before the policy, billing rates for VCAI and CAUTI were increasing (prepolicy odds ratio per quarter for VCAI, 1.17 [95% CI, 1.11-1.23]; for CAUTI, 1.19 [1.16-1.23]). The policy was associated with an immediate drop in billing rates for VCAI and CAUTI (odds ratio for change at policy implementation for VCAI, 0.75 [95% CI, 0.69-0.81]; for CAUTI, 0.87 [0.79-0.96]). In the postpolicy period, we observed a decreasing trend in the billing rate for VCAI and a leveling-off in the billing rate for CAUTI (postpolicy odds ratio per quarter for VCAI, 0.98 [95% CI, 0.97-0.99]; for CAUTI, 0.99 [0.97-1.00]). The Centers for Medicare & Medicaid Services hospital-acquired conditions policy appears to have been associated with immediate reductions in billing rates for VCAI and CAUTI, followed by a slight decreasing trend or leveling-off in rates. These billing rates, however, may not correlate with changes in clinically meaningful patient outcomes and may reflect changes in coding practices.