Economic Rate Of Return Research Articles

Estimating aggregate economic rate of return to foreign aid in Pakistan

Estimating aggregate economic rate of return to foreign aid in Pakistan

Optimism Bias and World Bank Project Performance

This paper examines the correlates of optimism bias and its impact on World Bank project performance. We measure optimism bias in different ways using estimated Economic Rates of Return (ERR) of projects at approval and closure. We examine over 2,800 World Bank projects that were appraised between 1960 and 2019. We find that approximately 60% of projects in the sample were prone to optimism bias. Correlates of optimism bias include both project and country characteristics. Findings also indicate that the incidence of optimism bias reduces the chance of a satisfactory project performance rate at the time of evaluation by 17–20%. Recommendations include embracing complexity and uncertainty in considering projects for approval, providing organizational incentives for ensuring projects are successful rather than ERRs being accurate, shifting some resources from appraisal to implementation, and changing the nature of project supervision.

Environmental Benefits of Air Emission Reduction in the Waste Tire Management Practice

Montenegro faces serious challenges in terms of waste tire management. The main goal of our paper is to consider the financial and economic justification of the implementation of the first phase of the project of collection, takeover and transport, sorting, and storage of waste tires from the three municipalities in Montenegro. The financial feasibility analysis pointed out the need to organize the second phase of the project and the production of commercially usable and energy efficient products. That phase would lead to the desired commercial effects and will probably ensure the financial sustainability of the project. The economic feasibility analysis of the project included an assessment of the socio-economic benefits from the emission reduction of the first group of pollutants (PM, SOX, NOX, VOC, CO) as a consequence of the waste tires’ destruction, predominantly by combusting them. Unit values of pollution costs by types of gases, adjusted for Montenegro, were defined in the interval from 192 EUR/t for CO to 24,294 EUR/t for PM. We proved that the direct socio-economic benefits of this project are savings in the cost of environmental pollution. The total present value of discounted costs in the observed time period was calculated at the level of EUR 1,620,080, while the total present value of the positive socio-economic effects was estimated at EUR 1,991,180. Dynamic justification indicators suggest that this investment has a satisfactory socio-economic justification, i.e., the economic rate of return is higher than the opportunity cost of capital (ERR = 15.82%), the economic net present value is greater than 0 (ENPV = 371,100 EUR), and the benefit–cost ratio is greater than 1 (B/C ratio = 1.23).

Day-ahead multi-objective optimal operation of Wind–PV–Pumped Storage hybrid system considering carbon emissions

It is crucial to alleviate the problems of energy consumption and grid fluctuations caused by the randomness and intermittency of variable renewable energy (VRE) such as wind power and photovoltaic (PV). Under the new situation of “carbon neutrality”, the optimal operation of Wind–PV–Pumped Storage (PS) hybrid system is studied in this paper. The direct economic benefits, carbon emissions and the stability of active power connected to the grid are selected as the objectives of the hybrid operation system. The Wind–PV–PS optimal operation model is established with the constraints of unit spinning reserve and reservoir capacity with the characteristics of hydropower system. The optimization is executed through Non-dominated Sorting Genetic Algorithm-II (NSGA-II) and the optimal solution is selected by the membership normalization method from the Pareto optimal solution set. The results of the objective values before and after the configuration of PS system show that the stability of power grid decreases with the increase of economic and environmental benefits. The VRE curtailment rate is reduced by 8.57%; the economic rate of return is increased by 14.37%; the carbon emissions are reduced by 3.984 million t/year; and the active power volatility of the grid is reduced as well. The hybrid system with PS plays an important role in promoting the safe, economic and efficient grid connection of VRE.

Sustainable Development Impacts of Renewable Power: Insights from Three Indian States

This paper applies WRI’s 'Framework to Assess the Sustainable Development Impacts of Renewable Power Technologies' to estimate the economic rate of return (ERR) associated with prominent renewable energy (RE) technologies in three Indian states: Maharashtra, Jharkhand, and Assam. The analysis provides insight into context-specific drivers of socioeconomic returns from RE deployment that can inform local technology choices and deployment policies to maximize the societal benefits of renewable energy.

Research on the Influence of Fiscal Decentralization on the Return Rate of China’s Real Economy

Based on the panel data of 30 provinces from 2000 to 2020, this paper empirically analyzes the impact of local fiscal decentralization on the return rate of China’s real economy from two dimensions, that is, income decentralization and expenditure decentralization. It is found that income decentralization and expenditure decentralization can improve the overall real economic return rate with heterogeneity in different regions. The empirical results in the central region are consistent with the core conclusions, and the regression results of expenditure decentralization in the eastern and western regions are significant, while income decentralization is not significant. With industrial structure affecting the role of fiscal decentralization, the more advanced the industrial structure, the greater role of fiscal decentralization in promoting the return rate of the real economy.

Screening Life Cycle Environmental Impacts and Assessing Economic Performance of Floating Wetlands for Marine Water Pollution Control

The growing environmental awareness of society, the advancement of nature-based solutions (NbSs), and the need for reliable and cost-effective solutions create a favorable environment of opportunities for floating wetlands as alternative solutions for marine water pollution control. The aim of this work was to screen, through OpenLCA, the environmental impacts of floating wetlands for marine water pollution control at various life cycle stages of the system, and assess its economic performance and contribution to the welfare of society. The stage of raw materials production and acquisition was found to be responsible for the main environmental impacts of the floating wetlands, especially on global warming potential, whereas the main impact of the operational stage was related to the eutrophication potential due to N and P residuals in the effluent. The economic performance indicators of economic net present value (ENPV), economic rate of return (ERR), and benefits/costs ratio (B/C ratio) indicate, although marginally, that floating wetlands may constitute a viable investment with potential positive socioeconomic impacts. However, there are still several scientific challenges and technical issues to be considered for the operational application of such systems at full-scale in marine environments.

Analysis of the Impact of Exports and Investment on Indonesian Economic Growth

The average share of net exports to Indonesia's economic growth was only 1.01% in the last 30 years. The contribution and important role of manufacturing industry exports in total national exports ranged from 73.62 – 80.91% with an average of 78.30% in the last 10 years (2010 – 2020). This study aims to analyze the impact of manufacturing industry exports and investment on economic growth through the export-led growth hypothesis. The results show that there is a long-term relationship between foreign investment, domestic investment, employment, and manufacturing industry exports to GDP. Domestic investment and manufacturing exports have a positive effect on GDP, on the other hand, foreign investment and employment have a negative effect. An indication of the negative influence of FDI in Indonesia is due to the low rate of economic return. In addition, the negative effect of labor absorption is indicated by the unavailability of adequate employment opportunities.

Calculation of the profitability of fuzzy investment cash flows using the reliable economic rate of return measure

In recent years, the economic rate of return (ERR) index is one of the proper indices that has been presented to determine the profitability of the projects. The ERR measure has simple solution steps and has the ability to solve the non-existent real-valued and multiple IRRs problems. However, the ERR index has important shortcomings that have led to serious limitations in its use. In this regard, this paper introduces a new measure called the reliable economic rate of return (RERR), which has originated from ERR measure, but it has resolved the drawbacks of ERR index. On the other hand, it is sometimes difficult to estimate the values of cash flows as a crisp number, which may lead to a wrong decision in accepting or rejecting projects. For this purpose, this paper presents a new solution by considering the values of the cash flow in terms of fuzzy numbers, after calculating the fuzzy economic rate of return, the possibility degree of the investment projects profitability can be determined as well as reliable and in accordance with the net present value (NPV) method. Finally, using the @RISK software, this paper applies the Monte Carlo simulation method to analyze and validate the results.

Predicting Federal Funds Rate Using Extreme Value Theory

AbstractThe extreme value theory (EVT) is used to assess the risk of extreme events caused by natural calamities or untoward circumstances in the social and economic sectors. The theory can be used to study the frequency of rare events and to build up a predictive model so that one can attempt to forecast the frequency of such future extreme events such as a financial collapse and the amount of damage from such a collapse. Even though many statistical techniques have been used to analyze the manner in which the Federal Reserve determines the level of the Federal Fund Rates, no known study has used EVT to analyze and predict the extreme fund rates. In this study, the US Federal Funds Rate, one of the most publicized and important economic indicators in the financial world, from 1954–2019 has been analyzed. The contributions of this study are: (1) to provide an appropriate model for the normalized Federal Funds Rate data; (2) to compare several estimation techniques in estimating parameters for two possible models; (3) to predict the maximum economic return rate from a Federal Funds Rate in the future by using the concept of the return period; and (4) to investigate the bias of estimated parameters applying a simulation study. Simulated data and real financial data are used for the study, and the outcome satisfies the efficiency of its application.

Gıda Atıklarından Biyoaktif Peptitlerin Geri Kazanımı ve Biyoyararlanım Özellikleri

Küresel kentleşme ve nüfus artışı, gıda atık yönetimini zorlaştırmakta ve atıkların kontrolsüz bir şekilde birikmesine neden olmaktadır. Gıda üretim ve tedarik zinciri boyunca oluşan atıkların yüksek protein içeriklerinden dolayı doğru ve etkin bir şekilde kullanımının ve geri dönüşümünün sağlanması hem ülkemizde hem de tüm dünyada her geçen gün önem kazanmaktadır. Gıda endüstrisinde açığa çıkan yan ürünlerin değerlendirilmesi, yeni fonksiyonel ürünlerin geliştirilmesi ve endüstriyel boyutta daha büyük bir ekonomik getiri sağlaması açısından önemlidir. Bu doğrultuda proteince zengin bitkisel ve hayvansal atıklardan elde edilen biyoaktif peptitler ön plana çıkmaktadır. Biyoaktif peptitler fonksiyonel özellikler göstermeleri nedeniyle insan sağlığı açısından da büyük öneme sahiptir. Bu derleme kapsamında proteince zengin gıda atıklarından elde edilen biyoaktif peptitlerin fonksiyonel özellikleri ve insan gastrointestinal sisteminde sergiledikleri biyoyararlanım mekanizmaları üzerinde durulmuştur.

Adoption and economic analysis of using biological control in Philippine highland farms: Case of Trichoderma koningii strain KA

This study summarized evidence of adoption and outcomes of using Trichoderma koningii in highland agriculture in the Philippines, and estimated economic rate of returns to T. koningii R&D. Adoption rates were estimated from sales data of T. koningii pure culture, and net incremental changes based on reviewed field experiments in the Cordillera region, Philippines and partial budget analysis based on farmer interviews. Findings showed that T. koningii are being used mostly by organic and good agricultural practice producers as biofungicide for disease management, and as soil nutrient and compost enhancer. T. koningii pure culture annual geometric growth rate of sales was at 29.7% and overall adoption rate in Benguet in 2018 was roughly estimated at 0.03%. Identified constraints to adoption are: high price; misconception that Trichoderma is for organic farmers only; slow effect of the technology; limited information; and limited market outlets and marketing strategies. The estimated change in yield due to use of T. koningii ranged from 10% to 50% based on farmer interviews, and 4%–92% based on field and pot experiments in various crops and uses from literature. The net present value (NPV) assuming a 10% real social discount rate is PhP4.3 M (USD0.08M), and the rate of returns for the Philippine government investing resources in T. koningii development and promotion was estimated at 49.1% considering a 10-year period. Assuming the lowest estimate of net benefit at PhP28670 ha-1 (547 USD ha−1) and 20 years project duration, the NPV is Php3.7 M (USD 0.07M). The study contributes policy support to sustained promotion of T. koningii and continued government funding for effective biological control and biofertilizer R&D.

Financial efficiency estimation for a dental radiology laboratory.

Background and aimsConsidering nowadays trend among dentists to install a radiology laboratory beside their current practice, we proposed to investigate the aspect of financial efficiency related to such investment.MethodsWe evaluate two existing options: simple investment, consisting of intra-oral equipment and accessories, or investment in a radiology center that includes panoramic and CBCT equipment. The initial investment includes equipment acquisition, fitting out of the location, radiology accreditation and other miscellaneous expenses. Costs were estimated based on current quotations on the specific market available in Romania. We also described a financial model to estimate the financial risk.ResultsThe analysis was made under the assumptions that the laboratory is operated by the dentist who made the investment in the form of a legal person and paying corporate tax like all Romanian entities. The analysis took into account current fees for different types of X-rays, usual expenses of such a laboratory, and describes the approach to this analysis, starting with the initial investment estimation and forecast of revenues and expenses. Based on these projections and assessment of the working capital, we have built the cash flows forecast. Following a risk analysis we could assess the financial efficiency of the two investment alternatives.ConclusionsOur study reveals that the radiology center represents a more profitable investment due to the higher economic return rate.

Will teaching sustainability standards to oil palm smallholders in Indonesia pay off?

ABSTRACT This study presents an ex-ante cost-benefit analysis of introducing sustainability standards to smallholder oil palm farmers in the province of Jambi, Sumatra, Indonesia. Sustainability standards are defined as a set of oil palm management practices derived from the Indonesia Sustainable Palm Oil (ISPO) scheme. Economic and environmental benefits of ISPO are derived from a panel data set from some 185 oil palm smallholders collected in 2010, 2012 and 2013. We explore two basic strategies for the introduction of ISPO namely: (1) a conventional extension campaign and (2) a farmer field school approach. Our calculations show that the farmer field school approach results in a higher economic rate of return compared to conventional agricultural extension campaigns. A major conclusion from this analysis is that the Government of Indonesia should invest if ISPO standards are to be adopted on a large scale by smallholder farmers.

An ex-post evaluation of optimal credit granted to the youth under the program of Promoting Entrepreneurship in Agro-pastoral Activities in the Centre region of Cameroon

This study uses an ex-post evaluation method to estimate the optimal external funding level that maximizes the benefit of agro-pastoral enterprises supported by the youth program for the Promotion of Entrepreneurship in Agro-pastoral Activities (PEA-Youth Program) in the Centre region of Cameroon. The Linear Programming (LP) model recommends a personal contribution between 238,510 and 995,000 FCFA for each enterprise. It also recommends full use of start-up/subsidized credit (1,200,000 FCFA) for each activity, which can be justified by its zero interest rate (0%) as compared to the productive credit (15% interest rate) whose use(<1,500,000 FCFA) is recommended for short cycle activities (poultry, maize) and not recommended for long cycle activities (piggery, plantain, cassava production). The results of LP rotation restriction are similar to the profitability results using the economic rate of return (ERR) and suggest monoculture as profitable to only one activity (plantain), while the four remaining enterprises (maize, piggery, poultry, cassava) could be profitable if undertaken simultaneously or in association. Hence, the PEA-Youth Program should consider funding several activities at the same time, increasing the level of subsidized credit for short cycle agro-pastoral enterprises whereas productive credit should instead be revised downwards or eliminated completely for long cycle activities.

Accounting Measures and Economic Measures: An Integrated Theory of Capital Budgeting

Accounting measures are traditionally matched against economic measures. For example, accounting rates of return (ARR) are usually considered poor surrogates of the “economic rate of return” and the residual income is sometimes criticized as being periodically inconsistent with the net present value (NPV). This paper shows that the opposition accounting/economic is artificial and, taking a capital budgeting perspective, illustrates the strict links between economic measures and accounting measures. In particular, the ARR is shown to be a correct economic yield of a project and the traditional IRR is only a particular case of it. Also, maximization of the simple arithmetic mean of properly modified residual incomes is equivalent to NPV maximization, owing to its periodic consistency in the sense of Egginton (1995). The conciliation of such notions as NPV, IRR, ARR, and residual income stems from (i) the fundamental law of motion of any economic entity, (ii) the notion of Chisini mean, (iii) a modified notion of residual income which takes account of a comprehensive cost of capital.

ESTIMATING THE ECONOMIC RETURNS OF EDUCATION IN KSA BY USING MINCERIAN EARNINGS FUNCTION

This study aims to measure the economic rate of returns for investment in KSA. by using both basic and extended Mincerian Earnings Function. In addition to this, the comparison had been established between the results obtained and those of other researches in the same domain. We adopted in the research the model of Mincer in evaluating the rate of the economic returns according to previous classifications and the effective experience got by the individual in the work (measured by years). The result of the model application states that the economic return of university education in KSA has been improved by 10.35% based on the benchmark of Psacharopoulos International Return measured by 9.6%.Keywords: The individual Return, Earnings Function, Practical Experience, Theoretical ExperienceJEL Classifications: I26, J24, J16.DOI: https://doi.org/10.32479/ijefi.8659

Digging beneath the iron triangle: the Chunnel with 2020 hindsight

The Channel Tunnel project (the Chunnel) to connect the UK and France was the largest privately financed transport megaproject of the 20th century. Despite nearly 25 years of successful operation and growing profitability, the Chunnel is frequently portrayed as a failure. Some authors even suggest that it should never have been built. If one looks beyond the so-called ‘iron triangle’ criteria of keeping to time, cost and scope, and the project’s early financial troubles, reality looks rather different. This paper takes a holistic, multi-disciplinary, multi-stakeholder long run perspective to dig beneath the iron triangle to argue that the Chunnel was not just an extremely successful megaproject that has delivered real economic benefits, but also an important agent of change. The Chunnel made a significant contribution to modernising Europe’s transport infrastructure on its journey towards sustainability and in improving knowledge about how to deliver privately financed megaprojects through public-private partnerships. With perfect 2020 hindsight on demand risks and cost overruns, a public sector investment subsidy of around 50% of the capital costs would have been required to make the project financially attractive to private investors, whilst generating an economic rate of return over the life of the concession estimated between 3 and 6%.

185 Everyone Loves a Popsicle: A Simple and Affordable Intervention to Improve Patient Satisfaction

Value-based purchasing (VBP) is a quality incentive program under the Affordable Care Act that is funded by a 2% reduction from diagnosis-related group (DRG) payments for the 2018 fiscal year. One-quarter of this fund is determined by patient and caregiver-centered experience and care coordination. Therefore, patient satisfaction scores have become an increasingly important component of health care delivery. Few studies have sought to identify low-cost interventions that improve patient experience and subsequently patient satisfaction scores. Here, we aim to explore the impact of popsicle administration in pediatric emergency department (ED) patients on Press Ganey satisfaction scores. A prospective trial was conducted at a tertiary academic pediatric ED and one mid-sized community ED between January 2018 to March 2018. The intervention was to give a popsicle to all eligible patients 0-14 years of age on even-numbered days (popsicle days) versus conventional practice on odd-numbered days. Press Ganey top box scores (response to the question was a “5” or the highest value) between even- and odd-numbered days were then compared using 2-sample t and chi-square tests. Among the 152 pediatric patients included (0-14 years of age), 84 surveys were filled out on even days and 68 surveys were filled out on odd days. Baseline demographics were similar between the groups with an average age of 7.3 ± 6.0 years and no statistical difference between the number of male and female patients. Overall, there was a significant increase in patient satisfaction scores on popsicle administration days for questions that asked about physician’s concern for comfort 74% versus 58% (p < 0.05), physician’s courtesy 77% versus 62% (p < 0.04), and physician taking time to listen 74% versus 57% (p < 0.03). No statistical difference was observed for questions that asked about overall rating of care 64% versus 61% (p= 0.64), likelihood of recommending 66 versus 59% (p=0.37), or informed of treatment 74% versus 60% (p=0.07). Offering popsicles to all eligible pediatric emergency department patients resulted in an increase in Press Ganey patient satisfaction score regarding physician’s concern for comfort, courtesy, and listening. Further studies should increase sample size, assess subsets of age groups, and assess economic rate of return for this and other low-cost interventions that might significantly impact perceived health care quality.

Come on feel the noise: Ecological foundations in stochastic bioeconomic models

AbstractBioeconomic approaches to resource management treat renewable resources as naturally reproducing assets, or natural capital, whose conservation generates an economic rate of return. Stochasticity in resource growth produces stochasticity in these returns, affecting both the economic efficiency and ecological sustainability of resource use. Traditional bioeconomic models find that the rate of return to conservation is increased by a risk premium that may lower conservation incentives for more random populations. But these prescriptions depend on how the stochasticity of resource growth is modeled. Whereas the ecological literature adopts stochastic processes based on ecological considerations, bioeconomic analyses generally rely on ad hoc specifications chosen for convenience. Using analytical and numerical applications to the efficient management of fisheries and forests, we find that risk premium calculations based on traditional bioeconomic approaches versus ecological approaches may differ both quantitatively and qualitatively so that not all sources of ecological stochasticity imply conservation is risky.Recommendations for Resource ManagersBioeconomic approaches to resource management link economic and ecological models to evaluate economic–ecological tradeoffs arising from different management choices. The bioeconomic literature has focused very little on the implications of stochastic resource growth, and the specification of stochasticity in these analyses is generally ad hoc and not ecologically justifiable. We bridge this gap by adopting specifications promoted by ecologists and demonstrate as follows: Not all sources of ecological stochasticity imply conservation is risky. This result contrasts with traditional bioeconomic findings, driven by ad hoc modeling assumptions, that natural capital is always a risky investment. Whether a particular source of stochasticity implies conservation is risky may be state dependent. Even when models based on ecological notions of stochasticity do imply that conservation is risky, the magnitude of these risks and the ability of conservation efforts to manage risks may differ greatly from traditional bioeconomic specifications.