Potential Regime Shifts Research Articles

Spatial variation in the ongoing and widespread decline of a keystone plant species

AbstractExtensive dieback in dominant plant species in response to climate change is increasingly common. Climatic conditions and related variables, such as evapotranspiration, vary in response to topographical complexity. This complexity plays an important role in the provision of climate refugia. In 2008/2009, an island‐wide dieback event of the keystone cushion plant Azorella macquariensis Orchard (Apiaceae) occurred on sub‐Antarctic Macquarie Island. This signalled the start of a potential regime shift, suggested to be driven by increasing vapour pressure deficit. Eight years later, we quantified cover and dieback across the range of putative microclimates to which the species is exposed, with the aim of explaining dieback patterns. We test for the influence of evapotranspiration using a suite of topographic proxies and other variables as proposed drivers of change. We found higher cover and lower dieback towards the south of the island. The high spatial variation in A. macquariensis populations was best explained by latitude, likely a proxy for macroscale climate gradients and geology. Dieback was best explained by A. macquariensis cover and latitude, increasing with cover and towards the north of the island. The effect sizes of terrain variables that influence evapotranspiration rates were small. Island‐wide dieback remains conspicuous. Comparison between a subset of sites and historical data revealed a reduction of cover in the north and central regions of the island, and a shift south in the most active areas of dieback. Dieback remained comparatively low in the south. The presence of seedlings was independent of dieback. This study provides an empirical baseline for spatial variation in the cover and condition of A. macquariensis, both key variables for monitoring condition and ‘cover‐debt’ in this critically endangered endemic plant species. These findings have broader implications for understanding the responses of fellfield ecosystems and other Azorella species across the sub‐Antarctic under future climates.

Potential anthropogenic regime shifts in three freshwater lakes in Tropical East Asia

Abstract Regime shifts in ecology are characterised by major, often abrupt changes in ecosystem structure and functioning in response to one or more driving variables, or pressures. Changes in the provision of ecosystem services are a potential outcome. Despite the current combination of rapidly increasing pressures on what are often highly important socio‐ecological systems, the resilience of lakes in the warm tropics to human perturbation is far less well understood than those at higher latitudes. This paper focuses on evidence of aquatic ecosystem change from a cluster of three deep, freshwater, volcanic crater lakes (Yambo, Mohicap, and Sampaloc) at low altitude on the island of Luzon, Philippines. The lakes support different intensities of aquaculture, an important livelihood but also a driver of poor water quality throughout tropical Asia. Measured and monitored climate and water quality data, in addition to sedimentary evidence from sediment cores collected from the three study lakes, were used to determine the magnitude and trajectory of changes in lake water quality. Sediment cores were radiometrically dated and analysed for organic matter, spheroidal carbonaceous particles, and diatom remains. Diatom data were zoned numerically using cluster analysis. Diatom remains were also used to infer past variations in pH and possible relationships between potential driving climatic variables (temperature and rainfall). Diatom data sets were explored using detrended component analysis and principle component analysis. Despite differences in intensity of aquaculture, a common trajectory and timing of a potential regime shift, characterised by a replacement of benthic with planktonic diatoms and an increase in diatom accumulation rates from the early to mid‐1980s, is evident, and attests a low threshold for disturbance effects. A predominantly planktonic diatom flora has persisted even after recent improvements in environmental quality. The potential new regime may be less resilient and more susceptible to harmful algal blooms, abrupt expansions of anoxic conditions, and periodic mass fish kills when compared with its former state. The research further highlights the sensitivity of freshwater ecosystems in the warm tropics to disturbance pressures, and the risks to livelihoods, ecosystem services, and sustainable development.

Market-making strategy with asymmetric information and regime-switching

An event-triggered regime-switching jump-diffusion model is introduced with a view to incorporating the impact of asymmetric information on optimal trading decisions. The modeling structure is novel in the sense that it can disentangle the optimizing behavior of different types of traders, namely uninformed, partially informed and informed traders. Instead of establishing equilibrium results, all of the three types of traders are supposed to be price takers and determine their optimal trading strategies based on an “exogenously” given mid-price process. It is shown that traders, who have an access to more information about potential market turmoils, such as triggering events, are more aggressive on trading profits which are reflected in higher required liquidity premiums. The informed traders are more cautious in inventory controls through lowering their trading positions prior to the triggering events. With potential regime shifts, the feature of “information delay” about market efficiency is captured by allowing that the security market has a response time for a market shock. It is also shown that traders, who are informed about the information delay, not only gain a higher return, but also a higher level of standard deviation than traders who do not have the information.

Post-fire carbon and nitrogen accumulation and succession in Central Siberia

Improved understanding of carbon (C) accumulation after a boreal fire enables more accurate quantification of the C implications caused by potential fire regime shifts. We coupled results from a fire history study with biomass and soil sampling in a remote and little-studied region that represents a vast area of boreal taiga. We used an inventory approach based on predefined plot locations, thus avoiding problems potentially causing bias related to the standard chronosequence approach. The disadvantage of our inventory approach is that more plots are needed to expose trends. Because of this we could not expose clear trends, despite laborious sampling. We found some support for increasing C and nitrogen (N) stored in living trees and dead wood with increasing time since the previous fire or time since the previous stand-replacing fire. Surprisingly, we did not gain support for the well-established paradigm on successional patterns, beginning with angiosperms and leading, if fires are absent, to dominance of Picea. Despite the lack of clear trends in our data, we encourage fire historians and ecosystem scientists to join forces and use even larger data sets to study C accumulation since fire in the complex Eurasian boreal landscapes.

Equity market information and credit risk signaling: A quantile cointegrating regression approach

Investigating linkages between credit and equity markets, we consider daily aggregate U.S. CDS spreads as well as well-chosen equity market and implied volatility indexes over ten years. We describe such robust (to spurious correlation) relationship with the quantile cointegrating regression approach. Such approach handles extreme quantiles/CDS values and their behavior with respect to the equity market's influence. Heteroskedastic patterns such as time-varying variance, but also autocorrelation, skewness and leptokurtosis are captured. Thus, the sensitivity of aggregate CDS spreads to equity market price and volatility channels is accurately measured across quantiles and spreads. Such quantile-dependent sensitivity exhibits asymmetric responses to equity market shocks. A sub-period analysis investigates potential regime shifts in estimated quantile cointegrating regressions. Quantile cointegrating coefficients vary over time and quantiles, and exhibit different magnitudes across sub-periods and spreads. Therefore, the relationship is unstable over time. We also propose a scenario analysis and risk signaling application for credit risk management prospects. Under specific risk levels, credit risky situations are described conditional on the equity market's information over time, and related expected aggregate CDS spreads are computed. Estimated conditional quantiles/CDS spreads act as credit alert triggers.

Investigating Linkages between U.S. CDS Spreads and Both Equity Market Price and Equity Market Volatility Channels: A Quantile Cointegrating Regression Approach

We investigate the behavior of daily aggregate U.S. CDS spreads during almost six years. Existing linkages between credit and equity markets advocate the use of market price and volatility channels as explanatory factors. In particular, the evolution of CDS spreads is analyzed along with the level of the equity market and a well-chosen implied volatility index. We describe such robust (to spurious correlation) relationship with the quantile (cointegrating) regression approach. It allows for describing distributional patterns of CDS spreads in the light of the equity market’s influence. Going beyond a simple mean relationship, the quantile regression tool quantifies accurately the linkages between credit and market risks. Such powerful econometric approach handles extreme quantiles (i.e. extreme CDS values) and their behavior with respect to the equity market’s impact. Moreover, heteroskedastic patterns such as time-varying variance, but also autocorrelation, skewness and leptokurtosis are captured. Incidentally, the sensitivity of aggregate CDS spreads to equity market price and volatility channels vary across quantiles. Being quantile-dependent, the sensitivity of credit risk with respect to (equity) market risk exhibits asymmetric responses to equity market shocks. A complementing sub-period analysis investigates potential regime shifts in estimated quantile cointegrating regressions. Quantile cointegrating coefficients vary over time and quantiles, and exhibit different magnitudes across sub-periods. However, the nature of the full sample-specific impact of equity market on CDS spreads is mostly preserved across sub-periods. As a result, the assessment of credit risk with respect to the impact of market risk and the nature of corresponding linkages differ from one quantile to another. Such methodology can help enhance risk management processes, among which value-at-risk (VaR) and expected shortfall. In this light, a scenario analysis and risk signaling application are proposed for credit risk management prospects. Under specific risk levels, credit risky situations are described conditional on the equity market’s impact over time, and related expected aggregate CDS spreads are computed.

Regime Shifts and Resilience in Fisheries Management: A Case Study of the Argentinean Hake fishery

We investigate the role of potential regime shifts in Argentinean hake fishery and the inter-linkage between ecological and economic resilience. We develop a theoretical model incorporated with the hazard function for resource management under alternative conditions, and derive the corrective tax. Applying the model to the case of Argentinean hake fishery, we obtain insights for fishery management in the presence of risk for a regime shift. Based on three value functions, our model simulation indicates that the higher the relative loss from the fishery collapse, the more important the risk management would be with the resilience value taken into account. A higher level of fish stock leads to a higher optimized value and a lower corrective tax rate. When the stock level is lower, we need to introduce a higher tax rate to best avoid the fishery collapse. Decomposing the marginal value of the fish stock into a stock service value for fish production and a resilience value for flip risk reduction, we find that a higher fish stock leads to a lower tax rate because of the higher resilience of the fish stock, and hence the corrective tax rate as an instrument for managing fishery becomes less important.

Climatic Tipping Points and Optimal Fossil-Fuel Use

The economics of climate change is characterized by many uncertainties regarding, for instance, climate dynamics, economic damages and potentially irreversible climate catastrophes. Using an optimal growth model of a fossil-fuel-driven economy subject to climate externalities and potentially irreversible climatic regime shifts, this paper contributes to the understanding of how the risk of such events impacts on optimal fossil-fuel use, carbon taxes and fossil-fuel prices over time. We show that in excess, to an increase in the expected present value of marginal damages and an increase in the probability of triggering the event, there also exists a third opposing effect. This effect comes from the fall in value of remaining fossil-fuel reserve, which results from the potential regime shift which may (or may not) occur sometime in the future, and implies that optimal fossil-fuel policy shifts towards using more resources early on. This effect is related to the idea of the green paradox. We prove the existence of this effect and show under which circumstances it can become quantitatively important. Numerically, the green-paradox effect seems to be somewhat smaller than, but comparable in size to, the increase in expected marginal damages. In general, our findings highlight the importance of considering the supply-side impacts on climate policy in response to catastrophic climate events.

Coalition formation in fisheries with potential regime shift

A system can undergo rapid regime shift in which the growth of natural resources suddenly and permanently declines. We examine how the threat of such a shift alters the strategic management of a common pool renewable resource. We consider exogenous and endogenous threats and examine their effects on both incentives to join a coalition and harvest decisions. We find that an exogenous threat of reduced resource growth may cause the coalition to grow in size, and, perhaps of most interest, we identify conditions under which members of the stable coalition reduce harvest while non-members increase harvest in response to the threat. In contrast, an exogenous threat of total stock collapse may destabilize coalitions, resulting in higher harvest from former members, but reduced harvest by non-members. When the threat of either type of shift is endogenous, the threat of regime shift can induce stable coalitions with more than two members. In particular, we identify cases in which the first best (full cooperation) is sustained as an equilibrium outcome. Finally, we find that the relation between the magnitude of the shift and the size of stable coalitions may be negative.

Structural Changes in Inflation Dynamics: A Bayesian Analysis Allowing for Multiple Breaks at Different Dates for Different Parameters

I make inferences about complicated patterns of structural breaks in inflation dynamics. I extend Chib's (1998) approach by allowing multiple parameters such as the unconditional mean, a group of persistence parameters, and/or the residual variance to undergo mutually independent structural breaks at different dates with the different number of breaks. Structural breaks are modeled as abrupt changes to identify potential regime shifts in economic structure such as a long-run inflation target, monetary policy, and price-setting behavior. I consider postwar quarterly U.S. inflation rates based on the CPI and the GDP deflator over the period from 1953:Q1 to 2013:Q4. I find that two inflation measures had distinct structural changes in different parameters as well as at different dates using Bayesian model selection procedures. CPI inflation experienced a dramatic drop in persistence around the early 1980s, but GDP deflator inflation is still persistent. In addition, the residual variance for both inflation measures switched from a low volatility regime to a high volatility regime in the early 1970s, but it returned to another low volatility regime at different dates: the early 1980s for GDP deflator inflation and the early 1990s for CPI inflation. The residual variance for CPI inflation has increased again since the early 2000s, while GDP deflator inflation has remained less volatile. These volatility shifts are confirmed by the empirical results based on the unobserved components model with stochastic volatility. However, I do not find evidence of a structural shift in the unconditional mean. When reviewing the recent literature, considerable controversy exists over the structural break in inflation persistence around the early 1980s but this appears to be dependent on the measures of inflation, as highlighted by the empirical findings in this paper.

Regime Shifts in Resource Management

Resource management has to take account of the possibility of tipping points and regime shifts in ecological systems that provide the resources. This article focuses on the typical model of regime shifts in the ecological literature and analyzes optimal management and common-property issues when trade-offs occur between the loss of ecosystem services and the benefits of the activities that may lead to a regime shift. Regime shifts are uncertain. This article also analyzes optimal management in the case of a potential future regime shift. Research on regime shifts is rapidly developing, and the issue is studied from many different angles. This article is restricted to some standard economic analyses, but in the presence of regime shifts. It focuses on examples like lakes, fisheries, and climate change but provides a framework of analysis that can be used for many environmental issues facing us today.

Dynamic resource management under the risk of regime shifts

This paper provides a framework through which a dynamic resource management problem with potential regime shifts can be analyzed both in a strategic environment and from a social planner׳s perspective. Based on a fairly general model, a condition for a precautionary policy is discussed. By applying the framework to a common-property resource problem with a linear production technology, we illustrate how the qualitative as well as quantitative nature of equilibrium is altered due to the possibility of regime shifts. In particular, when the risk is endogenously affected by the players׳ behavior, potential regime shifts can facilitate the precautionary management of resources as long as the resource stock is in good shape. As the stock of resource becomes scarce, however, the precautionary effect vanishes and more aggressive resource exploitation emerges. The impacts of irreversibility on the equilibrium behavior are highlighted. It is also shown that there can exist a resource-depletion trap in which a regime shift, once it happens, triggers a continuous decline of resource stock no matter which regime materializes in the subsequent periods.

Integrating social-ecological dynamics and resilience into energy systems research

The ecological impact of energy production and consumption is often relegated in analytical accounts of the evolution of energy systems, where production and consumption patterns are analysed as the interaction of social, economic and technological factors. Ecological and social–ecological dynamics are, we argue, critical in the context of imperatives for access to modern energy services that are inadequate for significant sections of the world's population. The ecological impacts of energy use are often analysed as a set of externalities, many of which are uncertain or unquantifiable, particularly if they stem from earth system change such as anthropogenic climate change. Here we outline the benefits from analysing energy systems as social–ecological systems. We review the extensive literature from ecology and resilience theories, and compare the analytical domains, major findings and emphasis of social–ecological systems with socio-technical transition research. We illustrate these differences with the example of the multi-scale impacts of biofuel expansion. We show that social–ecological systems research combines analysis of interactions with ecological systems and power relations between actors in energy systems, and has the potential to do so across production, distribution and consumption domains whilst illustrating the dynamics of such energy systems, identifying potential trade-offs and regime shifts.

The optimal management of renewable resources under the risk of potential regime shift

Complex dynamic systems can undergo changes in feedbacks between system components causing a rapid and persistent shift in system behavior (“regime shifts”), and potentially reduce welfare from declining provision of important ecosystem services. In this paper, we provide an analytical condition that determinfilefs whether the threat of a potential regime shift causes management to be more aggressive or more precautionary. In numerical simulations we find that aggressive management can occur for reasonable parameter values, which is counter prior results that the potential for harmful regime shift always leads to precautionary management.

Changes in size and trends of North American sea duck populations associated with North Pacific oceanic regime shifts

Broad-scale multi-species declines in populations of North American sea ducks for unknown reasons is cause for management concern. Oceanic regime shifts have been associated with rapid changes in ecosystem structure of the North Pacific and Bering Sea. However, relatively little is known about potential effects of these changes in oceanic conditions on marine bird populations at broad scales. I examined changes in North American breeding populations of sea ducks from 1957 to 2011 in relation to potential oceanic regime shifts in the North Pacific in 1977, 1989, and 1998. There was strong support for population-level effects of regime shifts in 1977 and 1989, but little support for an effect of the 1998 shift. The continental-level effects of these regime shifts differed across species groups and time. Based on patterns of sea duck population dynamics associated with regime shifts, it is unclear if the mechanism of change relates to survival or reproduction. Results of this analysis support the hypothesis that population size and trends of North American sea ducks are strongly influenced by oceanic conditions. The perceived population declines appear to have halted >20 years ago, and populations have been relatively stable or increasing since that time. Given these results, we should reasonably expect dramatic changes in sea duck population status and trends with future oceanic regime shifts.

Nutrient reduction and climate change cause a potential shift from pelagic to benthic pathways in a eutrophic marine ecosystem

AbstractThe degree to which marine ecosystems may support the pelagic or benthic food chain has been shown to vary across natural and anthropogenic gradients for e.g., in temperature and nutrient availability. Moreover, such external forcing may not only affect the flux of organic matter but could trigger large and abrupt changes, i.e., trophic cascades and ecological regime shifts, which once having occurred may prove potentially irreversible. In this study, we investigate the state and regulatory pathways of the Kattegat; a eutrophied and heavily exploited marine ecosystem, specifically testing for the occurrence of regime shifts and the relative importance of multiple drivers, e.g., climate change, eutrophication and commercial fishing on ecosystem dynamics and trophic pathways. Using multivariate statistics and nonlinear regression on a comprehensive data set, covering abiotic factors and biotic variables across all trophic levels, we here propose a potential regime shift from pelagic to benthic regulatory pathways; a possible first sign of recovery from eutrophication likely triggered by drastic nutrient reductions (involving both nitrogen and phosphorus), in combination with climate‐driven changes in local environmental conditions (e.g., temperature and oxygen concentrations).

Trends of precipitation extremes during 1960–2008 in Xinjiang, the Northwest China

The spatial–temporal variability of the precipitation extremes defined by eight precipitation indices based on daily precipitation dataset was analyzed using the linear regression method and the Mann–Kendall test. The results indicate that increasing trends in the precipitation amount, rainy days, and the intensity of the extreme precipitation were identified at above 70 % of the total rain stations considered in this study, with more than 30 % of them were significant, while most stations show notable decreasing trend in the annual maximum consecutive no-rain days. Significantly increasing trends of the precipitation extremes are observed mainly in the northern Xinjiang and the north of the southern Xinjiang. Most extreme precipitation indices show a potential regime shift starting from the middle of 1980s. The magnitude of the trends is compatible with their pattern of spatial stability. The generally increasing trends in precipitation extremes are found in this study.

Potential regime shift in decreased sea ice production after the Mertz Glacier calving

Variability in dense shelf water formation can potentially impact Antarctic Bottom Water (AABW) production, a vital component of the global climate system. In East Antarctica, the George V Land polynya system (142-150°E) is structured by the local 'icescape', promoting sea ice formation that is driven by the offshore wind regime. Here we present the first observations of this region after the repositioning of a large iceberg (B9B) precipitated the calving of the Mertz Glacier Tongue in 2010. Using satellite data, we find that the total sea ice production for the region in 2010 and 2011 was 144 and 134 km(3), respectively, representing a 14-20% decrease from a value of 168 km(3) averaged from 2000-2009. This abrupt change to the regional icescape could result in decreased polynya activity, sea ice production, and ultimately the dense shelf water export and AABW production from this region for the coming decades.

A comment on mortgage procylicality

This paper comments on mortgage procyclicality. A framework for credit constraints along the lines of Kiyotaki and Moore (1997) is applied to illustrate a potential regime shift in the credit risk assessments of mortgagees. Depending on the relationship between house price growth and the alternative rate of return the weight given to collateral and debt-servicing ability may vary according to the house price cycle as mortgagees engage in search-for-yield. The regime shifts induced by increased global liquidity and expectations of continued housing appreciation might stimulate owner-occupation and LTV-ratios and induce mortgage procyclicality.

Optimal management with potential regime shifts

We analyze how the threat of a potential future regime shift affects optimal management. We use a simple general growth model to analyze four cases that involve combinations of stock collapse versus changes in system dynamics, and exogenous versus endogenous probabilities of regime shift. Prior work in economics has focused on stock collapse with endogenous probabilities and reaches ambiguous conclusions on whether the potential for regime shift will increase or decrease intensity of resource use and level of resource stock. We show that all other cases yield unambiguous results. In particular, with endogenous probability of regime shift that affects system dynamics the potential for regime shift causes optimal management to become precautionary in the sense of maintaining higher resource stock levels.