E. Rovenskaya

Vulnerability to shocks in the global seafood trade network

Trade can allow countries to overcome local or regional losses (shocks) to their food supply, but reliance on international food trade also exposes countries to risks from external perturbations. C ...

Optimal control for sustainable consumption of natural resources

Abstract In this paper we study optimal policies for a central planner interested in maximizing utility in an economy driven by a renewable resource. It is shown that the optimal consumption path is sustainable only when the intrinsic growth rate of the resource is greater than the social discount rate. The model is formulated as an infinite horizon optimal control problem. We deal with the mathematical details of the problem, develop a precise notion for optimality and establish the existence of optimal control at least when the condition for sustainability is met. We apply the appropriate version of the Pontryagin maximum principle and show a numerical simulation of the optimal feedback law. In the end we present the results along with physical interpretations.

Network structure impacts global commodity trade growth and resilience

Global commodity trade networks are critical to our collective sustainable development. Their increasing interconnectedness pose two practical questions: (i) Do the current network configurations support their further growth? (ii) How resilient are these networks to economic shocks? We analyze the data of global commodity trade flows from 1996 to 2012 to evaluate the relationship between structural properties of the global commodity trade networks and (a) their dynamic growth, as well as (b) the resilience of their growth with respect to the 2009 global economic shock. Specifically, we explore the role of network efficiency and redundancy using the information theory-based network flow analysis. We find that, while network efficiency is positively correlated with growth, highly efficient systems appear to be less resilient, losing more and gaining less growth following an economic shock. While all examined networks are rather redundant, we find that network redundancy does not hinder their growth. Moreover, systems exhibiting higher levels of redundancy lose less and gain more growth following an economic shock. We suggest that a strategy to support making global trade networks more efficient via, e.g., preferential trade agreements and higher specialization, can promote their further growth; while a strategy to increase the global trade networks’ redundancy via e.g., more abundant free-trade agreements, can improve their resilience to global economic shocks.

Examining the Ecology of Commodity Trade Networks Using an Ecological Information-Based Approach: Toward Strategic Assessment of Resilience

Commodity trade networks exhibit certain patterns in the configuration of material flows that are similar to natural ecological networks. This article develops and explores an ecological information‐based approach to examine the ecology of commodity trade networks. We demonstrate that commodity trade networks show a pattern of commonality when viewed through the introduced ecological information‐based metrics. Specifically, we show how the network metrics of effective connectivity and effective number of roles can convey boundaries where commodity trade networks are robust. Further, the temporal trends of these metrics suggest the existence of multiple basins of attractions and provide clues on the dynamics of resilience of these networks over time.

Non‐Homothetic Multisector Growth Models

Multisector growth (MSG) models are dynamic versions of computable general equilibrium (CGE) models. Non-homothetic preference (utility) functions are required for the evolution of factor allocations and industrial structures in accordance with consumption expenditure patterns implied by the non-unitary income elasticities observed in all budget data since Engel in the 1850s. But comparative static general equilibrium solutions and particularly solving the dynamics of MSG models require explicit specifications of all demand and cost (price) functions. On the demand side, the constant differences of elasticity of substitution (CDES) non-homothetic indirect utility functions and Roys identity provide the explicit Marshallian demand functions and budget shares. Sectorial constant elasticity of substitution (CES) cost functions and Shephards lemma provide the explicit relative commodity price functions and the sectorial cost shares and capital–labor ratios. Walrasian equilibria are given by one equation and the multisector dynamics by three differential equations. Benchmark solutions are given for three cost regimes of a 10-sector MSG model. History patterns of industrial/allocational evolutions are recognized.

Environmental Mortality and Long-Run Growth

There is emerging evidence that environmental degradation increases human mortality. This paper provides a long-run consumer optimization model in which mortality is endogenous to emissions generated by production. Emissions are assumed to follow the EKC path, first rising and then falling along with output. In the optimum, some deaths are accepted as an exchange for consumption. The model is estimated for the European outdoor air pollution data, showing that Europe has reached the downward sloping segment of the EKC. Economic growth will thus decrease rather than increase pollution in the future. Nevertheless, continuous population growth may increase the number of deaths in some countries.

Optimal Economic Growth under Stochastic Environmental Impact: Sensitivity Analysis

In this work we present an approach toward the sensitivity analysis of optimal economic growth to a negative environmental impact driven by random natural hazards that damage the production output. We use a simplified model of the GDP growth. We assume that production leads to the increase of the atmospheric GHG provided investment in cleaning is insufficient. The hypothesis of the Poisson probability distribution of the frequency of natural hazards is used at the this research stage. We apply the standard utility function—the discounted integral consumption and construct an optimal investment policy in production and cleaning together with optimal GDP trajectories. We calibrate the model in the global scale and analyze the sensitivity of obtained optimal growth scenarios with respect to uncertain parameters of the Poisson distribution.

Learning Through Fictitious Play in a Game-Theoretic Model of Natural Resource Consumption

Understanding the emergence of sustainable behavior in dynamic models of resource consumption is essential for control of coupled human and natural systems. In this letter, we analyze a mathematical model of resource exploitation recently reported by the authors. The model incorporates the cognitive decision-making process of consumers and has previously been studied in a game-theoretic context as a static two-player game. In this letter, we extend the analysis by allowing the agents to adapt their psychological characteristics according to simple best-response learning dynamics. We show that, under the selected learning scheme, the Nash Equilibrium is reachable provided certain conditions on the psychological attributes of the consumers are fulfilled. Moreover, the equilibrium solution obtained is found to be sustainable in the sense that no players exhibit free-riding behavior, a phenomenon which occurs in the original open-loop system. In the process, via a Lyapunov-function based approach, we also provide a proof for the asymptotic global stability of the original system which was previously known to be only locally stable.

Reconciling information from climate-economic model ensembles

Geophysical hazards such as earthquakes, floods, tsunamis, volcanic eruptions and storms affect electricity transmission infrastructure by destroying its elements including grids, masts, interconnectors and other elements of the electricity transmission system. Extreme temperatures also have negative impacts on transmission capacities of electricity networks. This paper discusses historical evidence of impacts of geophysical hazards and how they lead to major blackouts, which took place during the last decades in France, in the Balkans region and in China. In 1999 France experienced the storms Lothar and Martin, which had the wind speed of 200 km/h and had severe impacts on electricity transmission infrastructure. For instance 0.5% of the total number of towers were affected, 10% of circuits and 180 substations were out of order (Eurelectric, 2006). In the middle of 2015 the heavy rainfall resulted in extensive flooding in the Balkan region, which affected Serbia, Bosnia and Herzegovina as well as Croatia. This was a real multi-risk event, which was followed by landslides, which damaged overhead lines and underground infrastructure as well as transformer stations, customer connections and metering equipment. This resulted in an interruption of power supply, which affected more than 250,000 customers. The Wenchuan earthquake, which happened in May 2008, was one of the most devastating earthquakes in the history of China for the last 60 years. It had the magnitude of 8.0 on the Richter scale and severely damaged regional infrastructure, including electricity systems, such as regional high voltage power transmission lines and distribution lines. The earthquake damaged three 500 kV electricity transmission lines, fifty six 220 kV transmission lines, one hundred and ten 35 kV lines and seven hundred ninety five 10kV lines. The lines tripped mainly because of the broken poles, fallen pylons and damages to transformers and circuit breakers (Eidinger, 2009). The destruction of electricity transmission infrastructure resulted in a blackout, which affected 2.5 million people. Based on the analysis of the reports about these blackouts, lessons learned as well as elicitations from stakeholders from different sectors such as transmission systems operations, NGOs, academia and international organizations, this paper provides recommendations on risk management and short and medium term response and recovery measures. References 1. Eidinger, J. (2009). Wenchuan earthquake impact to power systems. In Proceedings of the 2009 technical council on lifeline earthquake engineering (TCLEE) conference: lifeline earthquake engineering in a multihazard environment, Oakland, June. 2. Eurelectric, (2006). Impacts of Severe Storms on Electric Grids. Union of the Electricity Industry – Eurelectric.

Exploring Drivers of Urban Expansion

Spatial patterns in urban land development are linked with the level and type of economic activity. Here, we develop a statistical model to explore the relationship between the spatially explicit population density and the type of land use in a region. The relationship between the type of land use (urban/non-urban) and the level of economic activity is modeled at the scale of a single cell on the geographical map. Thus, the statistical model should be tested against large samples of data points on the high-resolution maps. The challenge here is that the original socio-economic data is given at a coarser resolution than the land use (200\(\,\times \,\)200 m cells) We present results of our spatial modeling exercise for the case study of the Seville Province, Spain.