Roger Lawrey

Pricing and Access under National Competition Policy: The Case of the Natural Gas Pipeline Sector

This paper reviews the development of open access and deregulation of trunk pipeline natural gas transportation in Australia and the United States. It investigates Australian policy developments in the setting of reference tariffs for firm service, but argues that the institutional arrangements for granting third party access, and the pricing of that access on a spot or interruptible basis, are at least as important as tariffs for firm service. The paper concludes that, in the absence of an established pipeline network, pipelines may have little incentive to price their excess capacity efficiently. In this case, attempts to promote an efficient allocative outcome through privatisation and open access in Australia are unlikely to be as successful as they have been in North America.

Full social cost pricing in the energy sector

The recent interconnection and trade of electricity between NSW and Victoria is likely to exacerbate any misallocation of resources due to inefficient pricing. The aim of this article is to investigate the likely divergence between electricity generation costs using current market prices of coal and natural gas, and those when coal and natural gas are priced efficiently. To do so, the paper applies the concept of full social cost pricing to five different generation technologies in the two states. It concludes that the current movement to privatisation and interconnection in the electricity sector, while it may promote pricing closer to marginal private costs, will not result in efficient outcomes in the presence of external costs and the different tax regimes which currently apply to each generation fuel and in each state.

Halal Market Emergence and Export Opportunity: The Comparative Advantage Perspective

The comparative advantage theory of international trade states that countries should export commodities for which they have high comparative advantage and import commodities for which they have low comparative advantage. Analyzing the Halal trade flows for Malaysia’s 11 food/food-related commodities from 1991 to 2012, this study finds an interesting development of the standard view of comparative advantage in the emerging Halal export market. It finds that the greater the country’s current comparative advantage in an exported good, the higher the risk of export diversion (one- or two-way causality) between the Halal market and the conventional market with the country’s expansion of Halal exports; while the diversion risk disappears with lower current comparative advantage. Thus, the study suggests that if a country wants to take advantage of the fast-emerging market, it should aim to expand export of commodities with relatively low current comparative advantage but high demand in the emerging market.

Valuing environmental conservation in the ASEAN region: A contingent valuation study of Ulu Temburong National Park

This paper presents an economic valuation of Ulu Temburong National Park, located on the island of Borneo, which has great potential as a repository of biodiversity and an ecotourism destination. The paper employed the contingent valuation (CV) method to estimate the willingness to pay (WTP) of Bruneians for conserving the national park for ecotourism and biodiversity protection purposes, and developed econometric models to analyse the preferences of respondents. According to the results, some dependent variables have a significant impact on the respondents’ WTP and the probability of respondents visiting the national park. The WTP values are low, reflecting a view that the park’s natural wealth should be managed through government funding. Though public support for conservation is strong up to now, there is a need for change to cope with economic challenges associated with depletion of the country’s oil and natural gas resources. The study concludes that policy makers should enhance public awareness, promote forest-based small and medium enterprises, and involve indigenous and local communities in decision-making processes. The government should also consider setting up a research centre for the study of conservation of parks in the entire Borneo region in addition to Ulu Temburong National Park.

GM crops in sub-Saharan Africa: A critical comment on GTAP modelling

Purpose - The Global Trade Analysis Project (GTAP) model has been used to claim that genetically modified (GM) crops have substantial positive welfare potential for sub-Saharan Africa. The purpose of this paper is to critically examine these claims with a view to seeing if this type of modelling provides any meaningful basis for agricultural policy recommendations. Design/methodology/approach - One particular study is examined to show that because any possible negative effects of GM foods are ignored, optimistic assumptions are made about increases in productivity and trade, and selective scenarios are used, the modelling must, perforce, result in positive welfare effects. Findings - It is found that, because of the assumptions of the study and the restricted scenarios investigated, all the modelling can do is estimate the size of the supposedly positive benefits. A negative outcome is not possible. Practical implications - It is argued that the GTAP model is inappropriate for sub-Saharan Africa and that the sweeping conclusions from this type of stylised modelling trivialize the complex poverty and socio-economic problems of sub-Saharan Africa. Originality/value - It is demonstrated that, in this case, the GTAP model is not only redundant, but also can yield risky policy recommendations for sub-Saharan Africa as it affects not only the livelihoods of millions of poor Africans but the ecological balance, biodiversity and economic independence of these nations.