nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2012‒11‒24
six papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Assessing of the Projects Promoting Innovations in Rural Areas in the Czech Republic By Pechrova, Marie; Kolarova, Alena
  2. LEADER - an approach to innovative and suitable solutions in rural areas? By Schnaut, Gitta; Pollermann, Kim; Raue, Petra
  3. Local Action Groups and Rural Development Projects: The LEADER Program in Slovenia By Volk, Alenka; Bojnec, Stefan
  4. The cost structure of the clean development mechanism By Rahman, Shaikh M.; Larson, Donald F.; Dinar, Ariel
  5. Asset pricing with uncertain betas: A long-term perspective By Gollier, Christian
  6. The missing link: Unifying risk taking and time discounting By Thomas Epper; Helga Fehr-Duda

  1. By: Pechrova, Marie; Kolarova, Alena
    Abstract: Innovative approach is essential for a growth, but the understanding of the content of it is not unified. The term innovation itself is broad and can cover wide range of activities. The article deals with the projects promoting innovations in the rural areas of the Czech Republic (CR) financed from the European Agricultural Fund for Rural Development (EAFRD). Strategy Plans LEADER (SPL) submitted by Local Actions Groups (LAGs) which are operating under the LEADER1 scheme are analysed and their approach towards innovation is evaluated. The importance of the innovations in the projects is evaluated on the basis of established preferential criteria for selection of the projects and finances devoted to the measure Fiche2 which includes innovative projects. On the basis of case studies of the projects aimed on education I am coming to the conclusion that various types of projects are understood as innovative, but sometimes the term is misinterpreted. Preferential criteria for selecting projects defined by LAGs should be more precious and concrete. Despite the fact that innovations are one of the obligatory criteria for selecting projects which will be financed, its inclusion is mostly formal. Its relative weight in comparison with other criteria is quite low. Besides, the importance of innovative projects is not sufficiently underlined by finances. I argue that there is not adequate attention paid to the real contribution of the projects to innovations. I recommend the revision of the term innovation and its stronger inclusion into the preferential criteria for selection of the project in order to ensure that selected projects clearly correspond with the innovative approach.
    Keywords: Innovative Projects, Rural Area, Local Action Group, Strategic Plan LEADER, Agribusiness, Agricultural and Food Policy,
    Date: 2012–09–18
  2. By: Schnaut, Gitta; Pollermann, Kim; Raue, Petra
    Abstract: The research presented is part of the evaluation of Rural Development Programmes (RDP) in seven German “Länder” (federal states).Innovation is often mentioned as an important pillar of the development of rural areas. One part of Rural Development Programmes, which explicitly addresses innovation, is LEADER: a bottom up-oriented, participatory approach with cooperation by local actors in rural areas. In LEADER, a Local Action Group (LAG) with stakeholders of different institutions and origins comes together as a kind of a public-private partnership and decides about the financial support for regional projects. The LAG can be seen as a kind of new “network of practice.” In this context it is important for the LAGs to assemble people with various backgrounds and to foster a good communication and cooperative climate. A survey of LAG-members shows positive results: there are improvements in the “cooperation beyond administrative borders” (respectively, narrow village boundaries), in the “improving of understanding views from other groups” and in the „cooperation between different groups.” Thus LEADER is an example of how an external programme can connect actors from different interest groups who would, without this programme, in part not have met. In addition, LEADER offers the possibility to try out new approaches, as the regions have access to their “own” funding budget to implement their ideas. But in practice the possibilities of funding experimental or innovative projects via LEADER depend very much on the extent to which the RDPs are able to provide a suitable framework to fund projects outside the standard menu of measures. The assessments of the LAG-managers show that the real possibilities are limited, particularly compared with the former funding period (LEADER+). But despite these limitations, we found LEADER- projects fostering innovation in very different fields.
    Keywords: LEADER, Innovation, Evaluation, Funding, Agribusiness, Agricultural and Food Policy,
    Date: 2012–09–18
  3. By: Volk, Alenka; Bojnec, Stefan
    Abstract: This paper analyses the influence of a formal and informal system of the Local Action Group (LAG) board’s performance on the perception of its members about suitability of rural development projects for LEADER funds co–financing. The unique in-depth survey data was obtained from the surveys with the 103 LAG board’s members using the written questionnaire designed for the inquiry and from existing data analysis on projects which were co–financed by the LEADER funds in Slovenia in the years 2008 and 2009. The informal system of performance of the LAG board members was found to influence significantly its members’ perception on the suitability of projects to be co–financed by the LEADER axis. The opposite was established for the formal system, which had insignificant influence on the board members’ perception on the suitability of projects.
    Keywords: LEADER, Rural Development Projects, Board Members, Local Action Group, Formal System, Informal System, Agribusiness, Agricultural and Food Policy,
    Date: 2012–09–18
  4. By: Rahman, Shaikh M.; Larson, Donald F.; Dinar, Ariel
    Abstract: This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time.
    Keywords: Climate Change Economics,Climate Change Mitigation and Green House Gases,Energy Production and Transportation,Transport Economics Policy&Planning,Energy and Environment
    Date: 2012–11–01
  5. By: Gollier, Christian
    Abstract: How should one evaluate investment projects whose CCAPM betas are uncertain? This question is particularly crucial for projects yielding long-lasting impacts on the economy, as is the case for example for many green investment projects. We defined the notion of a certainty equivalent beta. We characterize it as a function of the characteristics of the uncertainties affecting the asset’s beta and the economy as a whole. We show that its term structure is not constant and that, for short maturities, it equals the expected beta. If the expected beta is larger than a threshold (which is negative and large in absolute value in all realistic calibrations), the term structure of the certainty equivalent beta is increasing and tends to its largest plausible value. In the benchmark case in which the asset’s beta is normally distributed, the certainty equivalent beta becomes infinite for finite maturities.
    Keywords: asset prices, term structure, risk premium, certainty equivalent beta.
    JEL: E43 E44 G11 G12
    Date: 2012–11
  6. By: Thomas Epper; Helga Fehr-Duda
    Abstract: Almost all important decisions in people’s lives entail risky and delayed consequences. Regardless of whether we make choices involving health, wealth, love or education, almost every choice involves costs and benefits that are uncertain and materialize over time. Because risk and delay often arise simultaneously, theories of decision making should be capable of explaining how behavior under risk and over time interacts. There is, in fact, a growing body of evidence indicating important interactions between behaviorally revealed risk tolerance and patience. Risk taking behavior is delay dependent, and time discounting is risk dependent. Here we show that the inherent uncertainty of future events conjointly with people’s proneness to weight probabilities nonlinearly generates a unifying framework for explaining time-dependent risk taking, risk-dependent time discounting, preferences for late resolution of uncertainty, and several other puzzling interaction effects between risk and time.
    Keywords: Risk taking, time discounting, probability weighting, decreasing impatience, increasing risk tolerance, preference for late resolution of uncertainty, preference for one-shot resolution of uncertainty
    JEL: D01 D81 D91
    Date: 2012–11

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