Justifications of Investment (?)
"The importance of infrastructure for overall economic development and enhancement of trade and business activities in a country need hardly be emphasized. Infrastructure climate of investment is supposed to reflect: government commitment to development, opportunities of civil engineering business; 'credibility' (if decisions budgeted), confidence (in the future of humane development), low-cost production opportunities (in certain circumstances), and market competitiveness (supported by public investment). Investment in physical and social infrastructure affects the poor directly and indirectly in multiple ways and anyhow, by the relative scales involved. Limited and poor quality of infrastructure facilities as been shown to act as an impediment to higher scale business growth". But there could be plenty of debates on infrastructures links between 'directly productive activities' and 'social overhead capital' (essentially public utilities), priorities of regulated development and interactions with needs of mitigations, preservation or conservation of natural 'stocks' and sustain of environmental values.
We view, review and forsee sort of priorities of scopes, while at the same time mixe. Concerning human social concentrations we can have perspectives of development driven by a main 'relative advantage': industrial and or mineral development or by the diversity of human needs: urban development. Development perspectives driven by the biotic ressources of spaces which may seek agrarian driving development (agriculture development) but todays it is better not be just monoculture or may have a more diversed perspective with rural space anthropization, and intent to diversify cares of biotic environments, say rural development or may be 'terroir' if more concerned by people and organic agriculture. Finally there would be the 5th sort of perspective: giving the aim to natural conservacy at large of fully excluding direct anthropization. All this can be combined in 2 or 3 levels, for shaping either priorities in diversity of perspectives, either combined diversities in main perspectives.
"The range of estimates for the returns from infrastructure investments is large. Given the range of estimates and the technical debates on methodology, it is not all convincing to base an argument for investment priorities around types of econometric evidence, on the external returns to public capital or economic infrastructures. For example in power, and often also in water, benefits are based frequently on revenues collected from sales. This can be misleading as when investments replace other supplies (measure should be at costs saved), when tariffs charged are below the cost of alternative supplies; or with informational problems (like if ignoring real benefits)".
Understanding Needs and Risks
Indicators of infrastructures equipment are too often taken as always positive. So that gross levels of lack of equipment, poverty are the shortest argument for investing in infrastructructures that very often are not effectively promoting poorest incorporation. Concerns about affected people will come before for mistaking and after for shortcoming. Sort of indicators globally used (in brackets: critical complements):
- Population in millions (+ cost of investment per inhabitant & fair distribution).
- Poverty: % living on less than 1 and/or 2 US$ a-day (+ percentages by groups of body mass index & local capacity to absorb the investment for safe development).
- Urban Population (+ index of social anomy & infrastructures possibilities of positive evolution).
- Electricity: % of population access to network (+ average hours of service a day & rate of non payment of fees).
- Water: % of population access to improved sources (+ average hours of delivery a day & rate of network loss).
- Sanitation: % of population access to improved sanitation (+ diarrhoeal diseases rates & correlation diarrhoeal diseases with waters networks).
- Roads: % of rural population living within 2 km of an all-season road (+ quali-quanti index of social territorial connectivity & qualit-quanti index of environmental territorial disconnectivity).
- Teledensity: fixed line and mobile subscribers per 1,000 people (+ index of social usefullness & index of freedom of communication without speaking too loud and so long!).
See also our proposal of system of indicators.
"Overall developing countries could required at least 3% of Gross Domestic Products on investments for infrastructure and quite the same amount in maintenance. Developed countries included overall could expect 1% in investment and 1.2% in maintenance. Part of transport sector in low income country is as 5.3% of GDP and goes up to 9.5% GDP in high income countries. Gas, electricity and water account for 1.3% in low income countries, goes up to 2.2% GDP in middle income and establish at 1.9% GDP in high income (during the nineties). In general in terms of sectorial income elasticities (proportionate change in sector output relative to proportionate change in national income) at higher income levels it is power and telecommunications that have higher elasticities than roads or water. At low income levels water shows the highest income elasticity, followed by transport."
"In 'advanced' Economics risks have been of special concern in
- Pricing models: model risk is defined as “the risk arising from the use of a model which cannot accurately evaluate market prices, or which is not a main stream model in the market.”
- In risk measurement models, model risk is defined as“the risk of not accurately estimating the probability of futurelosses.”
"Sources of model's risks in pricing models include:
- Use of wrong assumptions,
- Errors in estimations of parameters,
- Errors resulting from discretization, and
- Errors in market data.
On the other hand, sources of models' risk in risk measurement models include:
- The difference between assumed and actual distribution, and
- Errors in the logical framework of themodel. Now for out the purse question, plenty of models can be derived just extending the concept of price ot value in some primary instinct sense not just money involved".
"In Economic analysis of value of information under uncertainty, Blackwell showed that the value of information is always positive for expected utility preferences. As with analysis of choice under uncertainty in general, most discussion of the value of information has focused either on choice from a finite set of alternatives or on cases where the decision variable is a scalar. Sandmo develop a path breaking extension of the portfolio problem in considering the production choices of a risk-averse firm facing price uncertainty. Graham proposed the idea of margin of safety as a measure of risk and also recommended (portfolio) diversification to reduce risks. Exponents of the value based investment methodology include renowned investors. However Markowitz was the first to formalise portfolio risk, diversification and asset selection in a financial mathematics consistent framework. All that was needed were asset return means, variances and covariances".
More fundamentally (theory of information) "Kullback Leibler discrepancy is suggested as a measure of risk based on differences in knowledge. Defining the knowledge by the ability to predict consequences accurately and assess predictive accuracy operationally using scoring rules for probability forecaster. The Log scoring rule turns out to be a way of assessing differences in knowledge, precisely for constant absolute risk adverse. The multiple-bounded uncertainty choice (MBUC) value elicitation method allows respondents to indicate qualitative levels of uncertainty, as opposed to a simple yes or no, across a range of prices".
"Risk on health and safety perspective is simplified to the probability of harmful consequences or expected loss (of lives, people injured, property, livelihoods, economic activity disrupted or environment damaged) resulting from interactions between natural or human-induced hazards and vulnerable conditions. Risk is conventionally expressed by the equation Risk = Hazard + Vulnerability".
"In investments (like on infrastructures) the choice problem concerns the investment of an amount of money in a safe option and a risky option when there is a “globalrisk” of losing all earnings, from both options. Including any return from the risky option. Global risk can reduce the amount invested in the risky option. This result cannot be explained by Classical Expected Utility or by its main contenders Rank-Dependent Utility and Cumulative Prospect Theory. An explanationcould be to take into emotions account".
In assessment technicalities, there are like time discounts rates, actualized values, costs of money, proper schedule, interest rates, sources of costs saving, capital replacements and many other methods for caring. Mind that they will be positivelly completed by the way you can care with strange things from reality as well as your ability to explain this complicated things and to include practical involment. That is the complicated network of social values.
Some risks and uncertainty are already methodologically well known, like risk rates, conventional (or "state of the art" ratio). Of course technically and technologically, that is according 'real science' and known margins for the cover of risks. Making that your bridge will not fall easilly, dam will not fill too fast, towers will not burn just because of one cigarette, houses will not be torn down into pieces by a small tornado.
Byside of technological risks (for some technologists called cindynic, a sort of systemic of technological risks), industrial and large scales prossess including human made and natural disaster vulnerability of structure there is all an art of balance between knowledge, studies and lawful regulations. For example: "the process of classification of the toxic properties of hazardous materials is not straightforward. Even when the documentation is clear and comprehensive it can take decades before the authorities decide to take action. Moreover, a classification is always on trial because new scientific knowledge can lead to reclassification. It is not easy to understand the politics of the regulatory game because issues other than scientific results set the agenda. Further, the economic consequences for the technological industry and society are always taken into consideration before risk reduction strategies for hazardous materials are decided and implemented".
Subjectivity or sensibility are not to exclude, regulations have often been ratified when, almost accidents, not so relevant in terms of death at work places have happened.
"Originally infrastructure projects: roads, ports, power, and public utilities have traditionally been established, owned, and managed by the State. Demand for infrastructure investment has increased dramatically in response to the rapid industrialization and urbanization that has occurred in most developing economies during the nineties. During the last decades countries also faced budgetary constraints due to, among other things, declining terms of trade for primary commodities, the high costs of debt servicing, increasing revenue expenditures, and smaller aid flows. Governments are also under pressure from multilateral agencies to strengthen fiscal discipline as a part of their ongoing structural reforms".
"Therefore, governments have reduced their involvement in the design, construction, and management of infrastructure projects and sought alternatives. Importance of private sector participation and public-private partnerships in promoting infrastructure development have been promoted. They may help to solve infrastructural bottlenecks and have an impact on the economic well-being countries through increased employment. Not to mention the fact that infrastructure development is a critical determinant of economic growth and foreign direct investment. public-private partnerships are unlikely to entirely replace traditional infrastructure financing and development any time soon, if ever. Public-private partnerships are just one tool among many".
"Public-private partnerships provide new sources of capital for public infrastructure projects, bring construction forward, on-time and on-budget delivery. This may shift construction and maintenance risk to the private sector. Among the risks that may be assumed by the private partner are:
- Design risk of infrastructure projects (e.g., roads, flyovers). [But they may not always assume properly, it can often been easy to hide infrastructures imperfection (before disasters)].
- Meeting required standards of delivery Incurring excessive cost overruns during construction [this requires a good capacity of negociation and of control].
- Completing the facility on time [some time to time may be needed to let social involvement apply and could be usefull, partneship may have to bear the costs of it].
- Underlying costs to the service delivery operator and the future costs associated with the asset Industrial action against or physical damage to the asset.
- Certain market risks associated with the project. Care not to Socialize always the costs of failure of/on private agents.
- Cost and Construction Savings.
- Strong customer service orientation. [Enabling the public sector to focus on outcomes and core social business]".
"Types of Private Partners Providers:
- Design - Build (DB),
- Design - Build-Maintain (DBM),
- Design - Build - Operate (DBO),
- Design - Build - Operate - Maintain (DBOM)
- Build - Own - Operate - Transfer (BOOT),
- Build - Own - Operate (BOO),
- Design - Build - Finance - Operate / Maintain (DBFO, DBFM, or DBFO/M)".
Understanding Sustainability of Integration (without insisting too much)
Check the Pieces of Relations:
- Densities of Concentrations: many concepts can be explained with the simplest experiments of what happens if we put that together or increase amounts. Expecting to see emergent phenomena related to concentration or densities (or "envy" of the environment.
- Raw material or primary factors, origin and starting. But see if start can be downflow and make a product leadering-pivotal-niche for some key-focus, in the region where the investment.
- Intermediate Goods: final goods are for direct consumption. At least 'after them' an active discontinuity in the cycles of production and consumption (but look to new economy of recycling). Intermediate goods are supposed to link within supply, so important pieces parts in the chains of production, up to even make a category of kind of goods (seek that with information economy this can be virtual-intangible). Indeed infrastructures are indirectly of this sort: they provide the material structure of essential services both used by production as well as final consumption.
- Links: In the frame of structures of productions, there are plenty of relations, more or less ordered by the frames of productive sectors (not only because of international division of labour). Those links are of many kinds. Intermediate products are material ones. There are many intangible links too, but evidenced by transactions. One are constraints, like by the uses of trade or cooperation. Without missing the Industries need for sustainable behaviours, ethical criteria and need for huge environmental care.
- Intent to Calculate (grossly) the Networks overall effects with Input-Outputs models. In the design of the frame of relations of productions and the ambitions to look at major units of an economy; be it a country or a region. The overall structure of links, especially for stability, can be approached by an input-ouput matrix. The basic links of these matrix receive inputs and produce outputs that will turn inputs to other sectors. Up to final consumption or export. Do not let exports disunit your society. Structure of economy and its diversification can be followed. At a given picture there are 2 types of multipliers: backward and forward multipliers. Backward multipliers are computed using the Leontief Inverse Matrix that uses an input-output coefficients matrix. Forward multipliers are computed using a Leontief Inverse Matrix that uses a supply coefficients matrix. Most matrix calculus have been linear calculus. There is non linear calculated matrices. Materialistically probably better to practice with material-energetic Input-Outputs matrices or material balances. They may be more explicitedly covering material world and thermodynamical framed, while money supported matrices more exposed to hard to understand focused speculations and/or bubling sheep behaviors too latelly detectable by regulators. Observe that plenty focal distorsions in matrices of prices may just express the need for concern and/or bottlenecks to care (filling there their purpose of information).
- Social Accounting Matrix: is a database that represents, consistently and in a matrix format, all the flows of goods, services, and income among all the agents in an economy during a given reference period. That is inspired by Input-Output Methods. They can give the picture of a local or regional economy and the balance of links between inner and outer actors grouped in categories. 6) Indeed Ecological Impact Analysis and/or Spatial Planning used too Input-Output Matrices. The difficulties of calculus should be solved by conventionnaly qualifying computed programs. Short models are illustrative but arbitrary. Large Models are afffected by the complexity of calculus.
Ecological Risks Assessment
"There is a growing awareness that ecological risk assessments (ERAs) could be improved if they make better use of ecological information. In particular, landscape features that determine the quality of wildlife habitat can have a profound influence on the estimated exposure to stressors incurred by animals when they occupy a particular area. Various approaches to characterizing the quality of habitat for a given species have existed for some time. These approaches fall into three generalized categories:
- Entirely qualitative as in suitable or unsuitable,
- semiquantitative as in formalized habitat suitability index models, or
- highly quantitative site-specific characterization of population demographic data such as matrix population models or multiple regression models. Such information can be used to generate spatially explicit estimates of exposure to chemicals or other environmental stressors, e.g., invasive species, physical perturbation, that take into account the magnitude of co-occurrence of the animals and stressors as they forage across a landscape".
"But also key processes of speciation, endemism, coexistence, extinction, and differential vulnerability of taxa and habitats are not adequately understood as:
- Diversity–stability: Predicts a linear relationship in which the rate of ecosystem processes increases as the number of species increases. Rivet–Popper: Predicts a positive nonlinear relationship and assumes that all species are equally important – the deletion of species gradually weakens the system, and beyond some threshold critical values may cause the ecosystem to collapse.
- Redundancy: Considers most species as superfluous, only functional groups are important; those species within the same functional group are more expendable relative to one another than species without functional analogues.
- Idiosyncratic: Acknowledges none or an indeterminate relationship between species diversity and ecosystem function; the identity and the order of deletion of species will affect ecosystem function".
Infrastructures are supposed to impact strongly on these pictures, and now, without the naive safety of reduction (calling any infrastructures' project only with social benefit). Projects must Include more enviromental concern. Kind of damages can be registered as:
- "Damages to abiotic environment caused by presence of infrastructures and their functioning;
- Damages to biotic environment by change of biodiversity, variations in populations, disturbance of their habitus: habitat destruction, habitad disturbance, physical barriers fragmenting natural spaces, decrease in Population levels;
- Introduction of other species".
"Planetary biodiversity can be viewed under 4 components, that of species, that of high-level taxonomic groups, that of their genetics, and that of ecosystems and their functions and services for itself and potentially humanity. As well for the companies for which residual rehabilitation constitutes the core business as for those whose this rehabilitation is made in margin operations of industrial production, the integration of ecology and economy responds to a logic of increasing and diachronic profitability. A model of the evolution of this integration could have 4 essential stages: conscientiousness, structuring, assertion and consolidation".