Citation
Carbon retention by reduced-impact logging

Material Information

Title:
Carbon retention by reduced-impact logging
Creator:
Pinard, Michelle, 1960-
Publication Date:
Language:
English
Physical Description:
viii, 168 leaves : ill. ; 29 cm.

Subjects

Subjects / Keywords:
Biomass ( jstor )
Carbon ( jstor )
Carbon storage ( jstor )
Forest trees ( jstor )
Forests ( jstor )
Logging ( jstor )
Simulations ( jstor )
Timber ( jstor )
Tree felling ( jstor )
Trees ( jstor )
Botany thesis, Ph. D
Carbon dioxide -- Environmental aspects ( lcsh )
Dissertations, Academic -- Botany -- UF
Logging -- Environmental aspects ( lcsh )
Genre:
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Thesis:
Thesis (Ph. D.)--University of Florida, 1995.
Bibliography:
Includes bibliographical references (leaves 155-167).
Additional Physical Form:
Also available online.
General Note:
Typescript.
General Note:
Vita.
Statement of Responsibility:
by Michelle Amy Pinard.

Record Information

Source Institution:
University of Florida
Holding Location:
University of Florida
Rights Management:
Copyright [name of dissertation author]. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Resource Identifier:
022003556 ( ALEPH )
34330760 ( OCLC )

Downloads

This item has the following downloads:


Full Text










CARBON RETENTION BY REDUCED-IMPACT LOGGING


By

MICHELLE AMY PINARD














A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY

UNIVERSITY OF FLORIDA


1995





































This dissertation is dedicated to John P. and Florence H. Pinard.














ACKNOWLEDGMENTS

I am indebted to many people for their support and contributions to this project. Francis E.

"Jack" Putz first recognized the potential for developing reduced-impact logging techniques in Sabah

as a carbon offset. My mentor, Jack, provided me with encouragement and support throughout my

doctoral program and I am grateful to him for his time, energy, enthusiasm, and concern. Wendell P.

Cropper helped me to construct and evaluate the simulation model included in this dissertation.

Wendell's patience, consistent support, and thoughtful questions helped me to develop my ideas and

progress through this dissertation. John J. Ewel's critical review of this dissertation was instructive;

I am grateful to him for his questions, skepticism and encouragement. Kimberlyn Williams provided

suggestions on methods and emphasis; I thank her for her support. David A. Jones and the staff in

the Department of Botany have provided administrative support. I thank Thomas Sullivan at New

England Electric systems for his encouragement and for working to keep me with adequate funding.

I am grateful to Martin Barker for the unconditional support he provided throughout my doctoral

program.

Danum Valley Field Centre and Tekala Logging Camp staff provided logistical and technical

support in Sabah. The Silviculture Unit of Rakyat Berjaya Sdn. Bhd. (Innoprise Corp.) under the

supervision of M. Rajin and J. Tay carried out the plot-based samples described in chapter 3.

Rangers with the RIL Project and foresters with the Queensland Forest Service (Australia)

contributed to my understanding of the implementation of harvesting guidelines. A. Aribin, D.

Kennard, S. Ducham, C. Alsaffar, A. Smith, and C. Chai assisted in the field. M. Barker, M.

Carrington, J. Cedergren, D. Dykstra, J. Gerwing, J. Harison, B. Howlett, D. Kennard, B. Ostertag,








V. Salzman, and L. Snook provided critical comments on various sections of this dissertation. New

England Electric systems. National Geographic Society, and the Garden Club of America provided

financial support for this project. I thank the Government of Malaysia for allowing me to conduct

research in Malaysia.














TABLE OF CONTENTS

page

ACKNOW LEDGM ENTS ......................................................... iv

A B ST R A C T .................................................................. v ii

CHAPTERS

1. THE REDUCED-IMPACT LOGGING PROJECT IN SABAH, MALAYSIA ...... 1

Introduction ............................................................ 1
Scope of D issertation .................................................... 2
Conventional Logging Practices in Sabah .... ............................. 3
The Reduced-Impact Logging Project ....................................... 5
RIL Harvesting Guidelines ................................................ 6
Training in Reduced-Impact Logging Techniques ............................. 11
M monitoring Damage ................................................... 13
The Cost of Reducing Logging Damage ..................................... 13
D discussion ................................................. ........ 14

2. SOIL DISTURBANCE FROM BULLDOZER-YARDING OF LOGS AND
POST-LOGGING FOREST RECOVERY ON SKID TRAILS ................. 16

Introduction .................... ...................................... 16
M ethod s .......................................... .................... 18
R esu lts . . . . . . . . . . . . . . .. 2 1
D iscu ssion ............................................................ 3 1
C conclusions ........................................................... 35

3. RETAINING FOREST BIOMASS BY REDUCING LOGGING DAMAGE ..... 36

Study Site ................................................. ........ 36
M ethod s .............................................................. 37
R results . . . . . . . . . . . . . . . 4 5
Discussion .............................. ............................. 60

4. A SIMULATION MODEL OF ECOSYSTEM CARBON STORAGE
FOLLOWING LOGGING ............................................... 71

Carbon Storage and Patterns of Recovery Following Logging .................. 71








Background and Basic Model Structure ..................................... 73
Methods for Simulations and Evaluation ................................. .. 85
M odel A applications ..................................................... 86
Results and Discussion .................................................. 88
Conclusions ......................................................... 107

5. REDUCED-IMPACT LOGGING AS A CARBON OFFSET .................. 110

Introduction .......................................................... 110
Criteria for Joint Implementation Projects .................................. 111
Valuation of the Carbon Offset Associated With RIL ........................ 115
C conclusions .......................................................... 119

APPENDICES

A. HARVESTING GUIDELINES ......................................... 120

B. STEM VOLUME EQUATIONS AND WOOD DENSITIES ................. 122

C. SIMULATION MODEL CODE ....................................... 128

D. SIMULATION MODEL FLOW CHART ............................... 145

E. SENSITIVITY ANALYSIS RESULTS .................................. 150

R EFEREN C E S ............................................................... 155

BIOGRAPHICAL SKETCH ..................................................... 168














Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy

CARBON RETENTION BY REDUCED-IMPACT LOGGING

By

Michelle Amy Pinard

December 1995

Chairperson: Francis E. Putz
Major Department: Department of Botany


Global concern over rising atmospheric concentrations of carbon dioxide is stimulating

development and implementation of policies aimed at reducing net greenhouse gas emissions by

enhancing carbon sinks. One option for reducing net emissions is to lessen damage to residual

forests during selective logging thereby retaining carbon in biomass. A pilot carbon offset project

was initiated in Malaysia in 1992 in which a power company provided funds to a timber

concessionaire to implement guidelines aimed at reducing logging damage; in doing so, the utility

gained potential credit towards future emissions reduction requirements. To quantify the reduction in

soil disturbance resulting from the implementation of harvesting guidelines, I measured soil

disturbance associated with ground-skidding in the two areas. To quantify the carbon retained due to

this effort, I compared the biomass both before and after logging of dipterocarp forests logged

according to reduced-impact logging guidelines with forests logged by conventional methods.

Prior to logging, the forest stored approximately 400 Mg biomass ha-1. High volumes of

timber were removed from both logging areas (mean







of the conventional logging area was covered by roads and skid trails; in contrast, 6% of the reduced-

impact logging area was similarly damaged. Skid trails in reduced-impact logging areas were less

severely damaged than those in conventional logging areas; the proportion of skid trails with subsoil

disturbance was less than half that in conventional logging areas. Forty-one percent of the

unharvested trees <60 cm dbh were severely damaged from logging in conventional logging areas in

contrast to 15% in reduced-impact logging areas. One year post-harvest, reduced-impact logging

areas held about 42 Mg C ha' more than conventional logging areas.

To investigate the consequences of reductions in logging damage for ecosystem carbon

storage, I constructed a model to simulate changes in biomass and carbon pools following logging.

Simulation results indicate that the relationship between fatal stand damage and ecosystem carbon

storage is not linear and, at 50-60% fatal stand damage, biomass recovery following logging is

severely limited. Reducing fatal damage from 40 to 20% is associated with a 20% increase in mean

carbon storage over 60 years.















CHAPTER 1

THE REDUCED-IMPACT LOGGING PROJECT IN SABAH, MALAYSIA



Introduction

Uncontrolled logging and rising atmospheric concentrations of "greenhouse" gases are

distinct problems with somewhat overlapping solutions. Many logging operations in the tropics

involve unregulated and unsupervised selective cutting; though only a small proportion of the trees

are harvested, a large proportion of the forest is damaged (e.g., Fox 1968a; Uhl & Viera 1989;

Johnson & Cabarle 1993). Without costly silvicultural interventions, heavily damaged residual

forests yield little timber and thus are at high risk of conversion to other types of land use. Open

canopies and heavy vine loads, typical of many heavily logged forests, increase forest vulnerability to

fire and further degradation (e.g., Uhl & Buschbacher 1985; Kauffman et al. 1988). Appropriate

timber harvesting methods exist but incentives to implement better practices are lacking in many

countries (Gillis & Repetto 1988). Policies aimed at reducing greenhouse gas emissions may provide

a financial incentive for better logging.

In 1992, 52 nations signed a resolution to adopt policies to mitigate climate change by

limiting emissions and enhancing greenhouse gas sinks and reservoirs (Framework Convention on

Climate Change, UNCED 1992). The convention supported cost-effective approaches to reducing

net emissions and recommended cooperation between nations such as in joint implementation

programs that allow greenhouse gas emissions in one nation to be offset by reduced emissions or

increased sequestration in another.










A wide range of opportunities exists for carbon offset programs in forestry. For example,

estimates of the potential for carbon sequestration have been published for the following activities:

preserving old growth forests (Harmon et al. 1990), controlling forest fires (Faeth et al. 1994),

creating plantations and reforesting degraded lands (Sedjo 1989; Schroeder 1992), increasing

rotation times in plantations (Cropper & Ewel 1987; Hoen & Solberg 1994) and reducing logging

damage (Putz & Pinard 1993). Forestry-based offsets increase terrestrial carbon storage either by

expanding forest cover or by maintaining or improving existing forest for carbon storage. This

dissertation explores the potential for increasing carbon retention in managed forests by reducing

avoidable logging damage. By improving harvesting practices, fewer trees are killed or damaged

during logging and more carbon remains in the forest in living trees. Furthermore, if residual stands

contain more trees of larger diameter than areas conventionally logged, future yields of timber are

also likely be higher.



Scope of Dissertation

The objective of this dissertation is to explore the potential of reduced-impact logging for

offsetting carbon emissions. My interests are principally with relevant ecological and biological

processes and, consequently, my treatment of related political, economic, and silvicultural issues is

superficial. The dissertation contains five chapters. This first chapter introduces the concept of

reducing logging damage as a carbon offset, describes conventional logging practices in Sabah, and

provides an overview of the harvesting guidelines upon which the Reduced-Impact Logging (RIL)

Project is based.

Soil disturbance caused by yarding with bulldozers is the subject of the second chapter.

After a comparison of soil disturbance associated with two logging systems, conventional and

reduced-impact logging, I explore the importance of soil disturbance for forest recovery based on a








3

study of woody stem densities and species richness across a chronosequence of old skid trails and

logged forest.

The third chapter details quantification of carbon retained in forest biomass due to

implementation of harvesting guidelines. In this chapter, I describe forest biomass, above- and

below-ground stores, before and after logging. I compare logging damage in forest logged by

conventional methods and in forest logged according to RIL guidelines. Finally, I quantify the

carbon retained in biomass due to implementation of the guidelines.

The simulation model of carbon dynamics in dipterocarp forest (Chapter 4) is intended to

simulate forest recovery following disturbance by logging. I use the model as a tool for organizing

information relevant to forest carbon storage and fluxes after logging. Simulation results are

evaluated through a series of sensitivity analyses and comparisons to field observations and

published data. I evaluate the effects of reductions in logging damage on forest carbon storage by

examining output from simulations.

In the final chapter, I discuss several policy issues related to international carbon offset

programs in forestry. I describe how the carbon retained due to the Reduced-Impact Logging Project

might be valued and end with general conclusions about the suitability of reduced-impact logging as

a carbon offset.



Conventional Logging Practices in Sabah

When commercial forests in Sabah are selectively logged (e.g., Kleine & Heuveldop 1993),

all mature trees (>60 cm dbh) of commercial species felled during the first harvest. Trees in the

Dipterocarpaceae represent 90% of the total volume of commercial timber extracted (Sabah Forestry

Department 1989). Sabah's silvicultural system is a modification of the Malayan Uniform System

(Wan Razali 1993); seedlings and saplings present at the time of logging are assumed to replace the








4

mature trees in a 60 yr logging cycle. Pre- and post-logging inventories are carried out, but the data

are not currently used to prescribe cutting limits or silvicultural treatments (Tang 1987). Tending of

the residual potential or future crop trees through poison-girdling of overstory competitors, though

initially part of the silviculture system, was discontinued because only about a third of the logged

forest retained an overstory (Chai & Udarbe 1977).

In a typical logging operation in Sabah, logs are skidded to the roadside or log landing (flat,

cleared area for storing logs) by bulldozers (a few high-lead cable yarding systems are also used).

On average 8-15 trees are felled per ha, representing 50-120 m3 of timber (Sabah Forestry

Department 1989). Damage to the forest is extensive; as much as 30-40% of the area is traversed by

bulldozers (Chai 1975; Jusoff 1991; Nussbaum et al. 1995), and 40-70% of the residual trees are

damaged (Fox 1968a; Nicholson 1979). These relatively high levels of damage are due to both high

timber volumes extracted and poor harvesting practices. Typically, little pre-harvest planning is

carried out, and the activities of fellers and bulldozer operators are not well-coordinated.

Current forest management practices in Sabah are not sustainable because the volumes of

timber extracted, the area logged each year, and damage to advanced regeneration are all too high

(Sabah Forestry Department 1989). A new forest management system is clearly needed in Sabah and

is presently under development by the Sabah Forestry Department (Kleine & Heuveldop 1993;

Udarbe et al. 1994). As is true for many tropical countries, however, lack of forestry department

staff and difficulties in enforcing regulations over large and dispersed tracts of forest can render even

the best regulations ineffective (Jabil 1983). Programs that provide concession holders with

incentives for better management practices may help stimulate change in the industry.








5

The Reduced-Impact Logging Project

In 1992, the Reduced-Impact Logging (RIL) Project was established between Innoprise

Corporation, a timber concessionaire in Sabah, Malaysia, and New England Electric system, a coal-

burning utility in Massachusetts, USA. New England Electric provided funds to Innoprise for

training staff and implementing harvesting guidelines (Appendix A) aimed at reducing logging

damage in 1400 ha of their concession (total concession area is z 1 million ha with annual logging of

about 20,000 ha). The carbon retained in the forest due to these efforts could be claimed by the

utility as a carbon offset. Contemporary conventional selective logging practices in the area provide

the baseline for comparison.

The 1400 ha experimental area dedicated to the project is divided between two commercial

forest reserves in southeastern Sabah, a 450 ha tract in Ulu Segama Forest Reserve (50'N,

11730'E, 150-750 m a.s.l.) and a 950 ha tract in Kalabakan Forest Reserve (425'N, 11729'E,

150-900 m a.s.l.). This study is based on data from Ulu Segama only. The project began in May

1992 when woody vines were cut in Ulu Segama; logging is expected to be completed in the second

tract, Kalabakan, by December 1995. The logging crews and forest rangers working in the

experimental area were trained by foresters from the Queensland Forest Service and expert fellers

from Sweden. The harvesting guidelines (Appendix A) were based on best management practices

recommended in Indonesia, Malaysia, and Australia.

The harvesting guidelines developed and adopted by the Reduced-Impact Logging Project

specify practices expected to reduce logging damage and thereby retain more carbon in living trees

and promote post-logging biomass increments. The focus of the remainder of this chapter is the

development and implementation of the Reduced-Impact Logging harvesting guidelines.








6

RIL Harvesting Guidelines

The reduced-impact logging guidelines were initially drafted from best management

practices recommended by the Queensland Forest Service (Australia) and the Smartwood

certification program of the Rainforest Alliance. The guidelines include specifications for pre-

harvest planning, vine cutting, felling, skidding, and post-harvest site closure. During the project's

first two years, the guidelines have been modified to increase operational efficiency and the

guidelines' applicability to the forest conditions and soils in Sabah. Refinement of the guidelines

involved input from field staff, an international advisory committee, environmental groups, and

representatives of local state and private sector forestry institutions. In the following sections, the

harvesting guidelines are outlined, and some of the issues that emerged during the first two years of

implementation are described.

Planning

Knowledge of both the terrain and the distribution of harvestable timber is central to

controlled selective logging. Topographic maps (1:50,000 scale) available for the RIL project area

are unreliable and commercial trees are unevenly distributed. Therefore, pre-harvest planning calls

for preparation of a 100% stock map (1:5,000 scale) of harvestable trees. The stock map also shows

stream and road buffer zones and sensitive areas to be excluded from logging; the map forms the

base for the harvest plan.

The value of these costly 100% stock maps was debated midway through the project. Costs

of stock map preparation represented about 16% of the total cost of implementing the guidelines

(about $53 ha'). As illustrated in a concurrent research project in the area (Cedergren et al. 1994),

without any prior knowledge of the terrain, trained rangers can locate trees to be felled on an ad hoc

basis as they mark extraction routes based on a simple spacing rule that considers tree heights, winch

cable lengths, and terrain. The rangers involved with the RIL project, however, argued that stock








7

maps are essential for proper planning. In the process of making the maps, they become intimately

familiar with the forest and the timber resource. All subsequent aspects of the harvest plan are

based on the stock map.

Efficiency of logging operations is greatly facilitated by sensible road routings, but prior to

the RIL project, stock maps were not made, and road locations were consequently often suboptimal.

Roads and skid trails generally are located on ridges to avoid steep grades, to facilitate uphill

skidding, to minimize skidding distances and stream crossings, and to reduce the amount of sidecast

soil entering streams. Main extraction routes and landing areas are located on the stock map and

then these locations are checked in the field and marked with paint. The end points of all skid trails

are also clearly marked.

Rangers mark trees to be felled with a record number and with a vertical paint blaze to

indicate the intended direction of fall. Also, potential crop trees of good form and larger than 20 cm

dbh are marked with a ring of blue paint if they are at risk of being damaged from felling or skidding.

Tree enumeration and marking for directional felling were not done simultaneously during the pilot

project, but combining these two activities will increase operational efficiency.

Vine Cutting

About one year prior to logging, all vines with stems > 2 cm dbh are cut. Figs are protected

and no cutting is done in buffer zones. Vine-cutting reduces felling damage because the tree crowns

are not tied together, and it reduces post-felling vine infestations because there are fewer fallen vine

stems to resprout (Fox 1968a; Putz 1991). The effects of vine cutting on arboreal animals and forest

biodiversity in general deserves attention from researchers but has not yet been addressed in the RIL

Project.

The need to cut vines before logging is primarily a problem for tropical forestry. In our

study area, density of woody vines > 2 cm dbh averaged 586 stems per hectare (SD = 211, N= 104








8

plots in 4 logging units, Chapter 3). The utility of vine cutting is debated, perhaps because the

impacts of vine cutting on logging damage are not always obvious and the cost is substantial (about

$US 25 per ha). Certainly part of the reduction in the number of trees uprooted during logging (a

decrease from 37% of the residual trees in areas logged conventionally to 13% in areas logged

according to the guidelines) is related to vine cutting. Several studies designed to measure the

decrease in logging damage due to vine cutting in Malaysia reported a benefit (Fox 1968a; Liew

1973; Appanah & Putz 1983; Cedergren et al. 1994).

Tree Felling

Decisions about felling direction are based on feller safety, ease of skidding, avoidance of

damage to harvested and potential crop trees, and minimizing impacts on buffer zones. Trees are

felled and winched towards pre-marked skid trails. Directional felling reduces damage to potential

crop trees and facilitates skidding both by avoiding the need to reorient logs and by shortening the

overall extraction distance by up to the length of the log (up to 30 meters).

Recommended in the guidelines but not required is the use of plastic wedges during felling.

Wedges give fellers added control and help fellers discern small changes in direction of lean as the

tree is felled. Fellers working on the RIL project have not adopted the use of wedges and argue that

plastic wedges are unnecessary and their required use actually places fellers at risk. When needed,

fellers use wooden wedges made ad hoc at the tree to be felled.

Fellers consistently drop trees within 10 degrees of the marked direction (Project Records,

unpubl. data). Success in directional felling of huge trees with eccentric crowns on steep slopes is

impressive, but it should be pointed out that tree markers select the silviculturally optimal direction

from what they judge to be the possible range. Furthermore, during the first year of the project, the

number of harvestable trees felled in the experimental area was less in RIL areas than in comparable

areas logged using conventional methods, perhaps in part due to more frequent rejection of trees by








9

fellers, uncertain of their ability to fell the tree in the direction indicated. More training would

increase the skill and confidence of the fellers, thereby increasing the arc over which trees can be

felled and reducing the number of harvestable trees left standing. During the pilot phase, rangers

marked trees with the assistance of fellers because the rangers felt they had insufficient training to

determine possible felling directions. This process, however, is subject to undo influence by fellers.

Forest rangers need to be trained to so as to be able to select felling directions from the full range of

technically possible directions.

Winching and Skidding

Bulldozers are destructive machines that were not designed for skidding logs, but their utility

in logging heavily stocked primary dipterocarp forests cannot be ignored; in eastern Sabah, the

average log weighs 7-9 tons, and 50-200 cubic meters of timber typically are harvested from each

hectare. Under the RIL guidelines, main skid trails are constructed by logging crews following

rangers' paint blazes. During extraction activities, bulldozers are restricted to these main trails. The

guidelines call for extensive use of bulldozer-mounted winches to move logs from the stumps to main

skid trails. The weight of the 32 mm cables, however, precludes winching over distances greater than

about 15 meters. The use of a second small winch to pull out the heavy cable deserves investigation.

By restricting the practice of blading surface soil and sidecutting, the deleterious effects of

skid trails are reduced. In the first 450 ha to be logged according to the RIL guidelines, skid trail

area averaged 3.4% of the total area logged in contrast to 12% in adjacent areas logged by

conventional methods (Chapter 2). Further, the percentage of the skid trails with subsoil exposed

averaged 38% in the RIL areas in contrast to 87% in the conventionally logged areas. Many tropical

soils are highly erodible; the presence of a litter layer on the soil surface can reduce soil erosion

substantially (e.g., Ross & Dykes 1993).








10

Skidding logs with bulldozers is difficult, dangerous, and particularly destructive on slopes

greater than 15-20 degrees. In commercial forests elsewhere in the world, ground-based yarding is

restricted to slopes less than 17 degrees (30%, e.g., Dykstra 1994) because environmental damage

increases greatly as slope increases (Brady 1984). The RIL project guidelines limit bulldozers to

slopes less than 35 degrees (70%). Trees on slopes greater than 35 degrees can be felled only if they

can be winched and skidded from a position on a slope 35 degrees or less. The 35 degree cut-off

reflects a compromise between reducing soil damage and foregoing timber in a large portion of the

remaining commercial forest in Sabah. For example, over 20% of the first parcel dedicated to the

project (450 ha in Ulu Segama Forest Reserve) included slopes greater than or equal to 35 degrees;

the net area inaccessible due to the slope restriction was even greater as some less steep areas were

surrounded by steep areas. Consequently, the volume of timber removed from the first 450 ha

reduced-impact logging area was possibly 20% less than what might have been extracted by

conventional selective logging.

The issue of loss of timber harvested due to slope restrictions is the primary focus of current

negotiations about the future of the project. Arguments are being made by the concessionaire that

the slope restriction should be relaxed because overall damage to the forest can still be minimized by

careful planning of skid trail locations, directional felling, etc. An underlying assumption in their

argument is that damage to the soil is less important than damage to the residual stand. An

alternative solution would be to combine aerial with bulldozer yarding. The current proposal for

project expansion involves a combination of helicopter and bulldozer yarding and incorporates the

higher extraction costs associated with helicopter system into the cost of the carbon offset. Where no

incentive exists to protect the resource, the additional extraction costs associated with aerial yarding

are difficult for the concessionaire to justify.








11

The restriction against wet weather skidding, although certainly important for minimizing

soil damage (DeBonis 1986), slowed harvesting operations substantially in the RIL areas. The

delays experienced by the contractors increased the overall costs of extraction. Though comparative

financial assessments of selective logging in Sarawak, Malaysia (Marn & Jonkers 1981) and

Suriname (Jonker 1987; Hendrison 1990) suggest that reduced-impact logging costs less per cubic

meter of timber than conventional approaches, our experience with the RIL project in Sabah suggests

that damage-controlled logging may cost more than conventional logging.

Logging Area Closure

After logging is completed in a 40-60 hectare unit, the skid trails are closed through

installation of cross drains at specified intervals (e.g., < 20 meters on slopes 15-20 degrees). The

goal of the guidelines for skid trail marking, construction, use, and closure is to reduce overall

damage to the forest. If erosion is minimized, the same skid trail network should be utilizable when

the stands are logged in 30 to 60 years. Although the drain spacings recommended in the RIL

guidelines seem fairly standard, the field staff has argued convincingly that on some skid trails,

cross-drain construction would increase disturbance to soils. If surface soils are protected from

blading and skid trails are properly located, installing drainage structures may not be justifiable on

hydrological grounds. Inspection of skid trails on slopes of 15 20 degrees that were subjected to as

many as 30 bulldozer passes and three months of heavy rains revealed no signs of gullying. Skid

trails with an intact root mat and litter layer are uncommon in the conventionally logged areas (mean

of 4 logging units = 1.6%), but they represent 12% of the skid trails in the RIL areas.



Training in Reduced-Impact Logging Techniques

Successful implementation of the reduced-impact logging guidelines depends on substantial

technical expertise on the part of sawyers, bulldozer operators, and forest rangers. Traditionally,











Malaysian forest rangers are trained in mensuration and inventory methods, but their familiarity with

harvesting techniques is limited. Sawyers and bulldozer drivers receive no explicit training but

apprentice for several years before becoming operators. The Reduced-Impact Logging Project

sponsored training for representatives of several levels in the forest management hierarchy. One of

the first project activities was a visit by senior Innoprise staff and logging contractors to areas

managed by the Queensland Forest Service. Although it would have been better to have visited an

actively managed forest, seeing one that had been carefully logged was nonetheless valuable. Several

of the Australian foresters who hosted the ICSB visit then came to Sabah as advisors in

implementing the reduced-impact logging guidelines. Ten tractor drivers and fifteen ICSB field staff

worked with three experienced Australian foresters for three weeks. During this training period,

timber in a logging block of approximately 50 hectares was harvested.

Sawyers were trained by a Swedish specialist in directional felling during two 5-day training

programs. Although these programs undoubtedly increased the fellers' abilities to direct the fall of

trees, more training is clearly needed. Furthermore, forest rangers need to be trained so as to be able

to select felling directions from the full range of technically possible directions. These rangers may

themselves serve as future instructors, a situation from which considerable advantage will derive in

regard to effectiveness, cost, and ease of implementation.

The people most responsible for success of the Reduced-Impact Logging Project are the

Innoprise forest rangers, most of whom are high school graduates with one year of formal forestry

training. The rangers supervise and participate in stock mapping, vine cutting, tree marking for

directional felling, and skid trail planning, construction, use, and closure.








13

Monitoring Damage

Compliance with the reduced-impact logging guidelines and verification of reductions in

logging damage are assessed by an independent team consisting of three foresters, one appointee of

New England Electric systems (a representative from Rainforest Alliance), one appointee of

Innoprise Corporation (a representative from the Forest Research Institute Malaysia), and one joint

appointee (a representative from the Department of Forestry, University of Florida). The team,

referred to as the Environmental Audit Committee, conducts 5-10 day site inspections twice per year.

During these inspections, the team walks through the logging area and evaluates adherence to the

guidelines and levels of logging damage. Also, the Committee meets with the field staff, loggers, and

researchers responsible for logging damage studies and the carbon calculations for the offset due to

reduced-impact logging. The Committee's involvement is anticipated to increase the project's

international credibility, critical for qualification as a carbon offset. The rangers' records of logging

damage provide data for monitoring the contractor's performance and for verifying compliance with

the guidelines. The data provided in this dissertation also provide baseline data for carbon offset

calculations.



The Cost of Reducing Lo2gging Damage

As mentioned earlier, operational delays due to wet weather shut-downs increase extraction

costs. Also, as compared with conventional practices, felling times are slower when following the

RIL guidelines due to time spent marking and preparing trees for felling (Chua 1986a; Tay unpubl.

data). The additional planning, mapping, and monitoring activities also increase extraction costs as

compared to the conventional method.

Conversely, bulldozer maintenance costs are low in controlled logging sites, presumably

because of less side-cutting and blading, because the steep, rocky areas are avoided, and because the








14

total length of skid trails constructed is much reduced. Also, total skidding time is less when

following the RIL guidelines due to shorter skidding routes and less search time (Chua 1986b; Tay

unpubl. data). The denser stocking of potential crop trees in areas with reduced logging damage

eliminates the need for costly rehabilitation with enrichment planting and shortens felling cycles. It is

still too early to provide a comprehensive view of the costs and benefits of the project, but an

economic analysis is underway.



Discussion

While reducing logging damage does not guarantee sustainability, it is a general prerequisite

for good management of selectively logged forest. Managing a forest sustainably makes economic

and ecological sense for long-term concession holders that want to stay in the timber business, but

the appropriate financial incentives seem to be lacking. More effective appear the incentives for

conversion of logged-over forest to non-forest uses (e.g., oil palm plantations). Management decrees

initiated by forestry departments, though frequently based on sound management principles, are often

rendered ineffective due to a lack of enforcement capacity. For example, in the Forestry Department

in Sabah one professional forester is employed per 93,000 hectares of commercial forest reserve

(Sabah Forest Department 1989).

Alternatives to bulldozer yarding on steep slopes need to be developed that are acceptable to

local loggers. For example, demonstration of successful, commercial operation of skyline yarding

systems in selectively logged tropical forests would help establish the viability of this method.

Training in designing, rigging, and operating skyline systems is also needed.

Though the RIL Project has received accolades in the press (e.g., Miller 1994), expansion of

reduced-impact logging carbon offset projects is predicated on acceptance of the concept of joint

implementation in both developed and developing countries. Several developing countries are








15

outspoken against some types of cooperative programs to abate climate change and are suspicious of

the motivations of developed countries. Furthermore, if developing countries that are signatories of

the Global Convention of Climate Change sell their inexpensive carbon offsets to outsiders, they will

be left trying to satisfy the terms of the Convention with more costly offsets such as radically

modifying their power-generating and fuel-consuming industries.

Alternately, if foreign utilities can produce appropriate financial incentives, concession

holders may be tempted to endure outside assessments of their forest management. Carbon offset

money could absorb the operational costs associated with altering harvesting systems and decreasing

extraction rates. A reduction in extraction rate associated with adoption of better harvesting

practices will move concessionaires toward sustainability and closer to qualification for timber eco-

certification. Once sustainability is within reach, the profit margin and other advantages of certified

timber may drive concessionaires further toward better management practices.














CHAPTER 2

SOIL DISTURBANCE RESULTING FROM BULLDOZER-YARDING OF LOGS AND
POST-LOGGING FOREST RECOVERY ON SKID TRAILS


Introduction

In East Malaysia, though only 8-15 trees are extracted per ha, typically 15-40% of the area

is traversed by bulldozer paths (Chai 1975; Jusoff 1991; Nussbaum et al. 1995). There are

alternative harvesting systems that cause less soil disturbance, for example skyline (Miller & Sirois

1986) or helicopter (Blakeney 1992) yarding, but these techniques are generally more expensive than

ground skidding on all but the most difficult terrain (e.g., Aulerich et al. 1974). One of the goals of

the Reduced-Impact Logging Project in Sabah was to reduce the area with soil disturbance while

using existing equipment and personnel; bulldozer and chain saw operators were trained in damage-

control techniques and harvesting guidelines were implemented in 1400 ha of dipterocarp forest

(Chapter 1; Pinard et al. 1995). In this chapter, I compare soil disturbance associated with ground

skidding in areas logged using conventional and reduced-impact logging techniques. To explore the

importance of minimizing damage to soils for forest recovery, I examine tree regeneration on

abandoned skid trails.

In the process of extracting logs from the forest with bulldozers, soil is disturbed in a

number of ways that affect forest recovery. First, topsoils are displaced by the bulldozer blade

during skid trail construction; displaced soil (hereafter, sidecast soil) is dispersed over slopes or

forms linear mounds along the edges of skid trails. Although total soil organic matter content may

not change across the entire logged area, its distribution does (Johnson et al. 1991), with bulldozed








17

areas losing, and sidecast mounds accumulating, soil organic matter (Gillman et al. 1985; Rab

1994). These localized losses in organic matter can have substantial effects on soil fertility (Gillman

et al. 1985; Zabowski et al. 1994) and tree seedling growth and survival (Nussbaum et al. 1995;

Woodward 1995).

During ground-based log yarding operations, subsoils are exposed and churned by the tracks

of the bulldozer. Soil losses from these denuded areas can be substantial (e.g., Homrnbeck & Reinhart

1964; Ross et al. 1990). A hydrological study of recently logged dipterocarp forests in Sabah,

Malaysia, documented stream sediment loads 14 and 2.5 times that of a nearby unlogged catchment

during the first and second year after logging, respectively (Douglas et al. 1993); eroding roads and

gullied skid trails were identified as the principal sources of post-logging sediment. Installation of

proper drainage structures on skid trails, roads, and landings can reduce erosion substantially (Stuart

& Carr 1991; Wenger 1984).

Soil structure is also damaged due to compaction from loads applied by bulldozers and logs

skidded across the forest floor. As soils are compacted, soil porosity decreases, often causing

decreased water infiltration and increased surface runoff, as well as decreased soil moisture

availability, aeration and rooting space (Greacen & Sands 1980; Malmer & Grip 1990). During

heavy rains, seeds and seedlings may be washed away (Borhan et al. 1987; Pinard et al. 1996). Soil

bulk density values recorded in many post-logging habitats are within the range of values that

negatively affect tree growth (Greacen & Sands 1980; Rab 1994). In some forests, changes in soil

physical properties due to logging are apparent decades after logging (Congdon & Herbohn 1993;

Van der Plas & Bruijnzeel 1993).

The extent and degree of soil disturbance associated with bulldozer yarding are variable and

appear to be related to slope (Dymess 1965; Stuart & Carr 1991), soil texture (Daddow &

Warrington 1983 in Clayton 1990; Jusoff 1992), and soil moisture content at the time of logging








18

(DeBonis 1986; Jusoff 1992). Certain logging practices also influence soil damage, for example,

size of logs extracted (Dickerson 1968) and extent of bulldozer blade use (Miller & Sirois 1986).

Pre-harvest planning can increase the efficiency of log extraction and reduce the area damaged

(Froehlich et al. 1981). Prohibiting wet weather skidding, skidding on steep slopes, and use of the

bulldozer's blade can reduce further soil damage associated with logging.

To describe the reduction in soil damage achieved in the Reduced-Impact Logging (RIL)

Project area, I compared areas logged using conventional and RIL techniques in terms of extent and

degree of soil disturbance. To better understand the impacts of soil damage for forest recovery, I

studied a series of skid trails in areas logged using conventional methods in 1976, 1988, and 1991.

Short-term studies of pioneer tree establishment on skid trails and log landings suggest that,

during the first year after logging, tree establishment is limited by unfavorable site conditions, not by

seed availability (Pinard et al. 1996). Herbivore damage and trampling of tree seedlings on skid

trails are also commonly observed (pers. obs.; Moura-Costa & Lundoh unpubl. data). If skid trails

are unfavorable for tree regeneration, I expect sapling densities to be lower on skid trails than in

adjacent residual forest. If site conditions on skid trails become more favorable for tree

establishment over time, I expect that sapling densities on older skid trails would be more similar to

those in adjacent residual forest than those on younger skid trails.



Methods

Study Site

The study was conducted within the Yayasan Sabah concession in Ulu Segama Forest

Reserve (50'N, 1 1730'E, 150-750 m a.s.l.). Prior to logging, the tall, diverse forest is dominated

by dipterocarps (see Chapter 3 for more details). Soils are orthic acrisols, nutrient rich in the upper 5

cm then dropping steadily in concentration through the soil profile (Nussbaum 1995); the upper








19

horizons have a loamy texture and are well-drained. The conventional timber harvesting system used

in Sabah, as well as the harvesting guidelines being followed in Reduced-Impact Logging (RIL)

areas, are described in detail in Chapters 1 and 3 of this dissertation. The key differences between

the two systems are as follows: 1) RIL follows a pre-harvest plan with locations of all skid trails

identified on a stock map of trees to be harvested, whereas conventional logging involves little or no

pre-harvesting skid trail planning; 2) RIL restricts bulldozers to slopes <35 degrees, whereas

conventional logging has no slope restriction; and 3) RIL restricts bulldozer blade use and

encourages the use of the winch cable, whereas conventional logging does neither.

Soil Disturbance

To determine the extent and severity of soil disturbance associated with logging I mapped,

measured, and classified all soil disturbance associated with bulldozer activity in eight logging units

(approximately 50 ha each). Four units were selected randomly from a 450 ha experimental area

logged according to the RIL guidelines by trained crews and closely supervised by forest rangers.

For comparison, four units were selected randomly from an adjacent area logged by unsupervised and

untrained crews using conventional methods.

I used three broad disturbance categories: 1) roads and log storage landings; 2) bulldozer

paths (skid trails); and, 3) areas covered by sidecast soils. Roads and log landings generally are

leveled and graveled surfaces on subsoils. Skid trail surfaces are variable and were further classified

by degree of soil disturbance as follows: 1) subsoil exposed, either by blading or heavy bulldozer

churning; 2) churned but topsoil mixed with upper layers of subsoil; and, 3) compacted by bulldozer

passing over area but relatively little mixing of topsoil with subsoil. In the eight logging units, 100%

of the area was surveyed for soil disturbance caused by logging. I measured lengths and slopes of

roads and skid trails by sections; a section was a length of road or skid trail that was relatively

uniform in slope, width, and direction. Widths were measured every 10 to 15 m or, for more rapidly








20

changing sections, in the midpoint of each section. Contiguous areas of sidecast soils (e.g., linear

soil mounds or tips) were also measured; for large areas with sidecast soils adjacent to roads and skid

trails I measured the average slope and distance to the end of each soil mound (or slide). No effort

was made to measure areas crushed or scraped during the winching of logs to the skid trails. The

area of disturbed soil was calculated based on net loggable area per subblock (defined in Chapter 3).

T-tests performed on arcsine-transformed data were used to compare treatments.

Plant Regeneration on Skid Trails

To describe woody plant establishment on skid trails I sampled old skid trails in 1994 in

three logging coupes (1991, 1988, and 1976). Within each logging coupe, skid trails were located in

four logging units that were separated by at least 1 km. Main skid trails originating at log landings

or roads were selected in all cases. Skid trails were easily located in all three logging coupes. Often,

the edge of the skid trail was marked by an uneven soil surface, probably the result of side-cutting

with the bulldozer blade.

In each logging unit, I established 10 sampling points at 20 m intervals along a skid trail

with the first point located at a random distance (0-20 m) from the landing or road. At each

sampling point, three 2x2 m plots were established, one in the center of skid trail, another at the edge

of the skid trail, and a third 10 m into adjacent forest, following a line perpendicular to the skid trail.

The width of the skid trail was measured from edge to edge. Random numbers were used to

determine whether the edge and forest plots would be placed to the left or the right of the skid trail;

edge plots did not include skid trail surfaces though often sidecast soil was included. Within each

plot I recorded the following: canopy cover (above 1 m) using a spherical densiometer (Lemon

1957), number of woody stems (>1 m tall, <5 cm dbh), and number of species. Trees >5 cm dbh

were not included in the samples because the plot size was too small to adequately sample their

densities at this level of replication. All dipterocarps (i.e., commercial species) and colonizing tree








21

species (e.g., Macaranga spp.) were noted as such. For plots on the surface of the skid trail, 1

subplot (1 m2) was randomly selected for determination of above- and below-ground biomass. All

vegetation was clipped at ground level, weighed, and subsampled for dry weight determination.

Coarse roots (>5 mm diameter) were collected from a 50 x 50 x 50 cm pit located in center of

subplot; roots were washed, and live and dead roots were separated, weighed and subsampled for dry

weight determination.

For all analyses, logging units were considered replicates, and the plots within each unit were

considered samples. Analysis of variance followed by Tukey multiple comparisons was used to

compare stem densities, species richness, and canopy cover among the three logging coupes and the

three habitats within each coupe. To compare skid trail width and biomass in skid trails in the three

logging coupes, Kruskal-Wallis tests were used, followed by Tukey-type nonparametric multiple

comparisons (Zar 1984). In all cases, the significance level used to reject the null hypothesis was

0.05.



Results

Soil Disturbance

A greater area of soil was disturbed in conventional units than in RIL units (t = 5.6, df= 6, P

= 0.001; Fig. 2-1; Table 2-1). Road area was similar in the two treatments (t = 1.04, df= 6, P =

0.34), but skid trail area was much less in the RIL units than in conventional units (t = 4.95, df= 6,

P = 0.003). Including only logged areas, mean skid trail density was much higher in conventional

units (mean = 199 m ha', SD = 35.8) than in RIL units (mean = 66.5 m ha', SD = 25.7; t = 6.0, df=

6, P < 0.001).

Total volume of timber extracted per logging unit was not statistically different between the

two methods (t = 1.88, df = 6, P = 0.11; Fig. 2-2); however, high variability and low replication limit







CNV


WJ~I


Figure 2-1. Diagrams of the eight logging units in which soil disturbance was measured. (CNV =
conventional logging areas, RIL = reduced-impact logging areas). Thick black lines represent
roads, thin black lines are skid trails, blackened areas are log landings, stipled areas are riparian
zones, and the hatched area is a landslide below a road.


RIL




























Table 2-1. Soil disturbance in conventional and reduced-impact logging units (100% area); N =
4 per treatment. Skid trail area includes area covered with sidecast soil. Values are
mean percentages (SD) of logged areas.


Conventional Logging Units Reduced-Impact Logging Units
Total Area Disturbed (%)'" 16.6% (2.3) 6.8% (2.6)
Roads and Landings (%) 4.7% (0.8) 3.3% (2.5)
Skid Trails (%)"** 11.9% (2.7) 3.5% (2.1)

"*P<0.01














80 -


60 -





40 -


20 -





0


0







0



0 0


I I I


2000
2000


4000
4000


6000
6000


8000
8000


Timber volume extracted (m3 )






Figure 2-2. Total skid trail area (ha per logging unit) related to timber volume extracted (m3 per
logging unit) for reduced-impact logging areas (solid circles) and conventional logging areas
(open circles).










the power of this analysis. Excluding unlogged sections within units, mean volume extracted was

136 m3 ha- (SD = 29) in conventional units and 92 m3 ha' (SD = 40) in reduced-impact logging

units (Pacific Hardwoods Sdn Bhd, unpubl. data). Skid trail area (including sidecast mounds) per

timber volume extracted was greater in conventional units (mean = 8.8 m2 m3, SD = 0.56) than in

RIL units (mean = 4.6 m2 m3, SD = 3.04; U = 15, df= 1, P = 0.04). Including road area, soil

disturbance per harvested tree was 140 m2 tree' (SD =16) in conventional and 94 m2 tree' (SD = 28)

in reduced-impact logging areas. Skid trail disturbance was positively correlated with volume

extracted for conventional units (Pearson Correlation Coefficient = 0.97, P = 0.03) but not for RIL

units (Pearson Correlation Coefficient = 0.53, P = 0.54).

Within the area disturbed by skid trails, the severity of disturbance to the soil was greater in

conventional than in RIL logging units (Table 2-2). Skid trails with a bladed surface (or sidecut)

were predominant in the conventional units (mean = 87.2%, SD = 5.6%) whereas only 38% (SD =

9.9%) of the skid trails in the RIL units had a bladed surface. The most common surface condition

for skid trails in the RIL units was churned (i.e., the topsoil remaining in place but being mixed with

the upper layer of subsoil; Table 2-2). Skid trails with intact topsoil and litter layer were very

uncommon in conventional logging units but covered about 12% of the skid trail surfaces in RIL

units. In these compacted areas, saplings and vines resprouted soon after logging.

Plant Regeneration on Skid Trails

The width of skid trails surveyed in the three logging coupes ranged from 3.9 m to 6.0 m;

mean width in the '91 coupe (mean,, = 5.4 m, SD19 = 0.7) was greater than that in the '88 and '76

coupes meang = 4.1 m, SD88 = 0.2; mean76 = 3.9 m, SD76 = 0.2; F=13.2, df= 2,9 P = 0.002;

Tukey's Test P < 0.05). Both skid trail and forest habitats in the two older logging coupes had

nearly closed canopies at the time of sampling (Table 2-3). Skid trail tracks in the '91 coupe, had

more open canopies than edges or adjacent forest plots. For all three logging coupes, species



























Table 2-2.


Types of soil disturbance recorded in conventional and reduced-impact logging units
(N = 4 per treatment) presented as mean percentage (SD) of total area logged.


Conventional Logging Units Reduced-Impact Logging Units
Area With Sidecast Soil(%)*** 2.1% (0.2) 0.4% (0.5)
Skid Trail Surface Area (%)'" 9.9% (2.7) 3.2% (1.6)
Bladed (%) 87.2% (5.6) 37.7% (9.9)
Churned (%) 11.1% (4.9) 50.2% (7.3)
Compacted (%) *1.6% (1.1) 12.1% (9.5)


0.1 ** P < 0.01

























Table 2-3.


Characteristics of vegetation in 1994 on skid trail tracks, skid trail edges, and
adjacent forest in three logging coupes. Species richness refers to all woody stems
>1 m tall and <5 cm dbh. All values are means (SD) per plot for four logging units,
each unit with 10 sampling plots (2 x 2 min). Different superscripted letters within a
row denote a significant difference (P < 0.05) between habitats within a coupe using
Tukey multiple comparisons following ANOVA.


Coupe Skid Trail Track Skid Trail Edge Forest
Canopy Cover '91 66% (14)a 83% (3)b 89% (2)b
'88 90% (3)' 92% (4)" 94% (2)"
'76 93% (2)b 90% (2)" 93% (2)b
Species Richness '91 1.8 (1.1)8 5.5 (2.2)b 7.0 (0.7)b
'88 1.1 (0.1). 3.8 (1.1)b 5.1 (1.0)b
'76 2.7 (0.9)a 5.2 (1.0)b 6.5 (1.0)b








28

richness (woody plants >1 m tall, <5 cm dbh) was lower on skid trail tracks than in edge or adjacent

forest habitat (Table 2-3).

Fewer saplings were found on skid trail tracks than on skid trail edges or adjacent forest in

all three logging coupes (Table 2-4). The '91 and '76 logging coupes had identical mean sapling

densities on skid trail tracks although variance was higher in the '91 coupe than in the '76 coupe

(Table 2-4). Forest habitats in all three coupes had relatively few pioneer tree saplings. Pioneer tree

saplings were relatively abundant on skid trails and edges in the '91 coupe. Edges in the '88 coupe

had more pioneer saplings than either the skid trails or adjacent forest. In the '76 coupe, pioneer tree

sapling density was similar in the three habitats.

Dipterocarp sapling density was less on skid trails than adjacent forest in the '76 and '91

coupes (Table 2-4). In the '88 coupe, the three habitats had similar densities ofdipterocarp saplings.

The observed densities of dipterocarp saplings on skid trail edges and in adjacent forest habitats were

similar to densities recorded for unlogged forest (mean = 430 saplings ha"', SD = 158; 1993 coupe)

though the diversity was quite low in the '76 coupe where Hopea nervosa was dominant.

Aboveground biomass on skid trail tracks was extremely low ( 1.1-2.2 Mg biomass ha') and

was similar for the three logging coupes (KW= 1.5, df= 2, P = 0.47; Table 2-5). Coarse root

biomass under skid trails followed a general pattern of more biomass under older skid trails. Under

skid trails in the '76 coupe, coarse root biomass was greater than it was under skid trails in the '91

coupe (Table 2-5; q = 4.16, P < 0.05). Coarse root biomass under skid trails in the '88 coupe was

intermediate and not statistically different from either the '91 or '76 year old skid trails (qy9 ,8 =

2.08, P > 0.05; q-6 ,,,, = 2.08, P > 0.05). Dead root mass under skid trails was much higher in the

'91 coupe (median,, = 6.6 Mg necromass ha-', N= 4) than in either the '88 or '76 coupes (median88

= 1.0; median76 = 0.6, Table 2-5). Total coarse root mass was not different among the three logging

coupes (KW=3.04, df= 2,P = 0.22). Woody roots >15 mm diameter made up about 43%, 50%,






















Table 2-4.


Stem densities (>1 m tall, <5 cm dbh) in 1994 on skid trail tracks, skid trail edges,
and adjacent forest in three logging coupes. All values are means (SD) per ha;
densities were calculated from 4 m2 plots, 10 sample plots per unit, four units per
coupe. Different superscripted letters within a row denote a significant difference (P
< 0.05) between habitats within a coupe using Tukey multiple comparisons
following ANOVA. Similar results were obtained when habitats were compared
using frequency data in contingency table analyses.


Coupe Skid Trail Track Skid Trail Edge Forest
# Saplings and Vines '91 8,130 (4,880)a 22,060 (8,670)b 22,500 (2,280)"
'88 3,500 (710)' 12,630 (3,350)b 15,880 (2,950)b
'76 8,130 (2,070)' 18,380 (1,830)b 22,750 (4,410)"
# Pioneer Tree Saplings '91 2,630 (2,630)"b 4,690 (2,100)' 560 (800)"
'88 1,000 (890)b 3,560 (970)' 880 (720)b
'76 310 (320)' 440 (720)a 60 (130)'
# Dipterocarp Saplings '91 60 (130)a 560 (560).b 810 (130)b
'88 130 (250)' 250 (500)' 310 (470)2
'76 0 (0). 440 (330)b 1,560 (1,390)"




























Table 2-5. Above- and below-ground biomass and necromass for three ages of skid trails.
Values are medians (Mg organic dry mass ha' with range noted parenthetically) for
N = 4 logging units (n = 10 samples per unit). Different superscripted letters within
rows denote a significant difference (P < 0.05) between ages in nonparametric
pairwise comparisons.


3 Year Old 6 Year Old 18 Year Old
Aboveground Biomass 2.2 (0.8- 7.9)a 1.1 (0.5-1.7)a 1.4 (0.8-1.6)a
Living Coarse Roots 0.3 (0.0- 1.0)' 1.7 (0.7-4.2)'b 4.6 (2.2-7.6)b
Dead Coarse Roots 6.6 (0.4-12.0)' 1.0 (0.2-2.1)' 0.6 (0.2-3.4)b








31

and 69% of total living coarse roots under skid trails in the '91, '88, and '76 logging coupes,

respectively.



Discussion

Soil Disturbance Conventional versus Reduced-Impact Logging

In sites logged according to the RIL harvesting guidelines, proportionally less area of soil

was disturbed than in sites logged by conventional methods. An inefficient layout of skid trails,

typical of unplanned, unsupervised operations, was apparent in conventional logging areas. Skid

trails in conventional logging units were often cross-linked and located within 10 m of each other,

whereas, in general, skid trails in RIL units were widely spaced and evenly dispersed across the

logged area. A time-motion study of skidding practices in the two treatment areas documented the

higher level of efficiency of yarding in RIL operations as compared with conventional logging, 1.98

US$ m3 and 4.51 US$ m3, respectively (J. Tay unpubl. data).

The harvesting guidelines adopted by the RIL project include specifications about road

location and construction, but the road in the RIL pilot project area was constructed before adoption

of the RIL guidelines by the concessionaire, compromising flexibility in locating skid trails. The

road was positioned low on slopes; this location was suboptimal and often forced downhill skidding.

There was no difference in road density for the two methods (Table 2-1), but the area covered by

sidecast soils, associated with the road, was less in RIL areas than in conventional logging areas,

even though the roads in RIL units were used for processing logs. This difference reflects the

attitudes of the operators working in the two areas; bulldozer operators in RIL areas worked carefully

and with the awareness that the project's goal was to reduce damage. The operators in conventional

logging areas were not similarly motivated.








32

The extent of soil damage associated with conventional logging in this study (mean = 17%;

range = 14-20%) was at the low end of the range of published values for unsupervised logging in

Malaysia (e.g., 43%, Fox 1968a; 17%, Borhan et al. 1987; 16%, Jusoff& Nik 1992; 30%,

Nussbaum et al. in press) and was similar to values for operations in Suriname (14.5% and 16.0%,

Hendrison 1990) and Indonesia (16%, Cannon et al. 1994). Skid trail area in RIL units was similar

to values obtained with planned operations in Suriname (5-7%, Hendrison 1990) and Australia (5%,

Crome et al. 1992). The large variation in values reported for dipterocarp forests in Sabah may be

due to differences in sampling methods, biases towards roadside locations, or differences in local

topographical conditions. I expect the results from this study are relatively free from sampling biases

because soil disturbance associated with logging was measured in 100% of the area of the eight

logging units.

In general, damage to the residual stand is positively correlated with timber volume extracted

(Nicholson 1979). In this study, soil damage was positively associated with harvested volumes in

conventional logging areas but not in reduced-impact logging areas (Fig. 2-2). If main skid trails are

located to optimize efficiency of log extraction, bulldozers are restricted to main skid trails, and logs

are winched from the forest to the skid trail, one might expect that, after the whole area was rendered

accessible by the main skid trails, the proportion of area disturbed by logging would remain fairly

constant, regardless of the number of trees removed.

Unfortunately few studies of soil damage associated with logging in tropical forests include

information on the volume of timber extracted or express damage in terms of volume extracted.

Failure to include information about logging intensity makes it difficult to compare sites. One

exception is a study conducted in the Brazilian Amazon; Verissimo et al. (1992) found that 218 m2

of ground surface was scraped by bulldozers (roads and skid trails) for each harvested tree.

Comparable figures for this study are much lower (mean cNv = 140 m2 tree' and








33

mean IL = 94 m2 tree-'), perhaps reflecting differences in the size of harvested trees and number

extracted per hectare.

Skid trails in RIL units were, in general, less severely damaged than those in conventional

logging units, the proportion of skid trails with subsoil disturbance was less than half that in the

conventional logging areas. In part, this difference may be due to the fact that bulldozers did not

traverse slopes >35 degrees in RIL areas, so may have been less likely to require the use of the blade.

Blading is often considered essential on slopes >24 degrees to increase stability and control (Stuart &

Canrr 1991). But blading and side-cutting were not restricted to steep areas in the conventional

logging units; z87% of the skid trails had exposed and disturbed subsoils. The skid trails receiving

subsoil disturbance in RIL units (=38%) were typically main skid trails that received heavy traffic.

In conventional logging units, branch and main trails were not distinguishable in terms of soil

damage class. The restriction on wet-weather skidding in RIL areas also probably contributed to the

observed differences; in RIL units, all skid trails showing subsoil disturbance had been logged during

the wetter season.

Plant Regeneration on Skid Trails

Fewer sapling and pole-sized trees were found on abandoned skid trail tracks than in

adjacent, residual forest in '91, '88, and '76 logging coupes. This result suggests that, even 18 years

after logging, tree regeneration on skid trails is less than that in residual forest. Tree regeneration on

the edges of skid trails appears similar to that in adjacent forest in terms of sapling densities and

species richness. However, species composition is different in the two habitats, with pioneer tree

species being more common on skid trail edges than in residual forest.

Sapling densities in the '91 and '76 coupes are very similar, suggesting that conditions for

tree regeneration on older skid trails are no better than those on younger skid trails. The similarity in

biomass on skid trails from the three logging coupes also suggests little change. Immediately after








34

logging, 98% of the skid trail area in conventional logging units was bare of vegetation. The

quantity of aboveground biomass on the 3-, 6-, and 18-year-old skid trails was only slightly higher

than that recorded on one-year-old skid trails (0.3 Mg biomass ha'; SD = 0.38; Chapter 3). Living

coarse root biomass appears to be increasing with time since logging, as one might expect, but at 18

years after logging, coarse root biomass was 12% of the pre-logging value observed elsewhere in the

forest reserve (Chapter 3).

I interpret the results from this study with caution and recognize that pre-logging conditions

in the three logging coupes studied may have differed. Nevertheless, I am fairly confident that all

three areas were heavily logged (Pacific Hardwoods, unpubl. data) and that the coupes have not been

re-entered by heavy equipment after the initial selective cut. I chose three different-aged logging

coupes in order to look at the potential for recovery on skid trails over time, but comparisons among

habitats within a coupe involve fewer assumptions than do comparisons across the three coupes.

I expected that if soil disturbance favors pioneer trees over more persistent species, then the

density of pioneers on skid trails would be higher than in adjacent forest. This was supported by the

data from the younger areas, the '91 and '88 coupes, where pioneer sapling densities on skid trail

edges were higher than densities in adjacent forest. Densities on skid trail surfaces were not different

from densities in forest plots. Perhaps pioneer tree densities in forest plots were high relative to

undisturbed forest because of the inclusion of felling gaps, which may provide opportunities for

pioneer tree establishment, in some of the plots. Also, few pioneer saplings would be expected to

survive under the closed canopy observed in the '88 and '76 coupes.

Several studies in neotropical rain forest recorded vigorous tree seedling establishment along

the edges of skid trails and roads (e.g., Jonkers 1987; Verissimo et al. 1992; Guariguata & Dupuy

1995) two to three years after logging. It does not necessarily follow, however, that high densities of








35

saplings on skid trails will eventually develop into a stand of trees; unfavorable soil properties (e.g.,

compaction and low nutrient status) may continue to limit tree growth on skid trails for many years.

I attribute lower densities of saplings on skid trails as compared with adjacent forest to

unfavorable establishment conditions in those habitats. An alternative explanation for lower sapling

densities on skid trails is that crowns and root systems of residual trees occupy these areas and the

competition for resources on skid trails is greater than that in adjacent forest. Sapling densities in

these sites may have been lower than in adjacent forest prior to skid trail construction. A

manipulative study of tree establishment in these habitats that controlled for competition with

neighboring trees would help to elucidate the mechanisms driving differences in sapling densities.



Conclusions

Implementation of harvesting guidelines in a ground-based yarding system substantially

reduced the extent and degree of soil disturbance associated with logging. About 84% of the skid

trail area in conventional logging areas had subsoil disturbance. Distribution patterns in biomass,

species richness and sapling density across habitats in logged forest suggest that even 18 years after

conventional logging, areas with soil disturbance are less productive than areas without. In reduced-

impact logging areas, about 62% of skid trail area retained topsoil. Retention of organic matter in

these compacted areas may result in improved plant regeneration (Woodward in press), but for many

soils, most compaction associated with skidding happens with the first few passes of the bulldozer

(Dias & Nortcliff 1985; Koger et al. 1985). If damage to soil structure is to be minimized, reducing

the area traversed by bulldozers will be more important than reducing the traffic on any particular

skid trail.














CHAPTER 3

RETAINING FOREST BIOMASS BY REDUCING LOGGING DAMAGE



A pilot carbon offset project, in which a power company provided funds to a timber

concessionaire to implement guidelines aimed at reducing logging damage, was initiated in Malaysia

in 1992; in doing so, the utility gained potential credit towards future emissions reduction

requirements. To quantify the carbon retained due to this effort, dipterocarp forests logged according

to reduced-impact logging guidelines were compared to forests logged by conventional methods, in

terms of above- and below-ground biomass both before and after logging. This comparison is the

focus of this chapter.

I have three objectives for this chapter. The first objective is to describe forest biomass

stores both before and after logging. The second is to compare logging damage in forest logged by

conventional methods and in forest logged according to reduced-impact logging harvesting

guidelines. The third objective is to quantify the carbon retained in biomass due to implementation

of the harvesting guidelines.



Study Site

The experimental area in Ulu Segama supports primary dipterocarp forest, spectacular both

for its stature and its high density of big trees. Canopy height averages z45 m but emergent trees

reach heights of 70 m. The terrain consists of series of steep ridges; over 75% of the area occurs on

slopes exceeding 20 and generally <200-300 m long (Pinard, unpubl. data). Soils are varied but








37

primarily are Ultisols derived from Tertiary sediments (Ohta & Effendi 1992). The climate is only

slightly seasonal with a dry period centered on April. Mean annual rainfall is approximately 2700

mm and mean daily temperature is 26.7C (Danum Valley Field Centre Records, 1986-1993).



Methods

Pre-logging Measurements

Forest biomass and stand structure before logging were measured to allow comparison of the

effects of logging treatment on carbon stores. Prior to logging, four logging units (30-50 ha each)

were randomly selected from the experimental area to be logged according to the reduced-impact

logging guidelines (hereafter RIL units); four additional units were randomly selected from an

adjacent area destined to be logged conventionally (Fig. 3-1). Units logged conventionally or by the

RIL guidelines were paired according to topography and logging schedule to reduce variability of

logging impacts on the residual stand due to differences in soil moisture content and slope. The

conventional logging units were harvested by crews not involved in the reduced-impact logging

project. A crew that was trained with funds from the power company and was experienced with

directional felling and proper log extraction techniques harvested the RIL units according to the

reduced-impact logging guidelines.

Experimental Design

Within each unit 20 to 35 1600 m 2 plots (40 x 40 m for 6 units or 20 x 80 m for two units,

approximately 10% of each logging unit area) were located according to a stratified random design

(Fig. 3-1), avoiding areas within 20 m of permanent streams, within 10 m of a logging unit boundary

or a main road, steep rocky areas (slopes >45), and landslides. In the eight logging units, a total of

216 plots was established. No plots were established at 49 points dismissed due to exclusions listed

above.



















il,


c "
ut -o









c~ )
o 1
t 3





0 co
-o 0u


2 05


SE







V ) q7



C) -
U,

E E




~oE.
o0 0 U-0












000







r
-* CT3 0
U*-* U,.
cU 0 UL






3 rnX
u -
2~ io .





o- 0
so Xl 2
6 U
U,- I/
^-/ uU
r xu o








-B- B- -B-
-B-B--B -
-B-B--B-

B- -B-B- -


-B-B -B-

-EB-B-E- -
-B-B--B--

-B- -B-B -


S
% 0
' Cl










Aboveground Biomass

Each tree >60 cm diameter was tagged and its diameter measured at 1.3 m or above

buttresses (hereafter, dbh). Nested subplots were used for smaller trees and lianas (Fig. 3-1). All

commercial trees tagged in the plots were identified to species or timber species group. Stem and

bark damage were described, and any other tree characteristics that might be mistaken for logging

damage were noted. Lianas were tagged and measured only in the four units to be logged

conventionally because most of the lianas were cut prior to plot establishment in the units to be

logged according to the reduced-impact logging guidelines.

Aboveground tree biomass was estimated allometrically using tree inventory data and stem

volume diameter height relations calculated for 15 local species groups in the Ulu Segama Forest

Reserve (Forestal International Limited 1973; Appendix B) and a Biomass Expansion Factor (BEF)

developed for good hill dipterocarp forest in West Malaysia (Brown et al. 1989). The BEF for good

hill forest was selected over the factor developed for other Malaysian dipterocarp forest types

because the basal area for good hill forest (28.5 m2 ha"1 for trees >15 cm dbh) most closely matched

that of the study site. Wood densities were available for 120 of the 124 species or species groups

recorded in the plots (Burgess 1966). To convert wood densities determined at 12% moisture

content (air-dry weight) to density at dry weight, I applied a regression developed by Reyes et al.

(1992). For non-dipterocarp species whose wood density was not known, I used the arithmetic mean

of the known species that were not dipterocarps (0.503 g cm3, N= 48 species). For dipterocarp

species whose wood density was not known, I used the mean value of the known species within the

genus (or section of the genus, when applicable). Biomass of lianas >2 cm dbh was estimated from

basal area using a regression equation developed for Venezuelan liana species (Putz 1983).

To supplement the available stem volume equations, which I judged were inappropriate for

trees <10 cm dbh, I harvested 40 randomly selected trees 1-10 cm dbh, representing a mixture of








41

species and determined their aboveground biomass. Sampling was conducted in primary forest

within 1 km of the study sites. A regression equation was calculated with dbh as the independent

variable and tree biomass as the dependent variable. To determine total small tree biomass, I applied

the dbh-biomass equation to the trees (1-10 cm dbh) in the permanent plots.

Shrub, herb, palm, and herbaceous vine biomass was measured in 3 RIL and 3 conventional

logging units using 1 m2 circular clip plots (n = 15 per unit, N = 45 per treatment) randomly located

in a stratified random fashion using three topographical positions as strata. Each plot was considered

a sample and logging unit divisions were assumed to be inconsequential to the estimate as the

variation within a unit was much higher than that between units. In the clip plots, all above-ground

plant biomass (<1 cm diameter at base) was cut at the soil surface and weighed, and then a

subsample was oven-dried at 70 C to constant mass. For self-supporting species, only plants rooted

inside plots were included. For vines, all stems and leaves occurring over the clip plots were

collected regardless of the rooting site. Palms (primarily stemless rattans) that occurred in the plots

were also clipped and collected.

A conversion factor of 50% is frequently used to estimate carbon content of plant tissues

(e.g., Harmon et al. 1990; Hoen & Solberg 1994). To determine whether woody tissue in my site

was similarly about 50% carbon, I tested a small number of wood samples randomly collected from

fresh logging debris for carbon content. Twenty samples, approximately 45 cm3 each, were collected

from log and branch debris. The samples were split into small pieces, oven-dried, ground and sieved.

Carbon content was determined using a Carlo-Erba NA 1500 Carbon-Nitrogen Elemental Analyzer

(Isotope Ratio Mass Spectrometer, Department of Soil Science, University of Florida, Gainesville,

FL). Carbon content averaged 49.2% (SD = 1.1, N= 20; statistically different from 50%, t = 3.55,

df= 19, P < 0.005). I assume all plant tissues to be 49.2% carbon by dry weight though I recognize








42

that certain tissues often have carbon contents that are above or below this percentage (e.g., seeds

and fine roots, respectively; Golley 1969; Williams 1986).

Belowground Biomass

Pre-logging root biomass was sampled in the eight logging units using a stratified random

design, traversing terrain typical for each unit (n = 10 pits per unit, total N = 40 pits per treatment;

logging unit divisions were disregarded in the analyses). Coarse roots (>5 mm diameter) were

sampled in 50 x 50 cm monoliths of soil extracted to 50 cm with a sledge-driven flat blade. Roots

were separated from the soil in the field and washed, live and dead roots were separated, and sorted

into four diameter classes in the lab (5-15, 15-50, 50-150, and > 150 mm diameter); and live roots

were weighed and subsampled for dry weight determination. Dead roots were weighed and

subsampled in a subset of the samples (N = 56). I did not sample deeper than 50 cm in the soil

profile for coarse roots and consequently underestimate carbon stored in coarse roots. Fine root (<5

mm diameter) mass was estimated using 5 cm diameter cores taken to 10 cm depth; two cores were

taken at each sampling site, combined, soaked in water, and agitated (n = 10 sample sites per unit,

total N= 40 per treatment; logging unit divisions were disregarded in analyses). Roots were then

separated from soil, oven dried, and weighed. Due to difficulties in confidently differentiating live

and dead roots, only total fine root mass values are reported. A few of the early samples were not

included as only live roots were dried and weighed.

To determine coarse root biomass directly beneath trees where core sampling was

impractical (hereafter, butt roots), 14 partially uprooted trees (20-130 cm dbh) along roadsides and

skid trails within the 1993 logging area were opportunistically sampled to establish the relationship

between butt root mass and dbh. Coarse roots >10 mm diameter within 1 m of the bole of the tree

were separated from the soil, cut into pieces <50 kg, washed, weighed, and subsampled for dry

weight determination. Butt root mass was log-transformed and used as a dependent variable in a








43

regression equation with dbh as the independent variable. To determine total root mass, I applied the

dbh butt root mass equation to trees in the permanent plots and calculated the mean butt root

biomass per ha across the eight logging units. Coarse and fine root biomass are expressed on a per

ha basis, the calculation of which excluded areas occupied by butt roots.

Damage Assessment and Necromass Production

Permanent plots were recensused for tree damage and survival 5-30 days after logging and

again 8-12 months later. All trees and vines were relocated and assessed for damage. Although

numerous damage classes were used in the field, here I compress them into the following: destroyed

(uprooted and crushed), snapped-off below crown, and other damage (includes crown, stem, bark, or

root damage of varying severity).

From the damage assessment data I estimated (by logging unit) the following parameters:

timber volume extracted; necromass produced from the branches, leaves, stumps and butt roots of

harvested trees; necromass produced from trees destroyed during harvesting; and, necromass

produced from damaged trees that died within the first 8-12 months after logging. Aboveground and

butt root biomass were included in these calculations.

The biomass of shrubs and herbs in logged forest was measured using 1 m2 clip plots (n =

15) randomly located along transects dispersed through each of seven logging units (3 RIL, 4

conventional logging) 1 year after logging; the sampling protocol was similar to that used for pre-

logging measurements. To determine the biomass of colonizers and resprouted plants in areas with

soil disturbance (e.g., skid trails, log landings and roads) 1 year after logging, I sampled skid trails in

the same seven logging units using 1 m2 clip plots (n = 10 per unit, N = 70) located randomly along

skid trails. Although skid trails and other areas with soil disturbance covered a relatively small

percentage of the total area (conventional logging areas, mean = 11.9%, SD = 2.7, N = 4; RIL areas,

mean = 3.5%, SD = 1.6, N = 4; Chapter 2), biomass in these areas was expected to be more variable








44

than that in the rest of the forest, so sampling intensity was higher. As with pre-logging shrub and

herb biomass measurements, logging unit divisions were disregarded in the analyses. Pre- and post-

logging measurements of shrub and herb biomass are not paired, as sampling points were located

randomly in logging units.

Coarse root mass (both living and dead) was measured 3 months after logging in four

logging units (2 RIL, 2 CNV) following the protocol described for the pre-logging measurements.

Coarse-root pits were located randomly on skid trails (10 pits per logging unit, N= 40) and in other

areas of disturbed forest (10 pits per unit, N= 40). The difference between mean coarse root

biomass before and 3 months after logging (corrected for proportion area in skid trails and disturbed

forest) was considered to have entered the necromass pool (if biomassfore > biomasser at a = 0.05).

As with understory biomass, logging unit divisions were disregarded thus pre- and post-logging

samples were not paired for statistical comparisons. I did not harvest fine roots after logging and

assume that fine root mass 1 year after logging is similar to mass before logging.

For all of statistical comparisons I use a significance level of 5% but report test statistics

when P values are between 0.1 and 0.05. T-tests are two-tailed using pooled variances unless stated

otherwise. For t-tests using separate variances, degrees of freedom were calculated following

Brownlee (1965 in Wilkinson 1990). For treatment comparisons based on the aboveground biomass

plots, rather than using a global analysis of variance, I use separate t-tests for each diameter class.

Nested subplot size was selected for sampling convenience, not to allow equal variances among the

diameter classes. The term biomass always refers to living plant material.








45

Results

Pre-logging Conditions

Stand structure in RIL units was similar to that in conventional logging units prior to logging

(Fig. 3-2). The mean number of harvestable trees per hectare (commercial species with dbh >60 cm

dbh) ranged from 14.4 to 26.9 in the eight logged units (mean = 19.0, SD = 3.88); densities in RIL

units did not differ from those in conventional logging units (t = 0.244, df= 6, P > 0.8). Total basal

area of trees 2 10 cm dbh in the eight logging units ranged from 24.9 to 33.1 with an overall mean of

27.5 m2 ha' (SD = 2.86). Tree densities for the two treatment areas did not differ for any diameter

class (t-tests, a = 0.05). In the conventional logging units, density of lianas >2 cm dbh averaged 586

stems per ha (SD = 211, N = 4), about 86% of which were <5 cm dbh.

Of the 6298 trees 10 cm dbh in the plots, 59.3% (representing 83.3% of the total basal

area) were identified to species or species group. Dipterocarpaceae was well-represented in the study

area, comprising 29.6% of the tagged trees 10 cm dbh and 67.9% of the basal area (Table 3-1).

The forest was dominated by two dipterocarp species, Parashorea tomentella and Shorea

johorensis, which together made up 20% of the stems 10 cm dbh and 47.8% of the basal area. The

10 most abundant species or species groups were represented similarly in the RIL and conventional

logging units. The 15 stem volume equations used in biomass calculations for trees (2 10 cm dbh)

along with the species allocated to each are presented in Appendix B.

Total biomass in the two treatment areas averaged about 400 Mg ha' with approximately

17% occurring below ground (Table 3-2). For each diameter class, aboveground biomass per ha was

equivalent for the two treatments (Table 3-2). Approximately 59% of the initial aboveground

biomass was in trees >60 cm dbh. Small trees (<10 cm dbh) contributed approximately 4% of total

aboveground biomass (Table 3-2; Fig. 3-3). Understory plant biomass contributed approximately

1% of total aboveground biomass and was similar in RIL and conventional logging units (Table 3-2).
























3000 300 T 30



2500 250 25
0.3


S2000 200 20
E

0
1500 150 15












vaines. ) 00)
z
1000 100 10



500 50 5



00--
1-5 5-10 10-20 20-40 40-60 >60

Diameter class (cm dbh)





Figure 3-2. Stem density (mean +/- SE) for logging units prior to logging (black bars units logged
according to the RIL guidelines, open bars units logged conventionally; Note different y-axes). Pre-
logging stem densities by diameter class did not differ for the two treatments (t-tests with pooled
variances, a = 0.05).





















The 10 most common species or species groups of trees > 1 cm dbh based on
density and basal area (BA, m2 ha') before logging in the eight logging units (all
plots, N = 170). Merchantable species or species groups are marked with an
asterisk.


Species or % Stems Species or % BA


Species Group Species Group

Parashorea tomentella* 12.2 Parashorea tomentella* 24.1

Shorea johorensis* 7.8 Shorea johorensis* 23.8

Eugenia spp. 5.8 Annonaceae 5.4

Lauraceae 5.5 Shorea parvifolia* 3.5

Diospyros spp. 5.3 Eugenia spp. 3.4

Annonaceae 4.0 Diospyros spp. 3.4

Shorea parvifolia* 1.4 Shorea leprosula* 2.6

Shorea leprosula* 1.4 Dryobalanops lanceolata* 2.4

Dryobalanops lanceolata* 1.4 Lauraceae 2.2

Shorea section Shorea* 1.1 Shorea section Shorea* 1.7


Table 3-1.

















TABLE 3-2. Above- and below-ground biomass for the two logging treatment areas before
logging. Values are means (Mg ha-'), with SD and N noted parenthetically. For
trees, vines, and butt root mass, SD describes variation among four logging units
and does not incorporate error in biomass equations. No significant differences
were detected between treatments (t tests, P < 0.05).

Before Logging Conventional Logging Reduced-Impact Logging

Trees >60 cm dbh 190 (35, 4) 190 (53, 4)

Trees 40-60 cm dbh 53 (20, 4) 46 (6.5, 4)

Trees 20-40 cm dbh 46 (2.5, 4) 46 (6.3, 4)

Trees 10-20 cm dbh 21 (2.7, 4) 23 (2.8, 4)

Trees <10 cm dbh 13 (2.0, 4) 12 (2.0, 4)

Vine Biomass 7.6 (3.8, 4) 7.6 (3.8, 4)b

Understory Biomass 2.87 (1.50,45) 2.94 (1.67, 45)

Butt Root Mass 26.8 (6.2, 4) 24.5 (5.7, 4)

Coarse Roots (Alive)c 35.9 (33.0, 40) 39.4 (38.7, 40)

Coarse Roots (Dead)' 1.6 (2.6, 30) 1.8 (3.5, 26)

Fine Root Mass 2.57 (1.30, 31) 2.74(1.43, 18)
Total Mean (SD) Biomass Before Logging 399 (40)' 394 (59)e
a Each logging unit considered a replicate and subsampled with 10-27 plots.
b Assumed to be equivalent to conventional logging units; no statistical comparison made between
treatments.
c Log-transformed data used for statistical comparison.
d Not included as biomass.
SVariance for sum of means calculated using a weighted estimate: E1k ((k(wi)si2)/(n,)), where k = #
of components, wi = mean of component/sum of means.
























-4-
.2


0.5- (


0.0- 0


-0.5
2 4 6 8 10

Dbh (cm)









Figure 3-3. Relationship between dbh and total biomass for small trees (1-10 cm dbh), all species
combined. The line represents the following regression equation: Loge (Dry Weight in kg) =
0.539 DBH 1.25 (R2 = 0.93, SEslop =0.021, SEntercept = 0.119, P < 0.001, N= 40).








50

Approximately 2% of the aboveground biomass in conventional logging areas was in vines; small

vines (2-5 cm dbh) contributed about 56% of the vine biomass.

Total belowground biomass averaged approximately 66 Mg ha' in the two treatment areas;

about 40% was in butt roots, and about 56% was in coarse roots (Table 3-2). Estimated biomass in

butt roots for trees 220 cm dbh increased with diameter according to the following relationship:

Loga(Dry Weight) = 0.014 DBH + 1.51 (Fig. 3-4). Application of the above regression equation

to trees 220 cm dbh in the plots used for aboveground biomass yields an overall butt root biomass

estimate of 25.6 Mg ha' (SD = 5.84, N= 8). Coarse root biomass (>5 mm diameter) was extremely

variable (overall C.V. = 95%; Table 3-2), owing to the presence of widely dispersed, large roots of

the canopy trees that may extend more than 35 m away from the tree's stem (see Baillie & Mamit

1983 for discussion). Coarse root mass in the two treatment areas were not different prior to logging

(Table 3-2). Mean fine root mass (<5 mm) in the upper 10 cm of soil also did not different in the

two treatment areas (Table 3-2).

Details of Logging

Logging started in July 1993 and ended in March 1994 (Table 3-3). The time required to

log a unit varied from 1 to 24 weeks. Logging in two of the RIL units was prolonged due principally

to wet weather. No dry season occurred during the study period (unpubl. data), and environmental

conditions during logging were fairly similar for all units.

A portion of each of the RIL logging units (mean = 44%, SD = 18.9, N= 4, range 12 to

63%) was deemed unloggable by the rangers due to steep terrain, unstable substrates, lack of

commercial trees, or inaccessibility. Because the principal comparison of this study involves

impacts of two harvesting methods, I eliminated these unlogged areas (and any influenced plots)

from the analysis. Difficulties arose when trying to identify these areas a posteriori but I used the

following criterion: if neither a skid trail nor a stump of a harvested tree was inside a plot or within















4.0 0TI


3.5


3.0

-^ 0
0

2.5 -

CD 0
S2.0 -

00
o 00
1.5 -


1.0-


0.5-


0.0 -. .-----.- .-.-. .-. I I I -
20 40 60 80 100 120 140

Dbh (cm)




Figure 3-4. Relationship between dbh and butt root biomass for trees >=20 cm dbh. The line
represents the following regression equation: Log10 (Dry Weight in kg) = 0.014 DBH + 1.51
(R = 0.88, SEope = 0.001, SEtercept = 0.10, P < 0.001, N= 14).






















Table 3-3.


Dates of logging and volumes of timber removed from reduced-impact logging units
(RIL) and conventional logging units (CNV) in Ulu Segama Forest Reserve.
Volume extracted is based on data from 1600 m2 plots distributed among the four
units, including total area and only loggable area.


Unit No. Dates Logged Volume Extracted Volume Extracted
Per Total Area Per Loggable Area
32 RIL 17 Jul'93 6Aug'93 49.7 99.3

41 CNV 17 Jul'93 -10 Sep'93 129.6 134.1

36 RIL 7 Aug'93 16 Aug'93 18.5 50.4

38 CNV 7 Aug'93 -21 Sep'93 175.9 175.9

30 RIL 10 Oct '93 4 Apr'94 97.6 178.3

23 CNV 10 Oct '93 -11 Nov'93 129.9 129.9
35 RIL 24 Nov'93 -21 Apr'94 67.7 85.3

39 CNV 24 Nov'93 -21 Dec'93 167.8 167.8

Mean RM = 58.4 Mean R = 103.3
SD L = 33.1 SD pL = 54.1

Mean CNv = 150.8 Mean cNv = 151.9
SD = 24.5 SD = 23.3








53

30 m of any plot boundary, the plot was considered to be within an unloggable area. By this

definition, 48 of the 114 plots in the RIL units were eliminated; none of the 104 plots in the

conventional logging units were eliminated.

Mean volume of timber extracted per total unit area ranged from 19 to 176 m3 ha-1 (Table 3-

3). If only loggable areas are included in the calculations, mean volume extracted was 152 (SD = 23)

in conventional logging and and 103 (SD = 54) in RIL areas. The two treatments did not statistically

differ in terms of volume removed from loggable areas (Table 3-3) or associated biomass converted

into logging debris (Table 3-4), but small sample sizes and large variances limit the power of this

analysis. The Pacific Hardwoods mill that converts the timber extracted from Ulu Segama into

lumber, veneer, and blockboard does so with about 50% efficiency (Eng W. H., pers. comm.).

Therefore, in addition to the biomass converted to necromass in the forest, I included 50% of the

biomass of extracted timber in the necromass pool. (Note: most scrap at the mill is burned to

produce electricity; Table 3-4.)

Damage Assessment and Necromass Production

For all dbh classes, proportionally more trees were damaged (all types of damage combined)

from logging in conventional logging areas than in RIL areas (one-tailed t- tests, arcsine transformed

data, ix = 0.05; Fig. 3-5). Proportion of residual trees damaged differed by dbh class (ANOVA on

arcsine transformed data, F= 3.45, df= 5,36, P < 0.02). Generally, proportionally more small trees

were damaged than large trees (Fig. 3-5). There was no interaction in the proportion of trees

damaged between logging method and dbh class (F= 1.4, df= 5,36, P = 0.25).

The percentage of trees destroyed during logging was higher in units logged conventionally

than in units logged according to the RIL guidelines for all dbh classes (Fig. 3-5, one-tailed t-tests,

arcsine transformed data, a = 0.05); the mean values by dbh class ranged from 17 to 57% in





















Biomass converted into necromass. Values are means (Mg ha-'), with SD noted
parenthetically. SD describes variation among four logging units and does not
incorporate error in biomass equations.


Conventional
Logging Units


Reduced-Impact
Logging Units


50% of Extracted Timber'


Branches, Stumps, and Butt Roots of Extracted Treesb

Destroyed Trees (Uprooted and Crushed)

Damaged Trees Dead Within One Year After Logging

Lianas Destroyed


Understory Plant Deathc


Coarse Root Death (Excluding Butt Roots)c


Total Necromass Produced =


32.22 (4.4)

67.14 (9.76)

67.49(45.68)

7.20 (6.90)

5.05 (3.23)

1.74 (1.77)

10.8 (42.39)

192 (43)d


25.50 (11.12)

45.93 (22.96)

14.28 (9.56)

4.01 (5.00)

6.61 (3.3)

1.78 (1.94)

10.4 (48.47)

108.5 (22.5)d


Mean (SD) Difference Between Two Logging Methods =


86 (43) Mg Necromass ha'1


" 50% of the extracted timber is assumed to be converted into wood products.
b Treatment comparison t-test with separate variances, t = 1.79, df= 3.8, P = 0.15.
c Represented as the difference between biomass before logging and biomass at 1 yr after logging.
d Variance for sum of means calculated using a weighted estimate: Elk ((k(w)sj2)/(n)), where k = #
of components, wi = mean of component/sum of means.


Table 3-4.












40-60



S20-40
S
o
Cn
c 10-20



5-10
* ^M


0.0


ZRIL'CNV
]ECNV


RIL
IMCNV



MCNV


CNV


0.2


0.8


Proportion of trees


Uprooted and crushed
I -I Snapped-off below crown
Other types of damage







Figure 3-5. Mean proportion of trees completely destroyed, snapped-off, or otherwise damaged
(stem, bark, crown, or root) during logging in 4 units of each treatment. The proportion of trees
snapped-off or otherwise damaged did not differ for the two treatments (t-tests, arcsine transformed
data, alpha = 0.05). (Destroyed trees do not include harvested trees.)


I i I








56

conventional logging areas in contrast to 2 to 22% in RIL areas (Fig. 3-5). The biomass in these

destroyed trees was assumed to enter the necromass pool (Table 3-4).

The proportion of trees snapped-off (below crown) ranged from 3.5 to 10% across the dbh

classes (Fig. 3-5) and was higher in conventional logging than RIL areas for only one of the six

diameter classes, trees 10-20 cm dbh (t = 1.77, df= 6, 0.01< P < 0.05; one-tailed t-tests, arcsine

transformed data). Snapped-off trees were distinguished from other severely damaged trees because

I expected a proportion of these would resprout and would not enter the necromass pool.

The incidence of minor to moderate damage (e.g., crown or bark damage) was higher in

conventional logging units than in RIL units for three diameter classes, 40-60 cm dbh (arcsine

transformed data, t = 1.97, df= 6, P < 0.05), 10-20 cm dbh (t = 2.17, df= 6, P < 0.05), and 5-10 cm

dbh (t = 4.10, df = 6, P < 0.05); the other three diameter classes did not differ (one-tailed t-tests on

arcsine transformed data, c = 0.05; Fig. 3-5).

Sixty-seven percent of the vine stems were killed during logging in conventional logging

units, contributing an average of 4.68 Mg biomass per ha (SD = 0.18) to the necromass pool.

Mortality was evenly distributed across diameter classes (ANOVA, F= 0.49, df= 3,12 P > 0.6).

Vines in the RIL units were neither tagged nor measured prior to cutting. To estimate vine biomass

killed in the RIL areas I assume that vines cut were killed (87% of stems 2 2 cm dbh cut, F. E. Putz,

unpubl. data) and that they represented 87% of the total vine biomass (Tables 3-2, 3-4 & 3-5).

Reassessment

At 8-12 months after logging, many of the damaged trees were dead (Table 3-6). Overall,

18% of the trees (>5 cm dbh) snapped-off below the crown had not resprouted, so were considered

dead. In general, trees snapped off at a height > 10 m resprouted regardless of logging treatment.

The mortality rates for trees receiving other types of damage ranged by dbh class from 0 to 3% in

RIL areas and from 3 to 10% in conventional logging areas (Table 3-5). The percentage of these











o&










o a








I 0
8-







00 -




Ig|2












0 ,



u o -oa













.Cu
U



IN,!























F- s


00
r' o/~ Cl -' 6


0


0- 0C \0 0
^f f Cl -S


o 0c
;3 10
4) 4) 4
.^ I


57
0

II




iri
II





O
00
Cl
II







0'
6

00
6


E


00 0


Q0
a g



0

E E








24



C4)

700
a 11

0 0






















< >
4) II
S2 .-

&U u
-00




4) '-,





.0
00



cS-0




. E 0


0 S 2 0
S 2o1




























Table 3-6. Percentage of trees dead at 8-12 mo after logging for each treatment (RIL =
reduced-impact logging, CNV = conventional logging). All trees in the four logging
units were pooled for each treatment to generate mortality figures; sample sizes (i.e.,
number of trees) are noted parenthetically. All trees uprooted or uprooted and
crushed were assumed dead.



Dbh Snapped-off Other Damage Undamaged

CNV RIL CNV RIL CNV RIL


2 60cm

40-60 cm

20-40 cm

10-20 cm

5-10 cm

1-5 cm


14.3% (7) 28

22.0% (18) 42

21.7% (60) 12,

17.9% (84) 21.

11.3%(53) 10.

23.8% (21) 22.


i.6% (7)

2.9% (7)

1%(33)

1%(38)

0% (20)

7% (22)


2.7% (37)

10.0% (40)

8.2%(171)

8.2%(171)

8.6% (93)

6.0% (100)


0.0% (27)

0.0% (15)

0.0% (100)

2.9% (69)

2.9% (34)

1.5% (67)


0.0% (72)

0.0% (90)

0.9% (352)

0.5% (414)

1.4% (283)

0.5% (374)


0.0% (101)

0.5% (94)

0.3% (382)

0.0% (509)

0.6% (349)

0.4% (282)








59

damaged trees that died during the first year after logging was higher in conventional logging areas

than in RIL areas for all diameter classes (Table 3-5). The two logging treatments were not

compared statistically because none of the damaged trees in many logging units had died. Although

many of the damaged trees were expected to die soon, only the proportions that died before the

recensus were incorporated into the necromass pool (Table 3-4).

Between the time the plots were established and the recensus (approximately 18 mo after

establishment), an average of 0.5% of the undamaged trees (>5 cm dbh) died. The mortality rates for

undamaged trees appears similar for the two treatments (Table 3-5).

Shrub and herb biomass 12 months after logging was less than before logging both on skid

trails (t- test using separate variances, t = 12.64, df= 133.5, P < 0.001; Tables 3-2 & 3-5) and in

otherwise disturbed forest (t = 8.97, df= 193, P < 0.001; Tables 3-2 & 3-5). Biomass on skid trails

was greater in RIL units than in conventional logging units (Table 3-5). Biomass in other

areas of disturbed forest did not differ for the two treatments (Table 3-5). The difference between

shrub and herb biomass before logging and at 12 months after logging was considered necromass

(Table 3-4).

Three months after logging, coarse root biomass (exclusive of butt roots) on skid trails did

not differ between the logging treatments (Table 3-5) but was less than pre-logging levels (log-

transformed data, t = 15.2, df= 118, P < 0.001; Tables 3-2 & 3-5). This decline is probably due to

both root death and excavation and relocation from bulldozer activities. Dead coarse root mass on

skid trails did not differ between treatments (Table 3-5) and was similar to dead root mass before

logging in both conventional (log-transformed data, t = 1.07, df= 58, P = 0.29; Tables 3-2 & 3-5)

and RIL areas (log-transformed data, t = 1.64, df= 54, P = 0.11; Tables 3-2 & 3-5).

In disturbed forest (not skid trails) 3 months after logging, coarse root biomass did not differ

between treatments (Table 3-5) and was similar to pre-logging estimates (log-transformed data, t =








60

1.6, df = 118, P = 0.11; Tables 3-2 & 3-5). Dead coarse root mass in logged-over forest did not

differ from pre-logging mass (log-transformed data, t = 1.35, df 118, P > 0.18; Tables 3-2 & 3-5),

nor did treatments differ (Table 3-5). Because conventional logging units had proportionally more

area with disturbed soil or skid trails than did RIL units (approx. 12% and 3.5%, respectively;

Chapter 2), the calculated total standing stock of coarse root biomass in conventional logging units

was less than in RIL units (Table 3-5). My estimates of necromass produced from coarse root death

(biomassbefore-biomassafter) are associated with relatively large standard deviations (Table 3-4),

reflecting the large variance in the pre- and post- harvest biomass estimates.

One year after logging, forest areas logged by conventional methods and according to RIL

guidelines contained approximately 44% and 67% of their pre-logging biomass, respectively (Tables

3-2 & 3-5). The difference in necromass produced was 76 Mg ha-' (37 Mg C ha-1; Table 3-4). The

greater number of residual trees destroyed during logging in conventional logging areas was

responsible for approximately 62% of the difference between the two methods; the difference in

debris produced from trees felled accounted for approximately 25% of the difference. A large

proportion of the standard deviation associated with the estimate of the difference between the two

methods is due to variation in coarse root death.



Discussion

Implementation of RIL harvesting guidelines substantially reduced logging damage. The

residual forest in the two treatment areas is dramatically different, hence each forest's potential for

both short- and long-term carbon storage also differ. In the following sections, I compare my

biomass estimates to other dipterocarp forests and briefly discuss estimation methods. I compare

levels of logging damage recorded at my sites with other selective cutting operations and discuss

ecological implications of reductions in damage for forest recovery. I also discuss the amount of








61

carbon retained due to implementation of the RIL guidelines, how it could be increased, and how it

relates to power plant emissions and other offset options. Finally I identify several issues relevant to

future efforts to offset carbon through reduced-impact logging and suggest topics needing further

research.

Residual Forest Biomass

Pre-logging aboveground biomass estimates for my sites (291-400 Mg ha-'; mean = 330) are

higher than average moist forest biomass in southeast Asia (mean = 225 Mg ha', N = 204 stand

inventory data sets; Brown et al. 1991) but are comparable to estimates for unlogged forests in

Sarawak (280-405 Mg ha-'; Brown et al. 1991). Big trees (>60 cm dbh) made up about 59% of the

pre-logging biomass at my sites. Degraded forests tend to have few big trees and, consequently, have

much lower stores of biomass (see Brown et al. 1991).

I calculated tree biomass using published regression equations and conversion factors. Both

stem volume equations and biomass expansion factors (BEF) are associated with standard errors but

these errors were not incorporated into my estimates. I assume that the variance inherent in

calculated estimates apply equally to the two treatments. Stem volume equations used in this study

were generated from trees within the Ulu Segama area (Forestal International Limited 1973). The

BEF, however, was based on data taken from Peninsular Malaysia, Indonesia, Cambodia and Brazil;

I did not harvest trees to determine whether or not the selected BEF was appropriate for my site. I

also made no provision for hollow trees.

The estimates of necromass produced from logging were based on a relatively large

sampling area but did not incorporate the complete necromass pool. No effort was made to measure

necromass inputs from trees damaged but not killed (e.g., crowns of snapped off trees, or branches

from trees subjected to crown damage) making my estimate conservative. Also, trees snapped-off








62

below the crown which had resprouted at the 8-12 months census were considered alive, although

many of these trees will probably die within the second year post-harvest (Putz & Brokaw 1989).

Data published on belowground biomass in tropical moist forests are sparse and, generally,

based on few samples. For example, Edwards and Grubb (1977) excavated roots from 2 pits (10 x 5

m) to a depth of about 25 cm. Sim and Nykvist (1991) excavated roots from 7 pits (0.5 x 0.5 m) to

50 cm depth. My estimate (about 17% of aboveground biomass) falls close to the mean of reported

values for tropical moist forests (mean = 19%, range = 7-41%, N = 7; Ogawa et al. 1965; Hozumi et

al. 1969; Jenik 1971; Klinge & Rodrigues 1974; Edwards & Grubb 1977; Bullock 1981; Sim &

Nykvist 1991). Although I underestimate coarse root biomass by sampling only to 50 cm depth, a

more comprehensive root biomass study in dipterocarp forest on similar terrain in Sarawak found

most of the lateral coarse roots to be at 15-40 cm below the surface (Baillie & Mamit 1983). For

fine roots, my sampling of the upper 10 cm probably included 55-60% of total fmine root mass (Green

1993). Bias in my butt root measures are harder to predict. Uprooted trees along roads and skid

trails may not have complete root systems and do not represent a random sample from the

population; furthermore, I made no effort to separate live and dead sections of root.

Logging damage

In this study, there was no correlation between the proportion of stems fatally damaged and

timber volume extracted (R2 = 0.39, P = 0.37, N = 8; Fig. 3-6). This result is contrary to Nicholson's

(1979) finding that logging damage and volume extracted are positively correlated. Across the broad

range of volumes extracted in RIL units, fatal damage was less than 20% of the stand, lending

support to the conclusion that treatment differences in logging damage were due to logging technique

not harvesting intensity.

Relative to other selectively logged tropical forests, the amount of timber removed from my

study site was high, as was the level of logging damage. First cuts in Amazonian moist forest










0.6 -



0.5 -


w.


0.4 -


0.3 -


0.2 -


0.1



0.0


I I I I I I
80 100 120 140 160 180


200


Timber volume extracted (m ha )












Figure 3-6. Mean proportion of stems (1-60 cm dbh) fatally damaged plotted against mean timber
volume extracted (inm3 ha- ; open circles conventional logging units, solid circles reduced-impact
logging units).


0
0


0


0





6

-0 0


-.9


I








64

generally take <50 m3 ha-' (Uhl & Vieira 1989; Thiollay 1992; Verissimo et al. 1992); in African

forests generally <30 m3 ha' of timber is harvested (Nwoboshi 1987; Ola-Adams 1987; Kio &

Ekwebelam 1987; Wilkie et al. 1992; White 1994). Even though the lack of standard methodologies

precludes direct comparisons of results, for four studies where logging damage was reported, damage

to residual trees >10 cm dbh averaged 11% (Gabon White 1994), 18% (Nigeria Ola-Adams

1987), 26% (Brazil Uhl & Vieira 1989) and 43% (Brazil Verissimo et al. 1992). The damage

recorded in my conventional logging areas (approximately 66%), though higher than the figures from

Amazonia and Nigeria, is similar to figures reported for other sites in Sabah (Fox 1968; Chai &

Udarbe 1977), Sarawak (Nicholson 1979; Marn & Jonkers 1981), and West Kalimantan, Indonesia

(Cannon et al. 1994).

Implementation of RIL guidelines in the study area was associated with a reduction in

damage to the residual stand, both in extent and severity. In reduced-impact logging areas, z=27% of

trees >10 cm dbh were damaged and = 19% were dead within the first year after logging, compared

with r=54% damaged and =46% dead in conventional logging areas. Efforts to control damage in

tropical moist forest in Suriname (Hendrison 1990) and Indonesia (J. G. Bertault & P. Sist pers.

comm.) also reduced damage by about half as compared with uncontrolled or conventional logging.

The slopes in my sites, on average, exceeded those recommended for ground-based skidding.

Switching to an aerial yarding system (e.g., skyline cable yarding), as is generally recommended for

slopes >25 degrees (Dykstra 1994), could further reduce damage, as might further training of fellers

and bulldozer operators.

RIL areas had about 25% fewer severely damaged residual trees (all dbh classes) than

conventional logging areas. Often severe damage (e.g., uprooted, crushed, or snapped-off) is

associated with skidding operations and felling trees laden with lianas (Fox 1968; Appanah & Putz

1984). Vine-cutting, planning skid trail locations, and controlling skidding operations may have








65

been instrumental in reducing severe damage in RIL areas. Reductions in less severe damage (i.e.,

crown and bark damage) in RIL areas may have been related to directional felling. Directing trees

onto skid trails or into gaps created by previously felled trees further reduced overall gap size and

felling damage (Hendrison 1990).

Implications for Forest Recovery and Carbon Storage

RIL areas contained nearly 100 Mg more biomass per ha than conventional logging areas 1

year after logging. If both forests were ultimately to recover pre-logging biomass stores, then

regardless of conditions immediately following logging, the net difference in stored biomass, at this

ending point, would be zero. Given that these are production forests, repeated cutting cycles or

conversion to plantations are their probable fates; they are unlikely to be abandoned for the time

needed to fully recover biomass. The timescale relevant to this discussion, therefore, may be through

the next cutting cycle (generally stated as 60 years but it undoubtedly will be shorter). During this

period, differences in growth and mortality rates and other responses to logging could increase or

decrease the difference between the two treatments in biomass stores. I expect biomass to continue

to decline in both areas for 2-6 years after logging. Following stabilization of mortality rates, I

expect biomass accumulation rates to be greater in RIL areas than in conventional logging areas.

The rationale behind my predictions is outlined below.

Mortality rates in logged forest are often relatively high for several years after logging

relative to pre-harvest levels (Wan Razali 1989). Elevated mortality rates may be due to any or all of

the following: a) damage incurred during logging; b) increased exposure and edge effects (e.g.,

Kapos 1989; Young & Hubbell 1991); c) increased incidence of mechanical damage from vines

(Putz 1991) and falling debris (Wan Razali 1989); and d) competition with fast growing trees and

vines (Fox & Chai 1982). Conditions in conventional logging areas (i.e. proportionally more

damaged trees and greater degree of crown exposure) are expected to be associated with higher








66

mortality rates (Korsgaard 1992). The difference in mortality during the first year of post harvest

observations supports this conjecture.

Growth rates in logged forest have been found to be correlated with crown exposure

(Korsgaard 1992; Daalen 1993) and, in general, increased growth rates are frequently observed in

residual trees following selective logging (Jonkers 1987; Wan Razali 1989), thinning operations

(Fox & Chai 1982; Korsgaard 1992), or natural gap formation (Brown & Whitmore 1992). Though

fewer in number, the undamaged residual trees in conventional logging areas may show larger growth

increments after logging than trees in RIL areas because of the more open canopy conditions after

conventional logging. Overall biomass accumulation, however, is expected to be greater in RIL area

than in conventional logging areas because of several characteristics of logged dipterocarp forest,

discussed below.

First, large canopy openings can lead to extensive vine and pioneer tree invasions (e.g., Chai

& Udarbe 1977; Cannon et al. 1994). Residual trees infested with vines or overtopped by pioneer

trees may experience reduced growth rates (Lowe & Walker 1977; Putz et al. 1984). Vine invasions

in RIL areas are expected to be less common than in conventional logging areas due to vine cutting

before logging and more closed canopy conditions after logging (Appanah & Putz 1984). Pioneer

trees may be more likely to colonize conventional logging areas because of more extensive canopy

openings and soil disturbance (Chai & Udarbe 1977). Pioneer trees, because of their low wood

densities and short life spans, may not accumulate as much biomass per unit area as similar-sized

persistent forest species (Jordan & Famrnworth 1980). Second, RIL areas contain more undamaged

trees and more trees in the larger dbh classes than conventional logging areas, so the residual trees in

RIL sites will probably have larger volume increments than residual trees in conventional sites.

Third, sites with scraped and compacted soils accumulate biomass more slowly than sites free of

heavy soil disturbance (e.g., Maycock & Congdon 1992), and proportionally more soil was severely








67

damaged in conventional logging areas. For the skid trails that were opened in RIL areas, higher

biomass 1 year after logging relative to skid trails in conventional logging areas may reflect less

severe soil disturbance due to controlled logging (e.g., restrictions on soil scraping and wet weather

logging). The effect of a larger input of nutrients from logging debris in conventional areas as

compared with RIL areas is difficult to predict. The input may stimulate tree growth but could lead

also to nutrient immobilization by microbes, decreasing nutrient availability for trees (Lodge el al.

1994).

To summarize, for some time after logging, I expect carbon stored in both RIL and

conventionally logged forests to decline from levels immediately following logging because of high

mortality rates and decay of logging debris. If carbon accumulation rates are higher in RIL areas due

to low mortality rates and small quantities of decaying logging debris, they will become net sinks for

carbon in fewer years after logging than the conventional logging areas.

Carbon Offsets Through Reduced-Impact Logging

In this pilot project I demonstrated that implementation of RIL guidelines in dipterocarp

forests that would otherwise be logged in an uncontrolled and destructive manner could result in the

short-term retention of, on average, about 42 Mg C ha-' at a cost of approximately U.S. $300 ha71 (J.

Tay, pers. comm.). If the carbon "savings" was considered through the next rotation (e.g., 40-60 yr),

the difference in carbon stored in RIL areas compared with conventional logging areas is expected to

be greater than 42 Mg ha1'. How policy makers will translate this effort into carbon credits is

uncertain (Dixon et al. 1993; USDOE 1994). Without doubt, however, the time profile of emission

reductions or carbon sequestration will be important for determining the consequences of the action

for climate change (e.g.. Price & Willis 1993).

Forestry-based carbon offset programs, like the Reduced-Impact Logging Project, can

supplement but not replace other efforts such as energy conservation, fuel switching, and increased








68

power plant efficiencies. For example, application of my estimate (43 Mg ha-') to the loggable

portion of the project area (66% of 1400 ha) yields 39,732 Mg C, equivalent to about 11% of the

annual emissions from a 200 MW coal-burning energy plant (Freedman et al. 1992). Given the

ubiquity of poor timber harvesting practices, considerable scope exists for application of reduced-

impact logging in other tropical, subtropical, and temperate-zone forests. This approach to offsetting

carbon may not be appropriate for forests with large proportions of their ecosystem carbon stored in

fallen logs and soil organic matter because harvesting operations can result in large net losses in

carbon over time (Harmon et al. 1990). A forest's potential for retaining carbon by altering

harvesting practices is primarily a function of the forest's biomass, the baseline to which the damage-

controlled site is compared, possibilities for damage reduction, and the volume of timber extracted.

In the pilot project in Sabah, about 36% (or 15 Mg C ha-1 ) of the additional carbon retained in RIL

areas was related to volume extracted and debris from felled trees (i.e. treetops, stumps, butt roots).

Reductions in net volume extracted of the magnitude observed in the project in Sabah are not

inherent to RIL operations but are related to areas in streamside buffer zones, terrain, expertise of

operators, and supervision of field operations. As the project expands in Sabah, I expect differences

related to number of trees felled per ha to disappear, as will this proportion of the carbon savings.

As policies supporting forestry-based carbon offset projects develop, so will a system for

evaluating potential projects, their credibility, reliability, and verifiability (Dixon et al. 1993).

Describing the costs and benefits of reduced-impact logging as a harvesting technique is complicated

by externalities and undervalued environmental services (Kramer et al. 1992). Assessment of the

cost-effectiveness of applying RIL techniques for offsetting carbon will require an even more

complex analysis. Reduced-impact logging carbon offset programs may be attractive to power

companies because, relative to many tree planting programs, the carbon benefits come earlier and








69

less risk is involved. The risk of losing the investment to pests, fire or disease are small relative to

that for trees in industrial plantations with rotations of 7-20 years.

Expansion of the RIL approach to carbon offsetting is predicated on international acceptance

of joint implementation. Hesitancy is coming from developing countries suspicious about the

motivation of wealthy countries. Also, as nations industrialize they will develop their own need for

reducing net emissions. Although it would not be sensible for developing countries to sell all of their

inexpensive offset options to the industrialized nations, poorly managed forests abound, and the

world's supply of forestry-based carbon offset options is not in jeopardy.

Researchable Issues

Policy makers will look to biologists and foresters to provide estimates of impacts of

forestry-based carbon offset programs. Particularly lacking are data on the biomass of very large

trees, including roots. For many tropical trees, little is known about the effects of mechanical

damage on growth rates, wood quality, fruit production, mortality rates, and pathogen attack.

Foresters promote vine cutting as a useful tool for reducing logging damage, but the implications of

vine cutting on wildlife species, particularly frugivores and foliovores should be investigated.

Logging stimulates leaf production in some species (e.g., Johns 1988) but few data exist describing

changes in fruiting phenology or fruit abundance following logging (but see Wong 1983; Johns

1988). The incidence of weed invasions in logged-over forest appear related to gap size, soil

disturbance, and pre-logging species composition. Research directed towards elucidation of these

relationships could be useful for predicting impacts of harvesting clusters of trees in comparison with

scattered individuals and trees growing in areas with climbing bamboo (Dinochloa spp.), and the

importance of minimizing soil disturbance. Further efforts to quantify the impacts of forest

management activities on carbon storage or sequestration rates through models (e.g., Cropper &








70

Ewel 1987; Dewar 1990; Dewar & Cannell 1992) and the validation of models will contribute to the

database from which proposed carbon offset projects can be assessed.














CHAPTER 4

A SIMULATION MODEL OF CARBON DYNAMICS FOLLOWING LOGGING



Reductions in logging damage can result in increased carbon retention in forest biomass

(Chapter 3). In this chapter, I examine the effect of this biomass retention on long-term carbon

storage over a 60 year period in dipterocarp forest. I present a simulation model of dipterocarp forest

development based on FORMIX, a model developed by Bossel & Krieger (1991). My model tracks

carbon stored in forest biomass and necromass pools over time and is intended to simulate forest

recovery following logging. The amount of carbon stored in a logged or silviculturally managed

forest is influenced by factors and processes that are both internal to the system (e.g., species

composition, growth rates, decay rates) and external to the system (e.g., rotation times, logging

damage, timber volume extracted). The model provides a tool for organizing this information. I

evaluate the model using sensitivity analyses and comparisons with field observations and published

data on biomass and necromass stores in primary and logged dipterocarp forest. Finally, I use output

from simulations to evaluate effects of reductions in logging damage on carbon storage.



Carbon Storage and Patterns of Recovery Following LoggiMng

When timber is removed from a forest, total ecosystem carbon storage declines. Selective

cutting often involves harvesting only a few trees, but many others are usually damaged. As

damaged trees die and logging debris decomposes, total carbon stored declines further. Only when

carbon sequestration in growth and recruitment exceeds carbon losses in death and decay will total








72

carbon storage increase. Over time and in the absence of large-scale disturbance, ecosystem carbon

storage may approach an asymptote, the position of which may or may not be the same as before

logging.

Logging may influence a site's potential to store carbon (i.e., height of the asymptote) and

the rate at which the forest recovers and sequesters carbon. For example, soil compaction and

erosion, often a consequence of ground-based yarding, may decrease site productivity and,

consequently, decrease carbon storage potential. If, after selective logging, the residual stand

becomes dominated by vines, grasses and sedges, or pioneer trees, growth of persistent forest tree

species, many with high wood densities and large stature, may be suppressed for several decades1.

Changes in forest structure associated with selective logging operations in Sabah influence

environmental conditions within the forest and increase the forest's vulnerability to fire (Uhl &

Kauffminan 1990). An increase in fire frequency also reduces the forest's potential to accumulate

carbon in biomass.

The current state-mandated management plan for timber-producing dipterocarp forests in

Sabah calls for 60-year cutting cycles. Consequently, logging impacts that influence the rate of

carbon storage between logging and 60 years post-logging are of particular interest. The degree to

which total carbon stores decline during and after logging depends on many factors, including timber

volume extracted and how this volume is distributed among diameter classes, incidental damage to

the residual stand, and the degree to which the vegetation responds to opening. Recovery rates will

be influenced by site productivity, species composition, changes in necromass stores, long term



1 My concept of pioneer tree species includes species that, relative to the common
dipterocarp forest species, have low density wood (< 0.4 g cm3), short lifespans (10-40 years),
produce copious quantities of seeds that require relatively high light and temperatures for
germination and establishment, and do not maintain an understory seedling bank. I use "persistent"
forest species in reference to tree species that are able to establish in shade and that maintain a
seedling bank rather than a seed bank.








73

effects of nonfatal tree damage, the duration of elevated mortality rates following logging, and

impacts of soil damage on vegetation recovery.

In this paper I use a computer simulation model of carbon flow in dipterocarp forest

following logging to explore the potential influence of several factors on carbon recovery.

Specifically, I use output of simulations to address the following questions: 1) Over 60 years, how

does mean carbon storage in a logged forest change with reductions in logging damage?; 2) How do

changes in post-logging mortality rates affect mean carbon storage and the final biomass storage

over 60 years?; and, 3) How might a temporary post-logging shift in species composition affect

ecosystem carbon storage patterns over time?



Background and Basic Model Structure

Previous research has clarified some aspects of forest development and the carbon cycle in

dipterocarp forest. Primary productivity and organic matter dynamics were studied in a dipterocarp

forest ecosystem in the early 1970s, as part of the International Biological Program (IBP) in

Malaysia (synthesized in Kira 1978). The researchers presented a pool and flux model of ecosystem

carbon cycling for steady-state conditions (Kira 1987). Using a portion of the IBP data, Bossel and

Krieger (1991) developed a physiologically driven model of dipterocarp forest development and

natural treefall gap dynamics called FORMIX. FORMIX is useful for looking at forest growth and

structural development and, in combination with the IBP data, provides a base for modelling carbon

flow in dipterocarp forest. As originally published, however, FORMIX does not adequately

simulate forest recovery from logging with bulldozers because it does not incorporate community-

level and ecosystem changes fundamentally associated with soil disturbance and logging in Sabah.

Changes I have identified as potentially important to carbon storage are elevated post-logging








74

mortality rates, changes in seedling survival, and increased representation of pioneer trees among the

recruits.

The model used in this chapter, which I refer to as C-REC (for carbon recovery), tracks

carbon stored in dipterocarp forest and is intended to simulate forest dynamics both before and after

logging (Appendices C and D). The basic system is scaled to 1 ha, uses annual time steps, and

includes carbon pools for aboveground biomass and necromass (Fig. 4-1). Carbon storage in the

pools is followed as trees grow, shed litter, die, and are replaced. The basic structure of C-REC is

identical to FORMIX, as are processes describing carbon gain through photosynthesis, transition

rates between layers, recruitment, and mortality rates. C-REC differs from FORMIX in that it

simulates carbon transfer from biomass to necromass through tree mortality and litterfall.

Necromass decomposition is simulated as proportional mass loss. Coarse woody, small %%ood\, and

fine debris decay include transfer of carbon to soil organic matter. Carbon is lost from the soil

organic matter pool at 5% mass loss per year (based on Yoneda et al. 1977; Kira 1978). Carbon

stored in roots, shrubs, herbs, vines, and in mineral soil below 50 cm is not included in the C-REC

model.

Above2round Biomass

As in FORMIX, I divided the forest into 5 canopy layers (Fig. 4-1) which correspond to the

following: Layer 1, canopy trees (>45 cm dbh); Layer 2, subcanopy trees (25-45 cm dbh); Layer 3,

pole-sized trees (10-25 cm dbh); Layer 4, saplings (1-10 cm dbh); and, Layer 5, seedlings (0-1 cm

dbh). Initial stem densities are entered for a hectare of representative unlogged forest. Input files

contain individual trees identified by a number and diameter at breast height (at 1.3 m, hereafter

dbh). Initially all trees are assumed to be persistent forest species characterized by attributes of the

Shoreajohorensis-Parashorea group of the Dipterocarpaceae (e.g., photosynthetic rates, allometric










I-






0
0



U
U
0
.d




I-

I










oc



sisuqluAsoIoqd uOJA UVD uoq.jD








77

relationships, wood density; Table 4-1); Dipterocarpaceae dominate this forest in terms of basal area

and tree stem density (Chapter 3). Using these data, stem, branch, leaf, and total biomass are

calculated for each tree using diameter-biomass regression equations (Kira 1978; Brown et al. 1989).

Layers are defined and tracked by total biomass and tree numbers.

Carbon Gain

Annual gross photosynthate production is calculated for each layer and is based on total

layer leaf area, incident solar radiation, light attenuation through the canopy, and photosynthetic

capacity (following a light response curve; Tables 4-1 and 4-2). Litter production and respiration by

fine roots, leaves, and stems are subtracted from gross photoproduction to yield net annual biomass

production per layer. A complete description of the basic model is found in Bossel & Krieger

(1991).

Transitions

Allometric relationships are used to calculate mean stem diameters and crown projection

areas for each layer (Table 4-3). When a layer's mean stem diameter exceeds the maximum diameter

set for the layer, a given proportion of the trees (and associated biomass) are transferred to the next

layer. Transition probabilities were calculated by Bossel and Krieger (1991). Each layer is

associated with two specific mortality rates, a standard rate and a higher rate which applies to

crowded conditions. Crowded conditions exist when the layer's canopy is completely closed as

determined by crown area/stem diameter ratio, mean stem diameter, and number of trees per layer

(Tables 4-1 and 4-3). Recruitment into the seedling layer is controlled by the number of trees >25

cm dbh; each mature tree contributes 1000 seedlings per year (Table 4-1); the base survival rate for

established seedlings is 50% per year.





















Table 4-1.


Characteristics (with code name) of the 2 types of tree species used in the model.
Values that differ from those used in FORMIX (Bossel & Krieger 1991) are noted
by superscripts. Variables not defined here are defined in Table 4-2.


Persistent Forest Pioneer

Species Species

P,. (g CO2 m hr"1) 1.5 2.5a
M (g CO hr-' W-') 0.015-0.025 0.04b

PR 0.50 0.35c

Photosynthetic Production for Litterfall(PSD; proportion) 0.10 0.10

Stemwood fraction (TR) 0.70 0.70

Wood density (G; g cm-3) 0.52d 0.33d

Crown diameter ratio (CD; m m-1) 25 32c


"Bazaaz 1979

b Walters & Field 1987

c'Fox 1968b


d Burgess 1966



















Table 4-2. Equations describing carbon gain (taken from Bossel & Krieger 1991). Subscripts
refer to specific layers that are defined in the text and Figure 4-1.

Solar Radiation Received By a Layer 11 = I ,+1 EXP (-K i+ LAI i+)

Gross Photosynthetic Production PS, = C*(PI./K, )*LOG,((1 + (M / P,,)*I ,)/(1+ (M/P,,J)*I -1))

Photosynthetic Production Adjusted for Crown Area PT = PS, AT,

Photosynthetic Production Adjusted for Leaf and Root Respiration PB, = PT i PR

Photosynthetic Production Adjusted for Stem Respiration Cgain = PB (R, B )

I = radiation above the canopy, 335 W m'2.

K = light extinction coefficient (values per layer in Table 4-3).

LAI = layer leaf area index (maximum values per layer in Table 4-3).

C = conversion factor from g CO2 m2 hr' to metric tons of oven dry mass per ha per yr.

M = initial slope of the light response curve (values in Table 4-1).

Pinax = maximum rate of photosynthesis at light saturation (values in Table 4-1).

AT = current crown fill ratio; represents crown cover per layer.

PR = leaf proportional energy use efficiency; accounts for leaf and fine root respiration.

R = biomass proportional energy loss rate; accounts for stem respiration, 0.06.

B = layer total biomass (Mg oven dry mass hal).












Table 4-3.


Variables describing the two species groups represented in the C-REC model, by
layer. Persistent species refers to tree species able to establish in shade and that
maintain a seedling bank rather than a seed bank. Pioneer species refers to tree
species that require relatively high light for seedling establishment and that do not
maintain a seedling bank.


Layer 1 Layer 2 Layer 3 Layer 4 Layer 5

>45 cm 25-45 cm 10-25 cm 1-10 cm Seedlings

Persistent Species

Mortality Rate (mn ) 0.005 0.008 0.01 0.05 0.10

Crowding Mortality Rate (mc)a 0.10 0.15 0.20 0.50 0.50

Post-harvest Mortality Rate (ml)' 0.05 0.05 0.05 0.05 0.05

Maximum Leaf Area Index (LAI) 2.00 2.00 2.00 2.00 1.00

Transition Rate (TSi)D n/a 0.02 0.05 0.08 0.10


Pioneer Species

Mortality Rate (mni)8 0.01 0.01 0.05 0.05 0.10

Crowding Mortality Rate (mc,)3 0.25 0.25 0.25 0.50 0.50

Post-harvest Mortality Rate (mi)" n/a n/a n/a n/a n/a

Maximum Leaf Area Index (LAIP1) 2.00 2.00 2.00 2.00 2.00

Transition Rate (TSP,)a n/a 1.00 1.00 1.00 1.00


Common to Both Groups

Light Extinction Coefficient (K) 0.86 0.86 0.54 0.54 1.00

Form Factor (F) 0.38 0.42 0.44 0.45 0.50

Height-Diameter (HD; m inm-') 40 48 56 67 140

Maximum Diameter (DM1; m) n/a 0.45 0.25 0.10 0.01


a Expressed as proportions of individuals per hectare.










Necromass

Necromass exists in five compartments: coarse woody debris (branches or logs with

diameter >15 cm); small woody litter (diameter ranging from 2 to 15 cm); fine litter (leaves, fruits,

twigs <2 cm diameter); and, soil organic matter. Dead roots are not included in the model. Initial

pool sizes and decay rates were taken from published data for Malaysian dipterocarp forests (Table

4-4). Annual inputs to the necromass pools include biomass from dying trees and photosynthetic

production that goes towards litterfall. Soil organic matter receives annual inputs of coarse woody

debris, small woody debris, and fine litter. A proportion of the soil carbon is evolved as CO2. Soil

carbon below 50 cm depth is assumed to be static and is not included in the model; this probably

represents about 40 Mg C ha' (Ohta & Effendi 1992). Root biomass also is not included in the

model; this probably represents about 20% of aboveground tree biomass (Chapter 3).

Lo22ng

Impacts of logging on the forest are variable and depend, in part, on timber volume

extracted, the harvesting system used, and the extent of damage to the residual stand and to the soil.

Selective logging, as currently practiced in Sabah, removes a proportion of trees >60 cm dbh

(generally, 8-15 trees per ha), damages a portion of the residual stand, and generates logging debris.

The model incorporates the effects of logging in a sequence of steps.

First, timber volume extracted per ha is entered as a variable (m3). The value is converted

into biomass (Mg) using an mean specific gravity (Table 4-2) and is translated into number of trees

per ha based on the assumption that stem biomass represents 52.8% of total tree biomass (Biomass

Expansion Factor, taken from Brown et al. 1989). The biomass and number of trees felled are

subtracted from the top layer of the forest (trees >45 cm dbh). Non-stem biomass (i.e, branches,

leaves, stumps) enters the necromass pools (80% coarse woody debris, 10% small woody debris,

10% fine litter).























Variables (with code names) describing necromass stores and fluxes, initial
conditions listed with reference. O.D.M. refers to oven dry mass.


Coarse Woody Debris (qc)

Woody Litter Conversion to Carbon

Small Woody Litter (qswl)

Fine Litter (qfl)

Fine Litter Conversion to Carbon

Soil Organic Matter (qsoil)

Leaf Litter Decay Rate (fldk)

Leaf Litter to Soil (fltoS)

Small Woody Decay Rate (swldk)

Woody Debris Decay Rate (qcdk)

Woody Debris to Soil (qctoS)

CO2 Evolution From soil (seflx)


Initial Conditions

49.5 Mg O.D.M. ha'

50% carbon by mass

2.5 Mg O.D.M. ha'

2.4 Mg O.D.M. ha-1

46.9% carbon by mass

33 Mg C ha-1

71% mass loss yr"'

2.2% transfer to soil yr-1

50% mass loss yr-1

14.4% mass loss yr-'

4.6% mass loss yr'

5% loss yr-1


Reference

Yoneda et al. 1977

Kira 1978

This Study

Burghouts et al. 1992

Burghouts et al. 1992

Ohta & Effendi 1992

Burghouts et al. 1992

Burghouts et al. 1992

This Study

Yoneda et al. 1977

Yoneda et al. 1977

Kira 1978


Table 4-4.








83

Second, the proportion of trees receiving fatal damage during logging is entered; a single

value is used to describe fatal damage for all diameter classes. This proportion of each layer's

biomass and individual trees is transferred to the necromass pools (for allocation see Appendix C).

This input variable (mean proportion of trees fatally damaged across all layers) is then used to

represent the proportion of the 1 ha stand that will be colonized by pioneer tree species rather than by

persistent forest species during the first two years after logging.

Prior to logging, pioneer tree species are uncommon in the dipterocarp forests of Sabah

(Whitmore 1978; Comer 1988) but they are a dominant component of logged forests in Sabah, often

occurring as monodominant stands (Fox 1968b). Pioneer trees are incorporated into the model to

provide a way of exploring the impacts of a temporary shift in composition, a shift away from

dominance by relatively slow growing, persistent species to relatively fast-growing, colonizing

species with low wood densities. Pioneer trees are represented by a suite of physiological and

allometric attributes distinct from the trees that dominated the site before logging (i.e., the

dipterocarps; Table 4-2).

Bomrnean species of pioneer trees tend to establish in disturbed sites with open canopy.

Establishment patterns suggest that pioneer recruitment increases with some soil disturbance (Putz

1983; Kennedy 1991), but on compacted soils and subsoils typical of skid trails and log landings in

Sabah, pioneer tree recruitment is sparse (Pinard et al. 1996). In the model, pioneer tree seedlings

establish at 13500 seedlings per ha, equivalent to 1.25 Mg O.D.M. ha-' (Pinard et al. 1996;

Chapter 2).

The model tracks pioneer tree stand development separately from the residual forest.

Carbon gain and transitions within the pioneer tree stand subset follow the same processes described

earlier for the persisent forest species though specific parameters differ (Table 4-2). Layer transition

probabilities for pioneers are set to simulate development of an even-aged (i.e., one layer) stand.








84

Seedlings of persistent tree species begin to establish under the pioneer tree forest 5 years

after logging. Mature residual trees (>25 cm dbh) provide seedlings to the pioneer tree forest.

Generally, fruits of dipterocarp trees do not disperse far from parent trees (Ashton 1982) so both the

density and distribution of mature residual trees are important for seedling establishment under

pioneers. The model assumes that, as the area occupied by pioneer trees increases (i.e., proportion of

stand fatally damaged), the proportion of residual trees able to disperse seeds into the pioneer forest

decreases. The following equation describes the relationship used in the model to determine the

number of individuals contributing seedlings of persistent forest species under the pioneer stand:

NST = (N1 +N2) ((1- DAMF)2)

where NST equals the number of tree contributing seeds in a given year, N,, the number of trees in a

layer, and DAMF, the proportion of the stand receiving fatal damage.

In Ulu Segama Forest Reserve, observations of planted dipterocarp seedlings suggest that

seedlings on skid trails experience higher mortality rates than seedlings off skid trails in logged forest

(P. Moura-Costa pers. comm.). The relatively high seedling mortality rates on skid trails are due, in

part, to increased incidence of animal browsing and trampling (Pinard, unpubl. data). In the model,

survival of seedlings of persistent tree species in the pioneer stand is calculated using the following

equation:

survPD = basesurvival (1 AST)

where survPD equals persistent forest species seedling survival in the pioneer stand, basesurvival is

the baseline annual seedling survival rate, AST is the proportion of area with soil disturbance.

Although seedling growth rates are also affected by adverse soil conditions on skid trails (e.g.,

compacted soils or nutrient poor subsoils), the model does not incorporate any changes related to

carbon gain for trees on skid trails.








85

Although maximum lifespans of colonizing tree species are variable, the maximum lifespan

for the species of Macaranga that dominate the pioneers in Ulu Segama, is probably close to 30

years (Fox 1968b). To simulate senescence of pioneers, annual mortality rates of the pioneer trees

increase to 50% at 30 years after logging. The model continues to track the "pioneer" stand but,

after 35 years, the subset is predominantly trees of persistent species.

During logging, a proportion of the residual stand is damaged but some this damage (e.g.,

crown or bark damage) does not always cause immediate tree death. This damage is assumed to

influence growth rates of affected trees, simulated by removing 25% of the crown area of damaged

trees. Growth and yield plot studies in logged dipterocarp forest document an elevation in mortality

rates for 2 to 8 years following logging (Wan Razali 1989; Korsgaard 1992). These tree deaths may

be related to damage received during logging or may be related to changes in environmental

conditions in the residual stand. The model represents this phenomenon by uniform application of

5% mortality rates for five years following logging.



Methods for Simulations and Evaluation

Simulations were run under both no logging and logging scenarios. All carbon pools were

tracked over a 60 year period. Longer simulations (1000 yrs) were also performed to evaluate the

model's stability. As part of the model evaluation process, a selection of variables, constants and

parameters used in the model was increased by 15%, simulations were run, and output values of

response variables were recorded. The response variables used in the "sensitivity" analyses for a no-

logging scenario were as follows: mean total carbon storage over 20, 40, and 60 years, ending total

carbon storage at 20, 40 and 60 years, and ending total biomass in big trees (>45 cm dbh) at 60

years. Because a subset of the variables and parameters was applicable only to a logging scenario,

another set of "sensitivity" analyses was conducted assuming 125 inm3 of timber were extracted, 40%








86

of the residual stand fatally damaged, 20% of the area with soil disturbance, and 20% of the residual

stand nonfatally damaged. The response variables used in these logging scenario analyses included

those listed above but also included total biomass in pioneer-dominated forest at 20 years.

To evaluate the output of the no-logging scenario, I compared estimates of pre-logging

aboveground biomass and necromass stores from the study site with results from simulations run for

60 and 500 years. To evaluate the output of the logging scenario, I compared simulated densities of

pioneer trees at 6 and 18 years after logging to data from logged forest in Ulu Segama. Also,

simulated estimates of the amount of coarse woody debris 6 years after logging were compared with

measurements of detrital stores in logged forest in Ulu Segama.



Model Applications

To evaluate the impacts of timber volume extracted on mean carbon storage, I ran a series of

simulations in which damage was held constant and timber volumes were increased from 0 to 200 m3

in 25 m3 increments. Mean timber volume extracted from the study sites in Ulu Segama was about

125 m3 ha-1 (Chapter 3), so I used this value for all subsequent simulations.

The rationale for promoting reduced-impact logging as a carbon offset is based on the

assumption that more carbon is retained in forest biomass when logging damage is lessened. To

evaluate the importance of reduced logging damage for ecosystem carbon storage, I ran a series of

simulations holding constant the volume extracted (125 inm3), nonfatal damage (0%), and area in skid

trails (20%) but increased the proportion of residual stand killed in 10% intervals from 10 to 90%

killed.

In the study sites, about 22% of the individuals in the residual stands in both conventional

and RIL areas received damage that did not immediately result in tree death (Chapter 3). To evaluate

the potential importance of nonlethal damage to carbon storage, I ran two series of simulations in








87

which I varied mortality rates following logging. In the first series, the duration of elevated mortality

rates (0.01 for all layers) was increased in 1 year increments from 2 to 10 years. In the second series,

duration was set at 5 years, and post-logging annual mortality rates ranged from 1 to 12%. To

examine the impacts of reducing crown area for the proportion of trees receiving nonfatal damage, I

ran simulations reducing crown area of damaged trees from 80% to 10% of full crown. I also ran a

series of simulations in which the proportion of nonfatally damaged trees was increased in 10%

increments from 0 to 90%, holding volume extracted, area in skid trails, and fatal damage constant.

Conventional and reduced-impact logging, as described by the data in this dissertation

(Chapters 2 and 3), differ in terms of volume extracted, fatal damage, and soil damage. To compare

the integrated effects of these differences for carbon storage, I ran the model using values observed

for each logging method. For conventional logging, the input variables were 154 m3 ha' timber

extracted, 16.6% area with soil disturbance, 40% of the stand fatally damaged, and 20% of the stand

with minor damage. For reduced-impact logging, the input variables were 104 m3 ha' timber

extracted, 6.8% area with soil disturbance, 20% of the stand fatally damaged, and 20% of the stand

with minor damage.

I used mean total carbon storage over time as the response variable for simulations exploring

the effects of increasing volume extracted, fatal damage, nonfatal damage, and mortality rates.

Results from sensitivity analyses indicated that mean carbon storage was relatively insensitive to

small changes in parameter values. For the simulations, I used the following three time intervals: 60

years to represent one cutting cycle, 40 years to represent the NEES-ICSB project lifespan (Chapter

5), and 20 years to allow me to identify trends specific to a shorter time period.








88

Results and Discussion

Evaluation of Model Simulations

Over a 1000 year time span, simulated carbon stores in the unlogged forest fluctuate

between 200 and 265 Mg ha' (Fig. 4-2A); mean carbon storage over a 60 year simulation was 220

Mg ha-1 (SD = 11). Aboveground biomass ranged from 130 to 220 Mg C ha' and showed a mean

value of 166 Mg C ha-1 (SD = 19.5) over a 60 yr simulation, and 170 Mg C ha-' (SD = 23) over a

500 yr simulation. The distribution of biomass across diameter classes fell within the range of values

observed in Ulu Segama before logging (Table 4-5). Mean necromass store over a 60 year

simulation was 54 Mg C ha-1 (SD = 8.9; Fig. 4-2C). Coarse woody debris stores fluctuated between

10 and 60 Mg C ha-' and trends were negatively associated with fluctuations in total biomass stores

(Fig. 4-2, B and C). The mean quantity of coarse woody debris over a 60 year simulation (13.5 Mg

C ha-', SD = 7.5) was similar to the mean value recorded in our plots in Ulu Segama (mean = 12.2

Mg C ha-', SD = 2.3; unpubl. data).

Simulated biomass stores cycled with an approximate 100 year frequency (Fig. 4-2A).

Stand dynamics involving fluctuations of the magnitude observed in simulation results could be

expected in an area prone to regularly occurring large storms, droughts, or fires but would not be

expected if individual treefall gap dynamics were the principal structuring phenomenon in the forest.

However, one of the limitations of the C-REC model is that the entire hectare behaves as a unit.

When the overstory is "filled" with trees, overstory mortality rates switch to a higher rate, causing a

decline in biomass that affects the full hectare, similar to 1 hectare gaps. Natural forest canopy gaps

are generally much smaller, =0.02 ha. A spatially explicit model that incorporates a mosaic of

interconnected patches would simulate natural forest dynamics more realistically than the C-REC

model, meaning that the extreme fluctuations would be damped (e.g., FORMIX2, Bossel & Krieger

1995).











300 -
A

250 Total



200 -



U 150

SBiomass

100 -


Necromass
50-



0
0 200 400 600 800 1000















Figure 4-2A. Results from simulation with no logging. Carbon stored in aboveground biomass,
necromass, and both (total) over 1000 years.








175 -
B
150- >45cm

125 -

100 -

S75-
2545 cm
50

25-1--'25 c



0 50 100 150 200 250 300


40 -
C

30 Coarse woody debris Soil



) 20



10
Small woody little
Fine litter
0
0- I I I I
0 50 100 150 200 250 300
Time (years)

Figure 4-2B and C. Results from simulation with no logging. B) Changes in carbon storage
in 5 canopy layers identified by dbh class. C) Changes in carbon storage in soil, coarse woody
debris, fine litter, and small woody litter.




























Table 4-5.


Mean aboveground biomass (Mg C ha-1) for output from model simulations over a
60 year run without logging compared with mean biomass for 8 experimental
logging units before logging (Chapter 3).


Dbh class Model Results Dbh class Field Measurements

>45cmdbh 115 >40cm 120(28,8)

25-45 cm 25 20-40 cm 23 (3,8)

10-25 cm 17 10-20cm 11 (2,8)

1-10 cm 8 1-10 cm 7 (1,8)









92

Following selective logging, carbon storage dropped to a low of 97 Mg C ha-1, 7 years after

harvesting (Fig. 4-3A). Ecosystem carbon storage did not reach pre-logging levels (213 Mg C ha-')

within the 500 years after logging (Fig. 4-3A). Carbon storage peaked approximately 120 years after

logging (about 150 Mg C ha'), after which time cycling was similar to that seen in simulations

without logging. The mean carbon storage over 60 years after logging was 107 Mg C ha-' (SD =

9.9), about 52% of the level for the no-logging scenario. The small peak in carbon storage that

occurred about 30 years after logging was related to a peak in pioneer tree biomass and necromass

production associated with the death of the pioneer trees (Fig. 4-3 A, B, and C).

During the first 35 years after logging, only 23% of mean total forest biomass was in pioneer

trees even though the pioneer forest dominated 40% of the site (Fig. 4-3B). During the first 60 years

after logging, 84% of the mean biomass was in residual trees (Fig. 4-3B). Persistent tree species that

establish beneath the pioneer tree canopy increase in importance (for biomass storage) beyond 50

years after logging. Prior to this, these trees represent only 8% of the mean biomass stored per year

(7 Mg C ha'). Before logging, the model forest plot contained 41 trees >45 cm dbh per ha; 60 years

after logging, the layer contained 19.3 trees >45 cm dbh per ha.

Results from a simulation of logging (125 min3, 20% soil disturbance, 40% fatal damage, 20%

nonfatal damage), generated pioneer tree densities similar to those observed in logged forest in Ulu

Segama Forest Reserve (Chapter 2). At 6 years after logging, simulated pioneer tree density was

1603 stems ha1, with trees belonging to layer 4 (1-10 cm dbh). At 18 years after logging, simulated

density was 51 stems ha-1, at which time all pioneer trees were in the uppermost layer (>45 cm dbh).

Observed pioneer tree densities in logged forest, 18 years after logging, overlapped with simulated

values (pioneer trees >5 cm dbh, mean = 188, SD = 244) but few pioneers were found with dbh

greater than 45 cm.




Full Text
xml version 1.0 encoding UTF-8
REPORT xmlns http:www.fcla.edudlsmddaitss xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.fcla.edudlsmddaitssdaitssReport.xsd
INGEST IEID ERX6KR9TM_BY0Y1G INGEST_TIME 2014-10-06T22:31:09Z PACKAGE AA00025706_00001
AGREEMENT_INFO ACCOUNT UF PROJECT UFDC
FILES



PAGE 1

&$5%21 5(7(17,21 %< 5('8&(',03$&7 /2**,1* %\ 0,&+(//( $0< 3,1$5' $ ',66(57$7,21 35(6(17(' 72 7+( *5$'8$7( 6&+22/ 2) 7+( 81,9(56,7< 2) )/25,'$ ,1 3$57,$/ )8/),//0(17 2) 7+( 5(48,5(0(176 )25 7+( '(*5(( 2) '2&725 2) 3+,/2623+< 81,9(56,7< 2) )/25,'$

PAGE 2

7KLV GLVVHUWDWLRQ LV GHGLFDWHG WR -RKQ 3 DQG )ORUHQFH + 3LQDUG

PAGE 3

$&.12:/('*0(176 DP LQGHEWHG WR PDQ\ SHRSOH IRU WKHLU VXSSRUW DQG FRQWULEXWLRQV WR WKLV SURMHFW )UDQFLV ( f-DFNf 3XW] ILUVW UHFRJQL]HG WKH SRWHQWLDO IRU GHYHORSLQJ UHGXFHGLPSDFW ORJJLQJ WHFKQLTXHV LQ 6DEDK DV D FDUERQ RIIVHW 0\ PHQWRU -DFN SURYLGHG PH ZLWK HQFRXUDJHPHQW DQG VXSSRUW WKURXJKRXW P\ GRFWRUDO SURJUDP DQG DP JUDWHIXO WR KLP IRU KLV WLPH HQHUJ\ HQWKXVLDVP DQG FRQFHUQ :HQGHOO 3 &URSSHU KHOSHG PH WR FRQVWUXFW DQG HYDOXDWH WKH VLPXODWLRQ PRGHO LQFOXGHG LQ WKLV GLVVHUWDWLRQ :HQGHOOfV SDWLHQFH FRQVLVWHQW VXSSRUW DQG WKRXJKWIXO TXHVWLRQV KHOSHG PH WR GHYHORS P\ LGHDV DQG SURJUHVV WKURXJK WKLV GLVVHUWDWLRQ -RKQ (ZHOf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f XQGHU WKH VXSHUYLVLRQ RI 0 5DMLQ DQG 7D\ FDUULHG RXW WKH SORWEDVHG VDPSOHV GHVFULEHG LQ FKDSWHU 5DQJHUV ZLWK WKH 5-/ 3URMHFW DQG IRUHVWHUV ZLWK WKH 4XHHQVODQG )RUHVW 6HUY LFH $XVWUDOLDf FRQWULEXWHG WR P\ XQGHUVWDQGLQJ RI WKH LPSOHPHQWDWLRQ RI KDUYHVWLQJ JXLGHOLQHV $ $ULELQ .HQQDUG 6 'XFKDP & $OVDIIDU $ 6PLWK DQG & &KDL DVVLVWHG LQ WKH ILHOG 0 %DUNHU 0 &DUULQJWRQ &HGHUJUHQ '\NVWUD *HUZLQJ +DQVRQ % +RZOHWW .HQQDUG % 2VWHUWDJ LLL

PAGE 4

f§ 9 6DO]PDQ DQG / 6QRRN SURYLGHG FULWLFDO FRPPHQWV RQ YDULRXV VHFWLRQV RI WKLV GLVVHUWDWLRQ 1HZ (QJODQG (OHFWULF V\VWHPV 1DWLRQDO *HRJUDSKLF 6RFLHW\ DQG WKH *DUGHQ &OXE RI $PHULFD SURYLGHG ILQDQFLDO VXSSRUW IRU WKLV SURMHFW WKDQN WKH *RYHUQPHQW RI 0DOD\VLD IRU DOORZLQJ PH WR FRQGXFW UHVHDUFK LQ 0DOD\VLD ,9

PAGE 5

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

PAGE 6

%DFNJURXQG DQG %DVLF 0RGHO 6WUXFWXUH 0HWKRGV IRU 6LPXODWLRQV DQG (YDOXDWLRQ 0RGHO $SSOLFDWLRQV 5HVXOWV DQG 'LVFXVVLRQ &RQFOXVLRQV 5('8&(',03$&7 /2**,1* $6 $ &$5%21 2))6(7 ,QWURGXFWLRQ &ULWHULD IRU -RLQW ,PSOHPHQWDWLRQ 3URMHFWV ,OO 9DOXDWLRQ RI WKH &DUERQ 2IIVHW $VVRFLDWHG :LWK 5,/ &RQFOXVLRQV $33(1',&(6 $ +$59(67,1* *8,'(/,1(6 % 67(0 92/80( (48$7,216 $1' :22' '(16,7,(6 & 6,08/$7,21 02'(/ &2'( 6,08/$7,21 02'(/ )/2: &+$57 ( 6(16,7,9,7< $1$/<6,6 5(68/76 5()(5(1&(6 %,2*5$3+,&$/ 6.(7&+ YL

PAGE 7

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n +LJK YROXPHV RI WLPEHU ZHUH UHPRYHG IURP ERWK ORJJLQJ DUHDV PHDQ&19 PHDQA P KDnf $ERXW b YLL

PAGE 8

RI WKH FRQYHQWLRQDO ORJJLQJ DUHD ZDV FRYHUHG E\ URDGV DQG VNLG WUDLOV LQ FRQWUDVW b RI WKH UHGXFHG LPSDFW ORJJLQJ DUHD ZDV VLPLODUO\ GDPDJHG 6NLG WUDLOV LQ UHGXFHGLPSDFW ORJJLQJ DUHDV ZHUH OHVV VHYHUHO\ GDPDJHG WKDQ WKRVH LQ FRQYHQWLRQDO ORJJLQJ DUHDV WKH SURSRUWLRQ RI VNLG WUDLOV ZLWK VXEVRLO GLVWXUEDQFH ZDV OHVV WKDQ KDOI WKDW LQ FRQYHQWLRQDO ORJJLQJ DUHDV )RUW\RQH SHUFHQW RI WKH XQKDUYHVWHG WUHHV FP GEK ZHUH VHYHUHO\ GDPDJHG IURP ORJJLQJ LQ FRQYHQWLRQDO ORJJLQJ DUHDV LQ FRQWUDVW WR b LQ UHGXFHGLPSDFW ORJJLQJ DUHDV 2QH \HDU SRVWKDUYHVW UHGXFHGLPSDFW ORJJLQJ DUHDV KHOG DERXW 0J & KDn PRUH WKDQ FRQYHQWLRQDO ORJJLQJ DUHDV 7R LQYHVWLJDWH WKH FRQVHTXHQFHV RI UHGXFWLRQV LQ ORJJLQJ GDPDJH IRU HFRV\VWHP FDUERQ VWRUDJH FRQVWUXFWHG D PRGHO WR VLPXODWH FKDQJHV LQ ELRPDVV DQG FDUERQ SRROV IROORZLQJ ORJJLQJ 6LPXODWLRQ UHVXOWV LQGLFDWH WKDW WKH UHODWLRQVKLS EHWZHHQ IDWDO VWDQG GDPDJH DQG HFRV\VWHP FDUERQ VWRUDJH LV QRW OLQHDU DQG DW b IDWDO VWDQG GDPDJH ELRPDVV UHFRYHU\ IROORZLQJ ORJJLQJ LV VHYHUHO\ OLPLWHG 5HGXFLQJ IDWDO GDPDJH IURP WR b LV DVVRFLDWHG ZLWK D b LQFUHDVH LQ PHDQ FDUERQ VWRUDJH RYHU \HDUV YLLL

PAGE 9

&+$37(5 7+( 5('8&(',03$&7 /2**,1* 352-(&7 ,1 6$%$+ 0$/$<6,$ ,QWURGXFWLRQ 8QFRQWUROOHG ORJJLQJ DQG ULVLQJ DWPRVSKHULF FRQFHQWUDWLRQV RI JUHHQKRXVH JDVHV DUH GLVWLQFW SUREOHPV ZLWK VRPHZKDW RYHUODSSLQJ VROXWLRQV 0DQ\ ORJJLQJ RSHUDWLRQV LQ WKH WURSLFV LQYROYH XQUHJXODWHG DQG XQVXSHUYLVHG VHOHFWLYH FXWWLQJ WKRXJK RQO\ D VPDOO SURSRUWLRQ RI WKH WUHHV DUH KDUYHVWHG D ODUJH SURSRUWLRQ RI WKH IRUHVW LV GDPDJHG HJ )R[ D 8KO t 9LHUD -RKQVRQ t &DEDUOH f :LWKRXW FRVWO\ VLOYLFXOWXUDO LQWHUYHQWLRQV KHDYLO\ GDPDJHG UHVLGXDO IRUHVWV \LHOG OLWWOH WLPEHU DQG WKXV DUH DW KLJK ULVN RI FRQYHUVLRQ WR RWKHU W\SHV RI ODQG XVH 2SHQ FDQRSLHV DQG KHDY\ YLQH ORDGV W\SLFDO RI PDQ\ KHDYLO\ ORJJHG IRUHVWV LQFUHDVH IRUHVW YXOQHUDELOLW\ WR ILUH DQG IXUWKHU GHJUDGDWLRQ HJ 8KO t %XVFKEDFKHU .DXIIPDQ HW DO f $SSURSULDWH WLPEHU KDUYHVWLQJ PHWKRGV H[LVW EXW LQFHQWLYHV WR LPSOHPHQW EHWWHU SUDFWLFHV DUH ODFNLQJ LQ PDQ\ FRXQWULHV *LOOLV t 5HSHWWR f 3ROLFLHV DLPHG DW UHGXFLQJ JUHHQKRXVH JDV HPLVVLRQV PD\ SURYLGH D ILQDQFLDO LQFHQWLYH IRU EHWWHU ORJJLQJ ,Q QDWLRQV VLJQHG D UHVROXWLRQ WR DGRSW SROLFLHV WR PLWLJDWH FOLPDWH FKDQJH E\ OLPLWLQJ HPLVVLRQV DQG HQKDQFLQJ JUHHQKRXVH JDV VLQNV DQG UHVHUYRLUV )UDPHZRUN &RQYHQWLRQ RQ &OLPDWH &KDQJH 81&(' f 7KH FRQYHQWLRQ VXSSRUWHG FRVWHIIHFWLYH DSSURDFKHV WR UHGXFLQJ QHW HPLVVLRQV DQG UHFRPPHQGHG FRRSHUDWLRQ EHWZHHQ QDWLRQV VXFK DV LQ MRLQW LPSOHPHQWDWLRQ SURJUDPV WKDW DOORZ JUHHQKRXVH JDV HPLVVLRQV LQ RQH QDWLRQ WR EH RIIVHW E\ UHGXFHG HPLVVLRQV RU LQFUHDVHG VHTXHVWUDWLRQ LQ DQRWKHU

PAGE 10

$ ZLGH UDQJH RI RSSRUWXQLWLHV H[LVWV IRU FDUERQ RIIVHW SURJUDPV LQ IRUHVWU\ )RU H[DPSOH HVWLPDWHV RI WKH SRWHQWLDO IRU FDUERQ VHTXHVWUDWLRQ KDYH EHHQ SXEOLVKHG IRU WKH IROORZLQJ DFWLYLWLHV SUHVHUYLQJ ROG JURZWK IRUHVWV +DUPRQ HW DO f FRQWUROOLQJ IRUHVW ILUHV )DHWK HW DO f FUHDWLQJ SODQWDWLRQV DQG UHIRUHVWLQJ GHJUDGHG ODQGV 6HGMR 6FKURHGHU f LQFUHDVLQJ URWDWLRQ WLPHV LQ SODQWDWLRQV &URSSHU t (ZHO +RHQ t 6ROEHUJ f DQG UHGXFLQJ ORJJLQJ GDPDJH 3XW] t 3LQDUG f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f 3URMHFW LV EDVHG 6RLO GLVWXUEDQFH FDXVHG E\ \DUGLQJ ZLWK EXOOGR]HUV LV WKH VXEMHFW RI WKH VHFRQG FKDSWHU $IWHU D FRPSDULVRQ RI VRLO GLVWXUEDQFH DVVRFLDWHG ZLWK WZR ORJJLQJ V\VWHPV FRQYHQWLRQDO DQG UHGXFHGLPSDFW ORJJLQJ H[SORUH WKH LPSRUWDQFH RI VRLO GLVWXUEDQFH IRU IRUHVW UHFRYHU\ EDVHG RQ D

PAGE 11

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f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t +HXYHOGRS f DOO PDWXUH WUHHV FP GEKf RI FRPPHUFLDO VSHFLHV IHOOHG GXULQJ WKH ILUVW KDUYHVW 7UHHV LQ WKH 'LSWHURFDUSDFHDH UHSUHVHQW b RI WKH WRWDO YROXPH RI FRPPHUFLDO WLPEHU H[WUDFWHG 6DEDK )RUHVWU\ 'HSDUWPHQW f 6DEDKnV VLOYLFXOWXUDO V\VWHP LV D PRGLILFDWLRQ RI WKH 0DOD\DQ 8QLIRUP 6\VWHP :DQ 5D]DOL f VHHGOLQJV DQG VDSOLQJV SUHVHQW DW WKH WLPH RI ORJJLQJ DUH DVVXPHG WR UHSODFH WKH

PAGE 12

PDWXUH WUHHV LQ D \U ORJJLQJ F\FOH 3UH DQG SRVWORJJLQJ LQYHQWRULHV DUH FDUULHG RXW EXW WKH GDWD DUH QRW FXUUHQWO\ XVHG WR SUHVFULEH FXWWLQJ OLPLWV RU VLOYLFXOWXUDO WUHDWPHQWV 7DQJ f 7HQGLQJ RI WKH UHVLGXDO SRWHQWLDO RU IXWXUH FURS WUHHV WKURXJK SRLVRQJLUGOLQJ RI RYHUVWRU\ FRPSHWLWRUV WKRXJK LQLWLDOO\ SDUW RI WKH VLOYLFXOWXUH V\VWHP ZDV GLVFRQWLQXHG EHFDXVH RQO\ DERXW D WKLUG RI WKH ORJJHG IRUHVW UHWDLQHG DQ RYHUVWRU\ &KDL t 8GDUEH f ,Q D W\SLFDO ORJJLQJ RSHUDWLRQ LQ 6DEDK ORJV DUH VNLGGHG WR WKH URDGVLGH RU ORJ ODQGLQJ IODW FOHDUHG DUHD IRU VWRULQJ ORJVf E\ EXOOGR]HUV D IHZ KLJKOHDG FDEOH \DUGLQJ V\VWHPV DUH DOVR XVHGf 2Q DYHUDJH WUHHV DUH IHOOHG SHU KD UHSUHVHQWLQJ P RI WLPEHU 6DEDK )RUHVWU\ 'HSDUWPHQW f 'DPDJH WR WKH IRUHVW LV H[WHQVLYH DV PXFK DV b RI WKH DUHD LV WUDYHUVHG E\ EXOOGR]HUV &KDL -XVRII 1XVVEDXP HW DO f DQG b RI WKH UHVLGXDO WUHHV DUH GDPDJHG )R[ D 1LFKROVRQ f 7KHVH UHODWLYHO\ KLJK OHYHOV RI GDPDJH DUH GXH WR ERWK KLJK WLPEHU YROXPHV H[WUDFWHG DQG SRRU KDUYHVWLQJ SUDFWLFHV 7\SLFDOO\ OLWWOH SUHKDUYHVW SODQQLQJ LV FDUULHG RXW DQG WKH DFWLYLWLHV RI IHOOHUV DQG EXOOGR]HU RSHUDWRUV DUH QRW ZHOOFRRUGLQDWHG &XUUHQW IRUHVW PDQDJHPHQW SUDFWLFHV LQ 6DEDK DUH QRW VXVWDLQDEOH EHFDXVH WKH YROXPHV RI WLPEHU H[WUDFWHG WKH DUHD ORJJHG HDFK \HDU DQG GDPDJH WR DGYDQFHG UHJHQHUDWLRQ DUH DOO WRR KLJK 6DEDK )RUHVWU\ 'HSDUWPHQW f $ QHZ IRUHVW PDQDJHPHQW V\VWHP LV FOHDUO\ QHHGHG LQ 6DEDK DQG LV SUHVHQWO\ XQGHU GHYHORSPHQW E\ WKH 6DEDK )RUHVWU\ 'HSDUWPHQW .OHLQH t +HXYHOGRS 8GDUEH HW DO f $V LV WUXH IRU PDQ\ WURSLFDO FRXQWULHV KRZHYHU ODFN RI IRUHVWU\ GHSDUWPHQW VWDII DQG GLIILFXOWLHV LQ HQIRUFLQJ UHJXODWLRQV RYHU ODUJH DQG GLVSHUVHG WUDFWV RI IRUHVW FDQ UHQGHU HYHQ WKH EHVW UHJXODWLRQV LQHIIHFWLYH -DELO f 3URJUDPV WKDW SURYLGH FRQFHVVLRQ KROGHUV ZLWK LQFHQWLYHV IRU EHWWHU PDQDJHPHQW SUDFWLFHV PD\ KHOS VWLPXODWH FKDQJH LQ WKH LQGXVWU\

PAGE 13

7KH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW ,Q WKH 5HGXFHG,PSDFW /RJJLQJ 5,/f 3URMHFW ZDV HVWDEOLVKHG EHWZHHQ ,QQRSULVH &RUSRUDWLRQ D WLPEHU FRQFHVVLRQDLUH LQ 6DEDK 0DOD\VLD DQG 1HZ (QJODQG (OHFWULF V\VWHP D FRDO EXUQLQJ XWLOLW\ LQ 0DVVDFKXVHWWV 86$ 1HZ (QJODQG (OHFWULF SURYLGHG IXQGV WR ,QQRSULVH IRU WUDLQLQJ VWDII DQG LPSOHPHQWLQJ KDUYHVWLQJ JXLGHOLQHV $SSHQGL[ $f DLPHG DW UHGXFLQJ ORJJLQJ GDPDJH LQ KD RI WKHLU FRQFHVVLRQ WRWDO FRQFHVVLRQ DUHD LV PLOOLRQ KD ZLWK DQQXDO ORJJLQJ RI DERXW KDf 7KH FDUERQ UHWDLQHG LQ WKH IRUHVW GXH WR WKHVH HIIRUWV FRXOG EH FODLPHG E\ WKH XWLOLW\ DV D FDUERQ RIIVHW &RQWHPSRUDU\ FRQYHQWLRQDO VHOHFWLYH ORJJLQJ SUDFWLFHV LQ WKH DUHD SURYLGH WKH EDVHOLQH IRU FRPSDULVRQ 7KH KD H[SHULPHQWDO DUHD GHGLFDWHG WR WKH SURMHFW LV GLYLGHG EHWZHHQ WZR FRPPHUFLDO IRUHVW UHVHUYHV LQ VRXWKHDVWHUQ 6DEDK D KD WUDFW LQ 8OX 6HJDPD )RUHVW 5HVHUYH rn1 rn( P DVOf DQG D KD WUDFW LQ .DODEDNDQ )RUHVW 5HVHUYH rn1 rn( P DVOf 7KLV VWXG\ LV EDVHG RQ GDWD IURP 8OX 6HJDPD RQO\ 7KH SURMHFW EHJDQ LQ 0D\ ZKHQ ZRRG\ YLQHV ZHUH FXW LQ 8OX 6HJDPD ORJJLQJ LV H[SHFWHG WR EH FRPSOHWHG LQ WKH VHFRQG WUDFW .DODEDNDQ E\ 'HFHPEHU 7KH ORJJLQJ FUHZV DQG IRUHVW UDQJHUV ZRUNLQJ LQ WKH H[SHULPHQWDO DUHD ZHUH WUDLQHG E\ IRUHVWHUV IURP WKH 4XHHQVODQG )RUHVW 6HUYLFH DQG H[SHUW IHOOHUV IURP 6ZHGHQ 7KH KDUYHVWLQJ JXLGHOLQHV $SSHQGL[ $f ZHUH EDVHG RQ EHVW PDQDJHPHQW SUDFWLFHV UHFRPPHQGHG LQ ,QGRQHVLD 0DOD\VLD DQG $XVWUDOLD 7KH KDUYHVWLQJ JXLGHOLQHV GHYHORSHG DQG DGRSWHG E\ WKH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW VSHFLI\ SUDFWLFHV H[SHFWHG WR UHGXFH ORJJLQJ GDPDJH DQG WKHUHE\ UHWDLQ PRUH FDUERQ LQ OLYLQJ WUHHV DQG SURPRWH SRVWORJJLQJ ELRPDVV LQFUHPHQWV 7KH IRFXV RI WKH UHPDLQGHU RI WKLV FKDSWHU LV WKH GHYHORSPHQW DQG LPSOHPHQWDWLRQ RI WKH 5HGXFHG,PSDFW /RJJLQJ KDUYHVWLQJ JXLGHOLQHV

PAGE 14

5,/ +DUYHVWLQJ *XLGHOLQHV 7KH UHGXFHGLPSDFW ORJJLQJ JXLGHOLQHV ZHUH LQLWLDOO\ GUDIWHG IURP EHVW PDQDJHPHQW SUDFWLFHV UHFRPPHQGHG E\ WKH 4XHHQVODQG )RUHVW 6HUYLFH $XVWUDOLDf DQG WKH 6PDUWZRRG FHUWLILFDWLRQ SURJUDP RI WKH 5DLQIRUHVW $OOLDQFH 7KH JXLGHOLQHV LQFOXGH VSHFLILFDWLRQV IRU SUHn KDUYHVW SODQQLQJ YLQH FXWWLQJ IHOOLQJ VNLGGLQJ DQG SRVWKDUYHVW VLWH FORVXUH 'XULQJ WKH SURMHFWnV ILUVW WZR \HDUV WKH JXLGHOLQHV KDYH EHHQ PRGLILHG WR LQFUHDVH RSHUDWLRQDO HIILFLHQF\ DQG WKH JXLGHOLQHVn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f DYDLODEOH IRU WKH 5,/ SURMHFW DUHD DUH XQUHOLDEOH DQG FRPPHUFLDO WUHHV DUH XQHYHQO\ GLVWULEXWHG 7KHUHIRUH SUHKDUYHVW SODQQLQJ FDOOV IRU SUHSDUDWLRQ RI D b VWRFN PDS VFDOHf RI KDUYHVWDEOH WUHHV 7KH VWRFN PDS DOVR VKRZV VWUHDP DQG URDG EXIIHU ]RQHV DQG VHQVLWLYH DUHDV WR EH H[FOXGHG IURP ORJJLQJ WKH PDS IRUPV WKH EDVH IRU WKH KDUYHVW SODQ 7KH YDOXH RI WKHVH FRVWO\ b VWRFN PDSV ZDV GHEDWHG PLGZD\ WKURXJK WKH SURMHFW &RVWV RI VWRFN PDS SUHSDUDWLRQ UHSUHVHQWHG DERXW b RI WKH WRWDO FRVW RI LPSOHPHQWLQJ WKH JXLGHOLQHV DERXW KDnf $V LOOXVWUDWHG LQ D FRQFXUUHQW UHVHDUFK SURMHFW LQ WKH DUHD &HGHUJUHQ HW DO f ZLWKRXW DQ\ SULRU NQRZOHGJH RI WKH WHUUDLQ WUDLQHG UDQJHUV FDQ ORFDWH WUHHV WR EH IHOOHG RQ DQ DG KRF EDVLV DV WKH\ PDUN H[WUDFWLRQ URXWHV EDVHG RQ D VLPSOH VSDFLQJ UXOH WKDW FRQVLGHUV WUHH KHLJKWV ZLQFK FDEOH OHQJWKV DQG WHUUDLQ 7KH UDQJHUV LQYROYHG ZLWK WKH 5,/ SURMHFW KRZHYHU DUJXHG WKDW VWRFN

PAGE 15

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f 7KH HIIHFWV RI YLQH FXWWLQJ RQ DUERUHDO DQLPDOV DQG IRUHVW ELRGLYHUVLW\ LQ JHQHUDO GHVHUYHV DWWHQWLRQ IURP UHVHDUFKHUV EXW KDV QRW \HW EHHQ DGGUHVVHG LQ WKH 5,/ 3URMHFW 7KH QHHG WR FXW YLQHV EHIRUH ORJJLQJ LV SULPDULO\ D SUREOHP IRU WURSLFDO IRUHVWU\ ,Q RXU VWXG\ DUHD GHQVLW\ RI ZRRG\ YLQHV FP GEK DYHUDJHG VWHPV SHU KHFWDUH 6' 1

PAGE 16

SORWV LQ ORJJLQJ XQLWV &KDSWHU f 7KH XWLOLW\ RI YLQH FXWWLQJ LV GHEDWHG SHUKDSV EHFDXVH WKH LPSDFWV RI YLQH FXWWLQJ RQ ORJJLQJ GDPDJH DUH QRW DOZD\V REYLRXV DQG WKH FRVW LV VXEVWDQWLDO DERXW 86 SHU KDf &HUWDLQO\ SDUW RI WKH UHGXFWLRQ LQ WKH QXPEHU RI WUHHV XSURRWHG GXULQJ ORJJLQJ D GHFUHDVH IURP b RI WKH UHVLGXDO WUHHV LQ DUHDV ORJJHG FRQYHQWLRQDOO\ WR b LQ DUHDV ORJJHG DFFRUGLQJ WR WKH JXLGHOLQHVf LV UHODWHG WR YLQH FXWWLQJ 6HYHUDO VWXGLHV GHVLJQHG WR PHDVXUH WKH GHFUHDVH LQ ORJJLQJ GDPDJH GXH WR YLQH FXWWLQJ LQ 0DOD\VLD UHSRUWHG D EHQHILW )R[ D /LHZ $SSDQDK t 3XW] &HGHUJUHQ HW DO f 7UHH )HOOLQJ 'HFLVLRQV DERXW IHOOLQJ GLUHFWLRQ DUH EDVHG RQ IHOOHU VDIHW\ HDVH RI VNLGGLQJ DYRLGDQFH RI GDPDJH WR KDUYHVWHG DQG SRWHQWLDO FURS WUHHV DQG PLQLPL]LQJ LPSDFWV RQ EXIIHU ]RQHV 7UHHV DUH IHOOHG DQG ZLQFKHG WRZDUGV SUHPDUNHG VNLG WUDLOV 'LUHFWLRQDO IHOOLQJ UHGXFHV GDPDJH WR SRWHQWLDO FURS WUHHV DQG IDFLOLWDWHV VNLGGLQJ ERWK E\ DYRLGLQJ WKH QHHG WR UHRULHQW ORJV DQG E\ VKRUWHQLQJ WKH RYHUDOO H[WUDFWLRQ GLVWDQFH E\ XS WR WKH OHQJWK RI WKH ORJ XS WR PHWHUVf 5HFRPPHQGHG LQ WKH JXLGHOLQHV EXW QRW UHTXLUHG LV WKH XVH RI SODVWLF ZHGJHV GXULQJ IHOOLQJ :HGJHV JLYH IHOOHUV DGGHG FRQWURO DQG KHOS IHOOHUV GLVFHUQ VPDOO FKDQJHV LQ GLUHFWLRQ RI OHDQ DV WKH WUHH LV IHOOHG )HOOHUV ZRUNLQJ RQ WKH 5,/ SURMHFW KDYH QRW DGRSWHG WKH XVH RI ZHGJHV DQG DUJXH WKDW SODVWLF ZHGJHV DUH XQQHFHVVDU\ DQG WKHLU UHTXLUHG XVH DFWXDOO\ SODFHV IHOOHUV DW ULVN :KHQ QHHGHG IHOOHUV XVH ZRRGHQ ZHGJHV PDGH DG KRF DW WKH WUHH WR EH IHOOHG )HOOHUV FRQVLVWHQWO\ GURS WUHHV ZLWKLQ GHJUHHV RI WKH PDUNHG GLUHFWLRQ 3URMHFW 5HFRUGV XQSXEO GDWDf 6XFFHVV LQ GLUHFWLRQDO IHOOLQJ RI KXJH WUHHV ZLWK HFFHQWULF FURZQV RQ VWHHS VORSHV LV LPSUHVVLYH EXW LW VKRXOG EH SRLQWHG RXW WKDW WUHH PDUNHUV VHOHFW WKH VLOYLFXOWXUDOO\ RSWLPDO GLUHFWLRQ IURP ZKDW WKH\ MXGJH WR EH WKH SRVVLEOH UDQJH )XUWKHUPRUH GXULQJ WKH ILUVW \HDU RI WKH SURMHFW WKH QXPEHU RI KDUYHVWDEOH WUHHV IHOOHG LQ WKH H[SHULPHQWDO DUHD ZDV OHVV LQ 5,/ DUHDV WKDQ LQ FRPSDUDEOH DUHDV ORJJHG XVLQJ FRQYHQWLRQDO PHWKRGV SHUKDSV LQ SDUW GXH WR PRUH IUHTXHQW UHMHFWLRQ RI WUHHV E\

PAGE 17

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n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b RI WKH WRWDO DUHD ORJJHG LQ FRQWUDVW WR b LQ DGMDFHQW DUHDV ORJJHG E\ FRQYHQWLRQDO PHWKRGV &KDSWHU f )XUWKHU WKH SHUFHQWDJH RI WKH VNLG WUDLOV ZLWK VXEVRLO H[SRVHG DYHUDJHG b LQ WKH 5,/ DUHDV LQ FRQWUDVW WR b LQ WKH FRQYHQWLRQDOO\ ORJJHG DUHDV 0DQ\ WURSLFDO VRLOV DUH KLJKO\ HURGLEOH WKH SUHVHQFH RI D OLWWHU OD\HU RQ WKH VRLO VXUIDFH FDQ UHGXFH VRLO HURVLRQ VXEVWDQWLDOO\ HJ 5RVV t '\NHV f

PAGE 18

6NLGGLQJ ORJV ZLWK EXOOGR]HUV LV GLIILFXOW GDQJHURXV DQG SDUWLFXODUO\ GHVWUXFWLYH RQ VORSHV JUHDWHU WKDQ GHJUHHV ,Q FRPPHUFLDO IRUHVWV HOVHZKHUH LQ WKH ZRUOG JURXQGEDVHG \DUGLQJ LV UHVWULFWHG WR VORSHV OHVV WKDQ GHJUHHV b HJ '\NVWUD f EHFDXVH HQYLURQPHQWDO GDPDJH LQFUHDVHV JUHDWO\ DV VORSH LQFUHDVHV %UDG\ f 7KH 5,/ SURMHFW JXLGHOLQHV OLPLW EXOOGR]HUV WR VORSHV OHVV WKDQ GHJUHHV bf 7UHHV RQ VORSHV JUHDWHU WKDQ GHJUHHV FDQ EH IHOOHG RQO\ LI WKH\ FDQ EH ZLQFKHG DQG VNLGGHG IURP D SRVLWLRQ RQ D VORSH GHJUHHV RU OHVV 7KH GHJUHH FXWRII UHIOHFWV D FRPSURPLVH EHWZHHQ UHGXFLQJ VRLO GDPDJH DQG IRUHJRLQJ WLPEHU LQ D ODUJH SRUWLRQ RI WKH UHPDLQLQJ FRPPHUFLDO IRUHVW LQ 6DEDK )RU H[DPSOH RYHU b RI WKH ILUVW SDUFHO GHGLFDWHG WR WKH SURMHFW KD LQ 8OX 6HJDPD )RUHVW 5HVHUYHf LQFOXGHG VORSHV JUHDWHU WKDQ RU HTXDO WR GHJUHHV WKH QHW DUHD LQDFFHVVLEOH GXH WR WKH VORSH UHVWULFWLRQ ZDV HYHQ JUHDWHU DV VRPH OHVV VWHHS DUHDV ZHUH VXUURXQGHG E\ VWHHS DUHDV &RQVHTXHQWO\ WKH YROXPH RI WLPEHU UHPRYHG IURP WKH ILUVW KD UHGXFHGLPSDFW ORJJLQJ DUHD ZDV SRVVLEO\ b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

PAGE 19

7KH UHVWULFWLRQ DJDLQVW ZHW ZHDWKHU VNLGGLQJ DOWKRXJK FHUWDLQO\ LPSRUWDQW IRU PLQLPL]LQJ VRLO GDPDJH 'H%RQLV f VORZHG KDUYHVWLQJ RSHUDWLRQV VXEVWDQWLDOO\ LQ WKH 5,/ DUHDV 7KH GHOD\V H[SHULHQFHG E\ WKH FRQWUDFWRUV LQFUHDVHG WKH RYHUDOO FRVWV RI H[WUDFWLRQ 7KRXJK FRPSDUDWLYH ILQDQFLDO DVVHVVPHQWV RI VHOHFWLYH ORJJLQJ LQ 6DUDZDN 0DOD\VLD 0DP t -RQNHUV f DQG 6XULQDPH -RQNHU +HQGULVRQ f VXJJHVW WKDW UHGXFHGLPSDFW ORJJLQJ FRVWV OHVV SHU FXELF PHWHU RI WLPEHU WKDQ FRQYHQWLRQDO DSSURDFKHV RXU H[SHULHQFH ZLWK WKH 5,/ SURMHFW LQ 6DEDK VXJJHVWV WKDW GDPDJHFRQWUROOHG ORJJLQJ PD\ FRVW PRUH WKDQ FRQYHQWLRQDO ORJJLQJ /RJJLQJ $UHD &ORVXUH $IWHU ORJJLQJ LV FRPSOHWHG LQ D KHFWDUH XQLW WKH VNLG WUDLOV DUH FORVHG WKURXJK LQVWDOODWLRQ RI FURVV GUDLQV DW VSHFLILHG LQWHUYDOV HJ PHWHUV RQ VORSHV GHJUHHVf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bf EXW WKH\ UHSUHVHQW b RI WKH VNLG WUDLOV LQ WKH 5,/ DUHDV 7UDLQLQJ LQ 5HGXFHG,PSDFW /RJJLQJ 7HFKQLTXHV 6XFFHVVIXO LPSOHPHQWDWLRQ RI WKH UHGXFHGLPSDFW ORJJLQJ JXLGHOLQHV GHSHQGV RQ VXEVWDQWLDO WHFKQLFDO H[SHUWLVH RQ WKH SDUW RI VDZ\HUV EXOOGR]HU RSHUDWRUV DQG IRUHVW UDQJHUV 7UDGLWLRQDOO\

PAGE 20

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n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

PAGE 21

0RQLWRULQJ 'DPDJH &RPSOLDQFH ZLWK WKH UHGXFHGLPSDFW ORJJLQJ JXLGHOLQHV DQG YHULILFDWLRQ RI UHGXFWLRQV LQ ORJJLQJ GDPDJH DUH DVVHVVHG E\ DQ LQGHSHQGHQW WHDP FRQVLVWLQJ RI WKUHH IRUHVWHUV RQH DSSRLQWHH RI 1HZ (QJODQG (OHFWULF V\VWHPV D UHSUHVHQWDWLYH IURP 5DLQIRUHVW $OOLDQFHf RQH DSSRLQWHH RI ,QQRSULVH &RUSRUDWLRQ D UHSUHVHQWDWLYH IURP WKH )RUHVW 5HVHDUFK ,QVWLWXWH 0DOD\VLDf DQG RQH MRLQW DSSRLQWHH D UHSUHVHQWDWLYH IURP WKH 'HSDUWPHQW RI )RUHVWU\ 8QLYHUVLW\ RI )ORULGDf 7KH WHDP UHIHUUHG WR DV WKH (QYLURQPHQWDO $XGLW &RPPLWWHH FRQGXFWV GD\ VLWH LQVSHFWLRQV WZLFH SHU \HDU 'XULQJ WKHVH LQVSHFWLRQV WKH WHDP ZDONV WKURXJK WKH ORJJLQJ DUHD DQG HYDOXDWHV DGKHUHQFH WR WKH JXLGHOLQHV DQG OHYHOV RI ORJJLQJ GDPDJH $OVR WKH &RPPLWWHH PHHWV ZLWK WKH ILHOG VWDII ORJJHUV DQG UHVHDUFKHUV UHVSRQVLEOH IRU ORJJLQJ GDPDJH VWXGLHV DQG WKH FDUERQ FDOFXODWLRQV IRU WKH RIIVHW GXH WR UHGXFHGLPSDFW ORJJLQJ 7KH &RPPLWWHHnV LQYROYHPHQW LV DQWLFLSDWHG WR LQFUHDVH WKH SURMHFWnV LQWHUQDWLRQDO FUHGLELOLW\ FULWLFDO IRU TXDOLILFDWLRQ DV D FDUERQ RIIVHW 7KH UDQJHUVn UHFRUGV RI ORJJLQJ GDPDJH SURYLGH GDWD IRU PRQLWRULQJ WKH FRQWUDFWRUfV SHUIRUPDQFH DQG IRU YHULI\LQJ FRPSOLDQFH ZLWK WKH JXLGHOLQHV 7KH GDWD SURYLGHG LQ WKLV GLVVHUWDWLRQ DOVR SURYLGH EDVHOLQH GDWD IRU FDUERQ RIIVHW FDOFXODWLRQV 7KH &RVW RI 5HGXFLQJ /RJJLQJ 'DPDJH $V PHQWLRQHG HDUOLHU RSHUDWLRQDO GHOD\V GXH WR ZHW ZHDWKHU VKXWGRZQV LQFUHDVH H[WUDFWLRQ FRVWV $OVR DV FRPSDUHG ZLWK FRQYHQWLRQDO SUDFWLFHV IHOOLQJ WLPHV DUH VORZHU ZKHQ IROORZLQJ WKH 5,/ JXLGHOLQHV GXH WR WLPH VSHQW PDUNLQJ DQG SUHSDULQJ WUHHV IRU IHOOLQJ &KXD D 7D\ XQSXEO GDWDf 7KH DGGLWLRQDO SODQQLQJ PDSSLQJ DQG PRQLWRULQJ DFWLYLWLHV DOVR LQFUHDVH H[WUDFWLRQ FRVWV DV FRPSDUHG WR WKH FRQYHQWLRQDO PHWKRG &RQYHUVHO\ EXOOGR]HU PDLQWHQDQFH FRVWV DUH ORZ LQ FRQWUROOHG ORJJLQJ VLWHV SUHVXPDEO\ EHFDXVH RI OHVV VLGHFXWWLQJ DQG EODGLQJ EHFDXVH WKH VWHHS URFN\ DUHDV DUH DYRLGHG DQG EHFDXVH WKH

PAGE 22

WRWDO OHQJWK RI VNLG WUDLOV FRQVWUXFWHG LV PXFK UHGXFHG $OVR WRWDO VNLGGLQJ WLPH LV OHVV ZKHQ IROORZLQJ WKH 5,/ JXLGHOLQHV GXH WR VKRUWHU VNLGGLQJ URXWHV DQG OHVV VHDUFK WLPH &KXD E 7D\ XQSXEO GDWDf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f 0DQDJHPHQW GHFUHHV LQLWLDWHG E\ IRUHVWU\ GHSDUWPHQWV WKRXJK IUHTXHQWO\ EDVHG RQ VRXQG PDQDJHPHQW SULQFLSOHV DUH RIWHQ UHQGHUHG LQHIIHFWLYH GXH WR D ODFN RI HQIRUFHPHQW FDSDFLW\ )RU H[DPSOH LQ WKH )RUHVWU\ 'HSDUWPHQW LQ 6DEDK RQH SURIHVVLRQDO IRUHVWHU LV HPSOR\HG SHU KHFWDUHV RI FRPPHUFLDO IRUHVW UHVHUYH 6DEDK )RUHVW 'HSDUWPHQW f $OWHUQDWLYHV WR EXOOGR]HU \DUGLQJ RQ VWHHS VORSHV QHHG WR EH GHYHORSHG WKDW DUH DFFHSWDEOH WR ORFDO ORJJHUV )RU H[DPSOH GHPRQVWUDWLRQ RI VXFFHVVIXO FRPPHUFLDO RSHUDWLRQ RI VN\OLQH \DUGLQJ V\VWHPV LQ VHOHFWLYHO\ ORJJHG WURSLFDO IRUHVWV ZRXOG KHOS HVWDEOLVK WKH YLDELOLW\ RI WKLV PHWKRG 7UDLQLQJ LQ GHVLJQLQJ ULJJLQJ DQG RSHUDWLQJ VN\OLQH V\VWHPV LV DOVR QHHGHG 7KRXJK WKH 5,/ 3URMHFW KDV UHFHLYHG DFFRODGHV LQ WKH SUHVV HJ 0LOOHU f H[SDQVLRQ RI UHGXFHGLPSDFW ORJJLQJ FDUERQ RIIVHW SURMHFWV LV SUHGLFDWHG RQ DFFHSWDQFH RI WKH FRQFHSW RI MRLQW LPSOHPHQWDWLRQ LQ ERWK GHYHORSHG DQG GHYHORSLQJ FRXQWULHV 6HYHUDO GHYHORSLQJ FRXQWULHV DUH

PAGE 23

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

PAGE 24

&+$37(5 62,/ ',6785%$1&( 5(68/7,1* )520 %8//'2=(5<$5',1* 2) /2*6 $1' 3267/2**,1* )25(67 5(&29(5< 21 6.,' 75$,/6 ,QWURGXFWLRQ ,Q (DVW 0DOD\VLD WKRXJK RQO\ WUHHV DUH H[WUDFWHG SHU KD W\SLFDOO\ b RI WKH DUHD LV WUDYHUVHG E\ EXOOGR]HU SDWKV &KDL -XVRII 1XVVEDXP HW DO f 7KHUH DUH DOWHUQDWLYH KDUYHVWLQJ V\VWHPV WKDW FDXVH OHVV VRLO GLVWXUEDQFH IRU H[DPSOH VN\OLQH 0LOOHU t 6LURLV f RU KHOLFRSWHU %ODNHQH\ f \DUGLQJ EXW WKHVH WHFKQLTXHV DUH JHQHUDOO\ PRUH H[SHQVLYH WKDQ JURXQG VNLGGLQJ RQ DOO EXW WKH PRVW GLIILFXOW WHUUDLQ HJ$XOHULFK HW DO f 2QH RI WKH JRDOV RI WKH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW LQ 6DEDK ZDV WR UHGXFH WKH DUHD ZLWK VRLO GLVWXUEDQFH ZKLOH XVLQJ H[LVWLQJ HTXLSPHQW DQG SHUVRQQHO EXOOGR]HU DQG FKDLQ VDZ RSHUDWRUV ZHUH WUDLQHG LQ GDPDJH FRQWURO WHFKQLTXHV DQG KDUYHVWLQJ JXLGHOLQHV ZHUH LPSOHPHQWHG LQ KD RI GLSWHURFDUS IRUHVW &KDSWHU 3LQDUG HW DO f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f LV GLVSHUVHG RYHU VORSHV RU IRUPV OLQHDU PRXQGV DORQJ WKH HGJHV RI VNLG WUDLOV $OWKRXJK WRWDO VRLO RUJDQLF PDWWHU FRQWHQW PD\ QRW FKDQJH DFURVV WKH HQWLUH ORJJHG DUHD LWV GLVWULEXWLRQ GRHV -RKQVRQ HW DO f ZLWK EXOOGR]HG

PAGE 25

DUHDV ORVLQJ DQG VLGHFDVW PRXQGV DFFXPXODWLQJ VRLO RUJDQLF PDWWHU *LOOPDQ HW DO 5DE f 7KHVH ORFDOL]HG ORVVHV LQ RUJDQLF PDWWHU FDQ KDYH VXEVWDQWLDO HIIHFWV RQ VRLO IHUWLOLW\ *LOOPDQ HW DO =DERZVNL HW DO f DQG WUHH VHHGOLQJ JURZWK DQG VXUYLYDO 1XVVEDXP HW DO :RRGZDUG f 'XULQJ JURXQGEDVHG ORJ \DUGLQJ RSHUDWLRQV VXEVRLOV DUH H[SRVHG DQG FKXUQHG E\ WKH WUDFNV RI WKH EXOOGR]HU 6RLO ORVVHV IURP WKHVH GHQXGHG DUHDV FDQ EH VXEVWDQWLDO HJ +RPEHFN t 5HLQKDUW 5RVV HW DO f $ K\GURORJLFDO VWXG\ RI UHFHQWO\ ORJJHG GLSWHURFDUS IRUHVWV LQ 6DEDK 0DOD\VLD GRFXPHQWHG VWUHDP VHGLPHQW ORDGV DQG WLPHV WKDW RI D QHDUE\ XQORJJHG FDWFKPHQW GXULQJ WKH ILUVW DQG VHFRQG \HDU DIWHU ORJJLQJ UHVSHFWLYHO\ 'RXJODV HW DO f HURGLQJ URDGV DQG JXOOLHG VNLG WUDLOV ZHUH LGHQWLILHG DV WKH SULQFLSDO VRXUFHV RI SRVWORJJLQJ VHGLPHQW ,QVWDOODWLRQ RI SURSHU GUDLQDJH VWUXFWXUHV RQ VNLG WUDLOV URDGV DQG ODQGLQJV FDQ UHGXFH HURVLRQ VXEVWDQWLDOO\ 6WXDUW t &DUU :HQJHU f 6RLO VWUXFWXUH LV DOVR GDPDJHG GXH WR FRPSDFWLRQ IURP ORDGV DSSOLHG E\ EXOOGR]HUV DQG ORJV VNLGGHG DFURVV WKH IRUHVW IORRU $V VRLOV DUH FRPSDFWHG VRLO SRURVLW\ GHFUHDVHV RIWHQ FDXVLQJ GHFUHDVHG ZDWHU LQILOWUDWLRQ DQG LQFUHDVHG VXUIDFH UXQRII DV ZHOO DV GHFUHDVHG VRLO PRLVWXUH DYDLODELOLW\ DHUDWLRQ DQG URRWLQJ VSDFH *UHDFHQ t 6DQGV 0DLPHU t *ULS f 'XULQJ KHDY\ UDLQV VHHGV DQG VHHGOLQJV PD\ EH ZDVKHG DZD\ %RUKDQ HW DO 3LQDUG HW DO f 6RLO EXON GHQVLW\ YDOXHV UHFRUGHG LQ PDQ\ SRVWORJJLQJ KDELWDWV DUH ZLWKLQ WKH UDQJH RI YDOXHV WKDW QHJDWLYHO\ DIIHFW WUHH JURZWK *UHDFHQ t 6DQGV 5DE f ,Q VRPH IRUHVWV FKDQJHV LQ VRLO SK\VLFDO SURSHUWLHV GXH WR ORJJLQJ DUH DSSDUHQW GHFDGHV DIWHU ORJJLQJ &RQJGRQ t +HUERKQ 9DQ GHU 3ODV t %UXLMQ]HHO f 7KH H[WHQW DQG GHJUHH RI VRLO GLVWXUEDQFH DVVRFLDWHG ZLWK EXOOGR]HU \DUGLQJ DUH YDULDEOH DQG DSSHDU WR EH UHODWHG WR VORSH '\PHVV 6WXDUW t &DUU f VRLO WH[WXUH 'DGGRZ t :DUULQJWRQ LQ &OD\WRQ -XVRII f DQG VRLO PRLVWXUH FRQWHQW DW WKH WLPH RI ORJJLQJ

PAGE 26

'H%RQLV -XVRII f &HUWDLQ ORJJLQJ SUDFWLFHV DOVR LQIOXHQFH VRLO GDPDJH IRU H[DPSOH VL]H RI ORJV H[WUDFWHG 'LFNHUVRQ f DQG H[WHQW RI EXOOGR]HU EODGH XVH 0LOOHU t 6LURLV f 3UHKDUYHVW SODQQLQJ FDQ LQFUHDVH WKH HIILFLHQF\ RI ORJ H[WUDFWLRQ DQG UHGXFH WKH DUHD GDPDJHG )URHKOLFK HW DO f 3URKLELWLQJ ZHW ZHDWKHU VNLGGLQJ VNLGGLQJ RQ VWHHS VORSHV DQG XVH RI WKH EXOOGR]HUfV EODGH FDQ UHGXFH IXUWKHU VRLO GDPDJH DVVRFLDWHG ZLWK ORJJLQJ 7R GHVFULEH WKH UHGXFWLRQ LQ VRLO GDPDJH DFKLHYHG LQ WKH 5HGXFHG,PSDFW /RJJLQJ 5,/f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f +HUELYRUH GDPDJH DQG WUDPSOLQJ RI WUHH VHHGOLQJV RQ VNLG WUDLOV DUH DOVR FRPPRQO\ REVHUYHG SHUV REV 0RXUD&RVWD t /XQGRK XQSXEO GDWDf ,I VNLG WUDLOV DUH XQIDYRUDEOH IRU WUHH UHJHQHUDWLRQ H[SHFW VDSOLQJ GHQVLWLHV WR EH ORZHU RQ VNLG WUDLOV WKDQ LQ DGMDFHQW UHVLGXDO IRUHVW ,I VLWH FRQGLWLRQV RQ VNLG WUDLOV EHFRPH PRUH IDYRUDEOH IRU WUHH HVWDEOLVKPHQW RYHU WLPH H[SHFW WKDW VDSOLQJ GHQVLWLHV RQ ROGHU VNLG WUDLOV ZRXOG EH PRUH VLPLODU WR WKRVH LQ DGMDFHQW UHVLGXDO IRUHVW WKDQ WKRVH RQ \RXQJHU VNLG WUDLOV 0HWKRGV 6WXG\ 6LWH 7KH VWXG\ ZDV FRQGXFWHG ZLWKLQ WKH
PAGE 27

KRUL]RQV KDYH D ORDP\ WH[WXUH DQG DUH ZHOOGUDLQHG 7KH FRQYHQWLRQDO WLPEHU KDUYHVWLQJ V\VWHP XVHG LQ 6DEDK DV ZHOO DV WKH KDUYHVWLQJ JXLGHOLQHV EHLQJ IROORZHG LQ 5HGXFHG,PSDFW /RJJLQJ 5,/f DUHDV DUH GHVFULEHG LQ GHWDLO LQ &KDSWHUV DQG RI WKLV GLVVHUWDWLRQ 7KH NH\ GLIIHUHQFHV EHWZHHQ WKH WZR V\VWHPV DUH DV IROORZV f 5,/ IROORZV D SUHKDUYHVW SODQ ZLWK ORFDWLRQV RI DOO VNLG WUDLOV LGHQWLILHG RQ D VWRFN PDS RI WUHHV WR EH KDUYHVWHG ZKHUHDV FRQYHQWLRQDO ORJJLQJ LQYROYHV OLWWOH RU QR SUHKDUYHVWLQJ VNLG WUDLO SODQQLQJ f 5,/ UHVWULFWV EXOOGR]HUV WR VORSHV GHJUHHV ZKHUHDV FRQYHQWLRQDO ORJJLQJ KDV QR VORSH UHVWULFWLRQ DQG f 5,/ UHVWULFWV EXOOGR]HU EODGH XVH DQG HQFRXUDJHV WKH XVH RI WKH ZLQFK FDEOH ZKHUHDV FRQYHQWLRQDO ORJJLQJ GRHV QHLWKHU 6RLO 'LVWXUEDQFH 7R GHWHUPLQH WKH H[WHQW DQG VHYHULW\ RI VRLO GLVWXUEDQFH DVVRFLDWHG ZLWK ORJJLQJ PDSSHG PHDVXUHG DQG FODVVLILHG DOO VRLO GLVWXUEDQFH DVVRFLDWHG ZLWK EXOOGR]HU DFWLYLW\ LQ HLJKW ORJJLQJ XQLWV DSSUR[LPDWHO\ KD HDFKf )RXU XQLWV ZHUH VHOHFWHG UDQGRPO\ IURP D KD H[SHULPHQWDO DUHD ORJJHG DFFRUGLQJ WR WKH 5,/ JXLGHOLQHV E\ WUDLQHG FUHZV DQG FORVHO\ VXSHUYLVHG E\ IRUHVW UDQJHUV )RU FRPSDULVRQ IRXU XQLWV ZHUH VHOHFWHG UDQGRPO\ IURP DQ DGMDFHQW DUHD ORJJHG E\ XQVXSHUYLVHG DQG XQWUDLQHG FUHZV XVLQJ FRQYHQWLRQDO PHWKRGV XVHG WKUHH EURDG GLVWXUEDQFH FDWHJRULHV f URDGV DQG ORJ VWRUDJH ODQGLQJV f EXOOGR]HU SDWKV VNLG WUDLOVf DQG f DUHDV FRYHUHG E\ VLGHFDVW VRLOV 5RDGV DQG ORJ ODQGLQJV JHQHUDOO\ DUH OHYHOHG DQG JUDYHOHG VXUIDFHV RQ VXEVRLOV 6NLG WUDLO VXUIDFHV DUH YDULDEOH DQG ZHUH IXUWKHU FODVVLILHG E\ GHJUHH RI VRLO GLVWXUEDQFH DV IROORZV f VXEVRLO H[SRVHG HLWKHU E\ EODGLQJ RU KHDY\ EXOOGR]HU FKXUQLQJ f FKXUQHG EXW WRSVRLO PL[HG ZLWK XSSHU OD\HUV RI VXEVRLO DQG f FRPSDFWHG E\ EXOOGR]HU SDVVLQJ RYHU DUHD EXW UHODWLYHO\ OLWWOH PL[LQJ RI WRSVRLO ZLWK VXEVRLO ,Q WKH HLJKW ORJJLQJ XQLWV b RI WKH DUHD ZDV VXUYH\HG IRU VRLO GLVWXUEDQFH FDXVHG E\ ORJJLQJ PHDVXUHG OHQJWKV DQG VORSHV RI URDGV DQG VNLG WUDLOV E\ VHFWLRQV D VHFWLRQ ZDV D OHQJWK RI URDG RU VNLG WUDLO WKDW ZDV UHODWLYHO\ XQLIRUP LQ VORSH ZLGWK DQG GLUHFWLRQ :LGWKV ZHUH PHDVXUHG HYHU\ WR P RU IRU PRUH UDSLGO\

PAGE 28

FKDQJLQJ VHFWLRQV LQ WKH PLGSRLQW RI HDFK VHFWLRQ &RQWLJXRXV DUHDV RI VLGHFDVW VRLOV H J OLQHDU VRLO PRXQGV RU WLSVf ZHUH DOVR PHDVXUHG IRU ODUJH DUHDV ZLWK VLGHFDVW VRLOV DGMDFHQW WR URDGV DQG VNLG WUDLOV PHDVXUHG WKH DYHUDJH VORSH DQG GLVWDQFH WR WKH HQG RI HDFK VRLO PRXQG RU VOLGHf 1R HIIRUW ZDV PDGH WR PHDVXUH DUHDV FUXVKHG RU VFUDSHG GXULQJ WKH ZLQFKLQJ RI ORJV WR WKH VNLG WUDLOV 7KH DUHD RI GLVWXUEHG VRLO ZDV FDOFXODWHG EDVHG RQ QHW ORJJDEOH DUHD SHU VXEEORFN GHILQHG LQ &KDSWHU f 7WHVWV SHUIRUPHG RQ DUFVLQHWUDQVIRUPHG GDWD ZHUH XVHG WR FRPSDUH WUHDWPHQWV 3ODQW 5HJHQHUDWLRQ RQ 6NLG 7UDLOV 7R GHVFULEH ZRRG\ SODQW HVWDEOLVKPHQW RQ VNLG WUDLOV VDPSOHG ROG VNLG WUDLOV LQ LQ WKUHH ORJJLQJ FRXSHV DQG f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f IURP WKH ODQGLQJ RU URDG $W HDFK VDPSOLQJ SRLQW WKUHH [ P SORWV ZHUH HVWDEOLVKHG RQH LQ WKH FHQWHU RI VNLG WUDLO DQRWKHU DW WKH HGJH RI WKH VNLG WUDLO DQG D WKLUG P LQWR DGMDFHQW IRUHVW IROORZLQJ D OLQH SHUSHQGLFXODU WR WKH VNLG WUDLO 7KH ZLGWK RI WKH VNLG WUDLO ZDV PHDVXUHG IURP HGJH WR HGJH 5DQGRP QXPEHUV ZHUH XVHG WR GHWHUPLQH ZKHWKHU WKH HGJH DQG IRUHVW SORWV ZRXOG EH SODFHG WR WKH OHIW RU WKH ULJKW RI WKH VNLG WUDLO HGJH SORWV GLG QRW LQFOXGH VNLG WUDLO VXUIDFHV WKRXJK RIWHQ VLGHFDVW VRLO ZDV LQFOXGHG :LWKLQ HDFK SORW UHFRUGHG WKH IROORZLQJ FDQRS\ FRYHU DERYH Pf XVLQJ D VSKHULFDO GHQVLRPHWHU /HPRQ f QXPEHU RI ZRRG\ VWHPV P WDOO FP GEKf DQG QXPEHU RI VSHFLHV 7UHHV FP GEK ZHUH QRW LQFOXGHG LQ WKH VDPSOHV EHFDXVH WKH SORW VL]H ZDV WRR VPDOO WR DGHTXDWHO\ VDPSOH WKHLU GHQVLWLHV DW WKLV OHYHO RI UHSOLFDWLRQ $OO GLSWHURFDUSV LH FRPPHUFLDO VSHFLHVf DQG FRORQL]LQJ WUHH

PAGE 29

VSHFLHV HJ 0DFDUDQJD VSSf ZHUH QRWHG DV VXFK )RU SORWV RQ WKH VXUIDFH RI WKH VNLG WUDLO VXESORW Pf ZDV UDQGRPO\ VHOHFWHG IRU GHWHUPLQDWLRQ RI DERYH DQG EHORZJURXQG ELRPDVV $OO YHJHWDWLRQ ZDV FOLSSHG DW JURXQG OHYHO ZHLJKHG DQG VXEVDPSOHG IRU GU\ ZHLJKW GHWHUPLQDWLRQ &RDUVH URRWV PP GLDPHWHUf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f ,Q DOO FDVHV WKH VLJQLILFDQFH OHYHO XVHG WR UHMHFW WKH QXOO K\SRWKHVLV ZDV 5HVXOWV 6RLO 'LVWXUEDQFH $ JUHDWHU DUHD RI VRLO ZDV GLVWXUEHG LQ FRQYHQWLRQDO XQLWV WKDQ LQ 5,/ XQLWV W GI 3 )LJ 7DEOH f 5RDG DUHD ZDV VLPLODU LQ WKH WZR WUHDWPHQWV GI 3 f EXW VNLG WUDLO DUHD ZDV PXFK OHVV LQ WKH 5,/ XQLWV WKDQ LQ FRQYHQWLRQDO XQLWV W GI 3 f ,QFOXGLQJ RQO\ ORJJHG DUHDV PHDQ VNLG WUDLO GHQVLW\ ZDV PXFK KLJKHU LQ FRQYHQWLRQDO XQLWV PHDQ P KDn 6' f WKDQ LQ 5,/ XQLWV PHDQ P KDn 6' W GI 3 f 7RWDO YROXPH RI WLPEHU H[WUDFWHG SHU ORJJLQJ XQLW ZDV QRW VWDWLVWLFDOO\ GLIIHUHQW EHWZHHQ WKH WZR PHWKRGV I GI 3 )LJ f KRZHYHU KLJK YDULDELOLW\ DQG ORZ UHSOLFDWLRQ OLPLW

PAGE 30

5,/ &19 )LJXUH 'LDJUDPV RI WKH HLJKW ORJJLQJ XQLWV LQ ZKLFK VRLO GLVWXUEDQFH ZDV PHDVXUHG &19 FRQYHQWLRQDO ORJJLQJ DUHDV 5,/ UHGXFHGLPSDFW ORJJLQJ DUHDVf 7KLFN EODFN OLQHV UHSUHVHQW URDGV WKLQ EODFN OLQHV DUH VNLG WUDLOV EODFNHQHG DUHDV DUH ORJ ODQGLQJV VWLSOHG DUHDV DUH ULSDULDQ ]RQHV DQG WKH KDWFKHG DUHD LV D ODQGVOLGH EHORZ D URDG

PAGE 31

7DEOH 6RLO GLVWXUEDQFH LQ FRQYHQWLRQDO DQG UHGXFHGLPSDFW ORJJLQJ XQLWV b DUHDf 1 SHU WUHDWPHQW 6NLG WUDLO DUHD LQFOXGHV DUHD FRYHUHG ZLWK VLGHFDVW VRLO 9DOXHV DUH PHDQ SHUFHQWDJHV 6'f RI ORJJHG DUHDV &RQYHQWLRQDO /RJJLQJ 8QLWV 5HGXFHG,PSDFW /RJJLQJ 8QLWV 7RWDO $UHD 'LVWXUEHG bfrrr b f b f 5RDGV DQG /DQGLQJV bf b f b f 6NLG 7UDLOV bfrrr b f b f f3F

PAGE 32

)LJXUH 7RWDO VNLG WUDLO DUHD KD SHU ORJJLQJ XQLWf UHODWHG WR WLPEHU YROXPH H[WUDFWHG Q7 SHU ORJJLQJ XQLWf IRU UHGXFHGLPSDFW ORJJLQJ DUHDV VROLG FLUFOHVf DQG FRQYHQWLRQDO ORJJLQJ DUHDV RSHQ FLUFOHVf

PAGE 33

WKH SRZHU RI WKLV DQDO\VLV ([FOXGLQJ XQORJJHG VHFWLRQV ZLWKLQ XQLWV PHDQ YROXPH H[WUDFWHG ZDV P KDn 6' f LQ FRQYHQWLRQDO XQLWV DQG P KDn 6' f LQ UHGXFHGLPSDFW ORJJLQJ XQLWV 3DFLILF +DUGZRRGV 6GQ %KG XQSXEO GDWDf 6NLG WUDLO DUHD LQFOXGLQJ VLGHFDVW PRXQGVf SHU WLPEHU YROXPH H[WUDFWHG ZDV JUHDWHU LQ FRQYHQWLRQDO XQLWV PHDQ P Pn 6' f WKDQ LQ 5/ XQLWV PHDQ P P 6' 8 GI 3 f ,QFOXGLQJ URDG DUHD VRLO GLVWXUEDQFH SHU KDUYHVWHG WUHH ZDV P WUHHn 6' f LQ FRQYHQWLRQDO DQG P WUHHn 6' f LQ UHGXFHGLPSDFW ORJJLQJ DUHDV 6NLG WUDLO GLVWXUEDQFH ZDV SRVLWLYHO\ FRUUHODWHG ZLWK YROXPH H[WUDFWHG IRU FRQYHQWLRQDO XQLWV 3HDUVRQ &RUUHODWLRQ &RHIILFLHQW 3 f EXW QRW IRU 5,/ XQLWV 3HDUVRQ &RUUHODWLRQ &RHIILFLHQW 3 f :LWKLQ WKH DUHD GLVWXUEHG E\ VNLG WUDLOV WKH VHYHULW\ RI GLVWXUEDQFH WR WKH VRLO ZDV JUHDWHU LQ FRQYHQWLRQDO WKDQ LQ 5,/ ORJJLQJ XQLWV 7DEOH f 6NLG WUDLOV ZLWK D EODGHG VXUIDFH RU VLGHFXWf ZHUH SUHGRPLQDQW LQ WKH FRQYHQWLRQDO XQLWV PHDQ b 6' bf ZKHUHDV RQO\ b 6' bf RI WKH VNLG WUDLOV LQ WKH 5,/ XQLWV KDG D EODGHG VXUIDFH 7KH PRVW FRPPRQ VXUIDFH FRQGLWLRQ IRU VNLG WUDLOV LQ WKH 5,/ XQLWV ZDV FKXUQHG LH WKH WRSVRLO UHPDLQLQJ LQ SODFH EXW EHLQJ PL[HG ZLWK WKH XSSHU OD\HU RI VXEVRLO 7DEOH f 6NLG WUDLOV ZLWK LQWDFW WRSVRLO DQG OLWWHU OD\HU ZHUH YHU\ XQFRPPRQ LQ FRQYHQWLRQDO ORJJLQJ XQLWV EXW FRYHUHG DERXW b RI WKH VNLG WUDLO VXUIDFHV LQ 5,/ XQLWV ,Q WKHVH FRPSDFWHG DUHDV VDSOLQJV DQG YLQHV UHVSURXWHG VRRQ DIWHU ORJJLQJ 3ODQW 5HJHQHUDWLRQ RQ 6NLG 7UDLOV 7KH ZLGWK RI VNLG WUDLOV VXUYH\HG LQ WKH WKUHH ORJJLQJ FRXSHV UDQJHG IURP P WR P PHDQ ZLGWK LQ WKH f FRXSH PHDQ P 6', f ZDV JUHDWHU WKDQ WKDW LQ WKH f DQG f FRXSHV PHDQ P 6' PHDQ P 6' ) GI 3 7XNH\fV 7HVW 3 f %RWK VNLG WUDLO DQG IRUHVW KDELWDWV LQ WKH WZR ROGHU ORJJLQJ FRXSHV KDG QHDUO\ FORVHG FDQRSLHV DW WKH WLPH RI VDPSOLQJ 7DEOH f 6NLG WUDLO WUDFNV LQ WKH f FRXSH KDG PRUH RSHQ FDQRSLHV WKDQ HGJHV RU DGMDFHQW IRUHVW SORWV )RU DOO WKUHH ORJJLQJ FRXSHV VSHFLHV

PAGE 34

7DEOH 7\SHV RI VRLO GLVWXUEDQFH UHFRUGHG LQ FRQYHQWLRQDO DQG UHGXFHGLPSDFW ORJJLQJ XQLWV 1 SHU WUHDWPHQWf SUHVHQWHG DV PHDQ SHUFHQWDJH 6'f RI WRWDO DUHD ORJJHG &RQYHQWLRQDO /RJJLQJ 8QLWV 5HGXFHG,PSDFW /RJJLQJ 8QLWV $UHD :LWK 6LGHFDVW 6RLObffr b f b f 6NLG 7UDLO 6XUIDFH $UHD bfrrr b f b f %ODGHG bf rf b f b f &KXUQHG bf rrr b f b f &RPSDFWHG bf r b f b f r 3 rrr!

PAGE 35

7DEOH &KDUDFWHULVWLFV RI YHJHWDWLRQ LQ RQ VNLG WUDLO WUDFNV VNLG WUDLO HGJHV DQG DGMDFHQW IRUHVW LQ WKUHH ORJJLQJ FRXSHV 6SHFLHV ULFKQHVV UHIHUV WR DOO ZRRG\ VWHPV P WDOO DQG FP GEK $OO YDOXHV DUH PHDQV 6'f SHU SORW IRU IRXU ORJJLQJ XQLWV HDFK XQLW ZLWK VDPSOLQJ SORWV [ Pf 'LIIHUHQW VXSHUVFULSWHG OHWWHUV ZLWKLQ D URZ GHQRWH D VLJQLILFDQW GLIIHUHQFH 3 f EHWZHHQ KDELWDWV ZLWKLQ D FRXSH XVLQJ 7XNH\ PXOWLSOH FRPSDULVRQV IROORZLQJ $129$ &RXSH 6NLG 7UDLO 7UDFN 6NLG 7UDLO (GJH )RUHVW &DQRS\ &RYHU f b fD b fE b fE f b fD b fD b fD f b fE b fD b fE 6SHFLHV 5LFKQHVV f OOfD fE fE f fD OOfE fE f fD fE fE

PAGE 36

ULFKQHVV ZRRG\ SODQWV P WDOO FP GEKf ZDV ORZHU RQ VNLG WUDLO WUDFNV WKDQ LQ HGJH RU DGMDFHQW IRUHVW KDELWDW 7DEOH f )HZHU VDSOLQJV ZHUH IRXQG RQ VNLG WUDLO WUDFNV WKDQ RQ VNLG WUDLO HGJHV RU DGMDFHQW IRUHVW LQ DOO WKUHH ORJJLQJ FRXSHV 7DEOH f 7KH f DQG f ORJJLQJ FRXSHV KDG LGHQWLFDO PHDQ VDSOLQJ GHQVLWLHV RQ VNLG WUDLO WUDFNV DOWKRXJK YDULDQFH ZDV KLJKHU LQ WKH f FRXSH WKDQ LQ WKH f FRXSH 7DEOH f )RUHVW KDELWDWV LQ DOO WKUHH FRXSHV KDG UHODWLYHO\ IHZ SLRQHHU WUHH VDSOLQJV 3LRQHHU WUHH VDSOLQJV ZHUH UHODWLYHO\ DEXQGDQW RQ VNLG WUDLOV DQG HGJHV LQ WKH f FRXSH (GJHV LQ WKH f FRXSH KDG PRUH SLRQHHU VDSOLQJV WKDQ HLWKHU WKH VNLG WUDLOV RU DGMDFHQW IRUHVW ,Q WKH f FRXSH SLRQHHU WUHH VDSOLQJ GHQVLW\ ZDV VLPLODU LQ WKH WKUHH KDELWDWV 'LSWHURFDUS VDSOLQJ GHQVLW\ ZDV OHVV RQ VNLG WUDLOV WKDQ DGMDFHQW IRUHVW LQ WKH f DQG f FRXSHV 7DEOH f ,Q WKH f FRXSH WKH WKUHH KDELWDWV KDG VLPLODU GHQVLWLHV RI GLSWHURFDUS VDSOLQJV 7KH REVHUYHG GHQVLWLHV RI GLSWHURFDUS VDSOLQJV RQ VNLG WUDLO HGJHV DQG LQ DGMDFHQW IRUHVW KDELWDWV ZHUH VLPLODU WR GHQVLWLHV UHFRUGHG IRU XQORJJHG IRUHVW PHDQ VDSOLQJV KDn 6' FRXSHf WKRXJK WKH GLYHUVLW\ ZDV TXLWH ORZ LQ WKH f FRXSH ZKHUH +RSHD QHUYRVD ZDV GRPLQDQW $ERYHJURXQG ELRPDVV RQ VNLG WUDLO WUDFNV ZDV H[WUHPHO\ ORZ 0J ELRPDVV KDf DQG ZDV VLPLODU IRU WKH WKUHH ORJJLQJ FRXSHV .: GI 3 7DEOH f &RDUVH URRW ELRPDVV XQGHU VNLG WUDLOV IROORZHG D JHQHUDO SDWWHUQ RI PRUH ELRPDVV XQGHU ROGHU VNLG WUDLOV 8QGHU VNLG WUDLOV LQ WKH f FRXSH FRDUVH URRW ELRPDVV ZDV JUHDWHU WKDQ LW ZDV XQGHU VNLG WUDLOV LQ WKH f FRXSH 7DEOH T 3 f &RDUVH URRW ELRPDVV XQGHU VNLG WUDLOV LQ WKH f FRXSH ZDV LQWHUPHGLDWH DQG QRW VWDWLVWLFDOO\ GLIIHUHQW IURP HLWKHU WKH f RU f \HDU ROG VNLG WUDLOV TO f 3 TYV 3 f 'HDG URRW PDVV XQGHU VNLG WUDLOV ZDV PXFK KLJKHU LQ WKH f FRXSH PHGLDQ 0J QHFURPDVV KD 1 f WKDQ LQ HLWKHU WKH f RU f FRXSHV PHGLDQJ PHGLDQ 7DEOH f 7RWDO FRDUVH URRW PDVV ZDV QRW GLIIHUHQW DPRQJ WKH WKUHH ORJJLQJ FRXSHV $77 GI 3 f :RRG\ URRWV PP GLDPHWHU PDGH XS DERXW b b

PAGE 37

7DEOH 6WHP GHQVLWLHV P WDOO FP GEKf LQ RQ VNLG WUDLO WUDFNV VNLG WUDLO HGJHV DQG DGMDFHQW IRUHVW LQ WKUHH ORJJLQJ FRXSHV $OO YDOXHV DUH PHDQV 6'f SHU KD GHQVLWLHV ZHUH FDOFXODWHG IURP P SORWV VDPSOH SORWV SHU XQLW IRXU XQLWV SHU FRXSH 'LIIHUHQW VXSHUVFULSWHG OHWWHUV ZLWKLQ D URZ GHQRWH D VLJQLILFDQW GLIIHUHQFH 3 f EHWZHHQ KDELWDWV ZLWKLQ D FRXSH XVLQJ 7XNH\ PXOWLSOH FRPSDULVRQV IROORZLQJ $129$ 6LPLODU UHVXOWV ZHUH REWDLQHG ZKHQ KDELWDWV ZHUH FRPSDUHG XVLQJ IUHTXHQF\ GDWD LQ FRQWLQJHQF\ WDEOH DQDO\VHV &RXSH 6NLG 7UDLO 7UDFN 6NLG 7UDLO (GJH )RUHVW 6DSOLQJV DQG 9LQHV f fD fE fE f fD fE fE f f OfE fE 3LRQHHU 7UHH 6DSOLQJV f fDE f fE f fE f fE f fD ff ff 'LSWHURFDUS 6DSOLQJV f f fDE fE f f ff ff f fD fE OfE

PAGE 38

7DEOH $ERYH DQG EHORZJURXQG ELRPDVV DQG QHFURPDVV IRU WKUHH DJHV RI VNLG WUDLOV 9DOXHV DUH PHGLDQV 0J RUJDQLF GU\ PDVV KDn ZLWK UDQJH QRWHG SDUHQWKHWLFDOO\f IRU 1 ORJJLQJ XQLWV m VDPSOHV SHU XQLWf 'LIIHUHQW VXSHUVFULSWHG OHWWHUV ZLWKLQ URZV GHQRWH D VLJQLILFDQW GLIIHUHQFH 3 f EHWZHHQ DJHV LQ QRQSDUDPHWULF SDLUZLVH FRPSDULVRQV
PAGE 39

DQG b RI WRWDO OLYLQJ FRDUVH URRWV XQGHU VNLG WUDLOV LQ WKH f f DQG f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n DQG 86 Pn UHVSHFWLYHO\ 7D\ XQSXEO GDWDf 7KH KDUYHVWLQJ JXLGHOLQHV DGRSWHG E\ WKH 5,/ SURMHFW LQFOXGH VSHFLILFDWLRQV DERXW URDG ORFDWLRQ DQG FRQVWUXFWLRQ EXW WKH URDG LQ WKH 5,/ SLORW SURMHFW DUHD ZDV FRQVWUXFWHG EHIRUH DGRSWLRQ RI WKH 5,/ JXLGHOLQHV E\ WKH FRQFHVVLRQDLUH FRPSURPLVLQJ IOH[LELOLW\ LQ ORFDWLQJ VNLG WUDLOV 7KH URDG ZDV SRVLWLRQHG ORZ RQ VORSHV WKLV ORFDWLRQ ZDV VXERSWLPDO DQG RIWHQ IRUFHG GRZQKLOO VNLGGLQJ 7KHUH ZDV QR GLIIHUHQFH LQ URDG GHQVLW\ IRU WKH WZR PHWKRGV 7DEOH f EXW WKH DUHD FRYHUHG E\ VLGHFDVW VRLOV DVVRFLDWHG ZLWK WKH URDG ZDV OHVV LQ 5,/ DUHDV WKDQ LQ FRQYHQWLRQDO ORJJLQJ DUHDV HYHQ WKRXJK WKH URDGV LQ 5,/ XQLWV ZHUH XVHG IRU SURFHVVLQJ ORJV 7KLV GLIIHUHQFH UHIOHFWV WKH DWWLWXGHV RI WKH RSHUDWRUV ZRUNLQJ LQ WKH WZR DUHDV EXOOGR]HU RSHUDWRUV LQ 5,/ DUHDV ZRUNHG FDUHIXOO\ DQG ZLWK WKH DZDUHQHVV WKDW WKH SURMHFWfV JRDO ZDV WR UHGXFH GDPDJH 7KH RSHUDWRUV LQ FRQYHQWLRQDO ORJJLQJ DUHDV ZHUH QRW VLPLODUO\ PRWLYDWHG

PAGE 40

7KH H[WHQW RI VRLO GDPDJH DVVRFLDWHG ZLWK FRQYHQWLRQDO ORJJLQJ LQ WKLV VWXG\ PHDQ b UDQJH bf ZDV DW WKH ORZ HQG RI WKH UDQJH RI SXEOLVKHG YDOXHV IRU XQVXSHUYLVHG ORJJLQJ LQ 0DOD\VLD HJ b )R[ D b %RUKDQ HW DO b -XVRII t 1LN b 1XVVEDXP HW DO LQ SUHVVf DQG ZDV VLPLODU WR YDOXHV IRU RSHUDWLRQV LQ 6XULQDPH b DQG b +HQGULVRQ f DQG ,QGRQHVLD b &DQQRQ HW DO f 6NLG WUDLO DUHD LQ 5,/ XQLWV ZDV VLPLODU WR YDOXHV REWDLQHG ZLWK SODQQHG RSHUDWLRQV LQ 6XULQDPH b +HQGULVRQ f DQG $XVWUDOLD b &URPH HW DO f 7KH ODUJH YDULDWLRQ LQ YDOXHV UHSRUWHG IRU GLSWHURFDUS IRUHVWV LQ 6DEDK PD\ EH GXH WR GLIIHUHQFHV LQ VDPSOLQJ PHWKRGV ELDVHV WRZDUGV URDGVLGH ORFDWLRQV RU GLIIHUHQFHV LQ ORFDO WRSRJUDSKLFDO FRQGLWLRQV H[SHFW WKH UHVXOWV IURP WKLV VWXG\ DUH UHODWLYHO\ IUHH IURP VDPSOLQJ ELDVHV EHFDXVH VRLO GLVWXUEDQFH DVVRFLDWHG ZLWK ORJJLQJ ZDV PHDVXUHG LQ b RI WKH DUHD RI WKH HLJKW ORJJLQJ XQLWV ,Q JHQHUDO GDPDJH WR WKH UHVLGXDO VWDQG LV SRVLWLYHO\ FRUUHODWHG ZLWK WLPEHU YROXPH H[WUDFWHG 1LFKROVRQ f ,Q WKLV VWXG\ VRLO GDPDJH ZDV SRVLWLYHO\ DVVRFLDWHG ZLWK KDUYHVWHG YROXPHV LQ FRQYHQWLRQDO ORJJLQJ DUHDV EXW QRW LQ UHGXFHGLPSDFW ORJJLQJ DUHDV )LJ f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f IRXQG WKDW P RI JURXQG VXUIDFH ZDV VFUDSHG E\ EXOOGR]HUV URDGV DQG VNLG WUDLOVf IRU HDFK KDUYHVWHG WUHH &RPSDUDEOH ILJXUHV IRU WKLV VWXG\ DUH PXFK ORZHU PHDQ&19 P WUHHn DQG

PAGE 41

PHDQ 5,/ P WUHHnf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t &DUU f %XW EODGLQJ DQG VLGHFXWWLQJ ZHUH QRW UHVWULFWHG WR VWHHS DUHDV LQ WKH FRQYHQWLRQDO ORJJLQJ XQLWV b RI WKH VNLG WUDLOV KDG H[SRVHG DQG GLVWXUEHG VXEVRLOV 7KH VNLG WUDLOV UHFHLYLQJ VXEVRLO GLVWXUEDQFH LQ 5,/ XQLWV bf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f f DQG f ORJJLQJ FRXSHV 7KLV UHVXOW VXJJHVWV WKDW HYHQ \HDUV DIWHU ORJJLQJ WUHH UHJHQHUDWLRQ RQ VNLG WUDLOV LV OHVV WKDQ WKDW LQ UHVLGXDO IRUHVW 7UHH UHJHQHUDWLRQ RQ WKH HGJHV RI VNLG WUDLOV DSSHDUV VLPLODU WR WKDW LQ DGMDFHQW IRUHVW LQ WHUPV RI VDSOLQJ GHQVLWLHV DQG VSHFLHV ULFKQHVV +RZHYHU VSHFLHV FRPSRVLWLRQ LV GLIIHUHQW LQ WKH WZR KDELWDWV ZLWK SLRQHHU WUHH VSHFLHV EHLQJ PRUH FRPPRQ RQ VNLG WUDLO HGJHV WKDQ LQ UHVLGXDO IRUHVW 6DSOLQJ GHQVLWLHV LQ WKH f DQG f FRXSHV DUH YHU\ VLPLODU VXJJHVWLQJ WKDW FRQGLWLRQV IRU WUHH UHJHQHUDWLRQ RQ ROGHU VNLG WUDLOV DUH QR EHWWHU WKDQ WKRVH RQ \RXQJHU VNLG WUDLOV 7KH VLPLODULW\ LQ ELRPDVV RQ VNLG WUDLOV IURP WKH WKUHH ORJJLQJ FRXSHV DOVR VXJJHVWV OLWWOH FKDQJH ,PPHGLDWHO\ DIWHU

PAGE 42

ORJJLQJ b RI WKH VNLG WUDLO DUHD LQ FRQYHQWLRQDO ORJJLQJ XQLWV ZDV EDUH RI YHJHWDWLRQ 7KH TXDQWLW\ RI DERYHJURXQG ELRPDVV RQ WKH DQG \HDUROG VNLG WUDLOV ZDV RQO\ VOLJKWO\ KLJKHU WKDQ WKDW UHFRUGHG RQ RQH\HDUROG VNLG WUDLOV 0J ELRPDVV KDn 6' &KDSWHU f /LYLQJ FRDUVH URRW ELRPDVV DSSHDUV WR EH LQFUHDVLQJ ZLWK WLPH VLQFH ORJJLQJ DV RQH PLJKW H[SHFW EXW DW \HDUV DIWHU ORJJLQJ FRDUVH URRW ELRPDVV ZDV b RI WKH SUHORJJLQJ YDOXH REVHUYHG HOVHZKHUH LQ WKH IRUHVW UHVHUYH &KDSWHU f LQWHUSUHW WKH UHVXOWV IURP WKLV VWXG\ ZLWK FDXWLRQ DQG UHFRJQL]H WKDW SUHORJJLQJ FRQGLWLRQV LQ WKH WKUHH ORJJLQJ FRXSHV VWXGLHG PD\ KDYH GLIIHUHG 1HYHUWKHOHVV DP IDLUO\ FRQILGHQW WKDW DOO WKUHH DUHDV ZHUH KHDYLO\ ORJJHG 3DFLILF +DUGZRRGV XQSXEO GDWDf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f DQG f FRXSHV ZKHUH SLRQHHU VDSOLQJ GHQVLWLHV RQ VNLG WUDLO HGJHV ZHUH KLJKHU WKDQ GHQVLWLHV LQ DGMDFHQW IRUHVW 'HQVLWLHV RQ VNLG WUDLO VXUIDFHV ZHUH QRW GLIIHUHQW IURP GHQVLWLHV LQ IRUHVW SORWV 3HUKDSV SLRQHHU WUHH GHQVLWLHV LQ IRUHVW SORWV ZHUH KLJK UHODWLYH WR XQGLVWXUEHG IRUHVW EHFDXVH RI WKH LQFOXVLRQ RI IHOOLQJ JDSV ZKLFK PD\ SURYLGH RSSRUWXQLWLHV IRU SLRQHHU WUHH HVWDEOLVKPHQW LQ VRPH RI WKH SORWV $OVR IHZ SLRQHHU VDSOLQJV ZRXOG EH H[SHFWHG WR VXUYLYH XQGHU WKH FORVHG FDQRS\ REVHUYHG LQ WKH f DQG f FRXSHV 6HYHUDO VWXGLHV LQ QHRWURSLFDO UDLQ IRUHVW UHFRUGHG YLJRURXV WUHH VHHGOLQJ HVWDEOLVKPHQW DORQJ WKH HGJHV RI VNLG WUDLOV DQG URDGV HJ-RQNHUV 9HULVVLPR HW DO *XDULJXDWD t 'XSX\ f WZR WR WKUHH \HDUV DIWHU ORJJLQJ ,W GRHV QRW QHFHVVDULO\ IROORZ KRZHYHU WKDW KLJK GHQVLWLHV RI

PAGE 43

VDSOLQJV RQ VNLG WUDLOV ZLOO HYHQWXDOO\ GHYHORS LQWR D VWDQG RI WUHHV XQIDYRUDEOH VRLO SURSHUWLHV HJ FRPSDFWLRQ DQG ORZ QXWULHQW VWDWXVf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b RI WKH VNLG WUDLO DUHD LQ FRQYHQWLRQDO ORJJLQJ DUHDV KDG VXEVRLO GLVWXUEDQFH 'LVWULEXWLRQ SDWWHUQV LQ ELRPDVV VSHFLHV ULFKQHVV DQG VDSOLQJ GHQVLW\ DFURVV KDELWDWV LQ ORJJHG IRUHVW VXJJHVW WKDW HYHQ \HDUV DIWHU FRQYHQWLRQDO ORJJLQJ DUHDV ZLWK VRLO GLVWXUEDQFH DUH OHVV SURGXFWLYH WKDQ DUHDV ZLWKRXW ,Q UHGXFHG LPSDFW ORJJLQJ DUHDV DERXW b RI VNLG WUDLO DUHD UHWDLQHG WRSVRLO 5HWHQWLRQ RI RUJDQLF PDWWHU LQ WKHVH FRPSDFWHG DUHDV PD\ UHVXOW LQ LPSURYHG SODQW UHJHQHUDWLRQ :RRGZDUG LQ SUHVVf EXW IRU PDQ\ VRLOV PRVW FRPSDFWLRQ DVVRFLDWHG ZLWK VNLGGLQJ KDSSHQV ZLWK WKH ILUVW IHZ SDVVHV RI WKH EXOOGR]HU 'LDV t 1RUWFOLII 5RJHU HW DO f ,I GDPDJH WR VRLO VWUXFWXUH LV WR EH PLQLPL]HG UHGXFLQJ WKH DUHD WUDYHUVHG E\ EXOOGR]HUV ZLOO EH PRUH LPSRUWDQW WKDQ UHGXFLQJ WKH WUDIILF RQ DQ\ SDUWLFXODU } VNLG WUDLO

PAGE 44

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a P EXW HPHUJHQW WUHHV UHDFK KHLJKWV RI P 7KH WHUUDLQ FRQVLVWV RI VHULHV RI VWHHS ULGJHV RYHU b RI WKH DUHD RFFXUV RQ VORSHV H[FHHGLQJ r DQG JHQHUDOO\ P ORQJ 3LQDUG XQSXEO GDWDf 6RLOV DUH YDULHG EXW

PAGE 45

SULPDULO\ DUH 8OWLVROV GHULYHG IURP 7HUWLDU\ VHGLPHQWV 2KWD t (IIHQGL f 7KH FOLPDWH LV RQO\ VOLJKWO\ VHDVRQDO ZLWK D GU\ SHULRG FHQWHUHG RQ $SULO 0HDQ DQQXDO UDLQIDOO LV DSSUR[LPDWHO\ PP DQG PHDQ GDLO\ WHPSHUDWXUH LV r& 'DQXP 9DOOH\ )LHOG &HQWUH 5HFRUGV f 0HWKRGV 3UHORJJLQJ 0HDVXUHPHQWV )RUHVW ELRPDVV DQG VWDQG VWUXFWXUH EHIRUH ORJJLQJ ZHUH PHDVXUHG WR DOORZ FRPSDULVRQ RI WKH HIIHFWV RI ORJJLQJ WUHDWPHQW RQ FDUERQ VWRUHV 3ULRU WR ORJJLQJ IRXU ORJJLQJ XQLWV KD HDFKf ZHUH UDQGRPO\ VHOHFWHG IURP WKH H[SHULPHQWDO DUHD WR EH ORJJHG DFFRUGLQJ WR WKH UHGXFHGLPSDFW ORJJLQJ JXLGHOLQHV KHUHDIWHU 5/ XQLWVf IRXU DGGLWLRQDO XQLWV ZHUH UDQGRPO\ VHOHFWHG IURP DQ DGMDFHQW DUHD GHVWLQHG WR EH ORJJHG FRQYHQWLRQDOO\ )LJ f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b RI HDFK ORJJLQJ XQLW DUHDf ZHUH ORFDWHG DFFRUGLQJ WR D VWUDWLILHG UDQGRP GHVLJQ )LJ f DYRLGLQJ DUHDV ZLWKLQ P RI SHUPDQHQW VWUHDPV ZLWKLQ P RI D ORJJLQJ XQLW ERXQGDU\ RU D PDLQ URDG VWHHS URFN\ DUHDV VORSHV !rf DQG ODQGVOLGHV ,Q WKH HLJKW ORJJLQJ XQLWV D WRWDO RI SORWV ZDV HVWDEOLVKHG 1R SORWV ZHUH HVWDEOLVKHG DW SRLQWV GLVPLVVHG GXH WR H[FOXVLRQV OLVWHG DERYH

PAGE 46

)LJXUH ,Q UDQGRPO\ VHOHFWHG ORJJLQJ XQLWV KD HDFK 5,/ XQLWV ORJJHG DFFRUGLQJ WR WKH 5,/ JXLGHOLQHV &19 XQLWV ORJJHG FRQYHQWLRQDOO\f SHUPDQHQW SORWV Pf ZHUH HVWDEOLVKHG WR VDPSOH WUHHV DQG ZRRG\ YLQHV 6WHPV ZHUH WDJJHG DQG PHDVXUHG LQ QHVWHG SORWV DV IROORZV P WUHHV A FP GEK P VWHPV FP GEK P VWHPV FP GEK P VWHPV FP GEK P WUHHV FP GEK DQG YLQHV FP GEK

PAGE 47

NP

PAGE 48

$ERYHJURXQG %LRPDVV (DFK WUHH FP GLDPHWHU ZDV WDJJHG DQG LWV GLDPHWHU PHDVXUHG DW P RU DERYH EXWWUHVVHV KHUHDIWHU GEKf 1HVWHG VXESORWV ZHUH XVHG IRU VPDOOHU WUHHV DQG OLDQDV )LJ f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f DQG D %LRPDVV ([SDQVLRQ )DFWRU %()f GHYHORSHG IRU JRRG KLOO GLSWHURFDUS IRUHVW LQ :HVW 0DOD\VLD %URZQ HW DO f 7KH %() IRU JRRG KLOO IRUHVW ZDV VHOHFWHG RYHU WKH IDFWRU GHYHORSHG IRU RWKHU 0DOD\VLDQ GLSWHURFDUS IRUHVW W\SHV EHFDXVH WKH EDVDO DUHD IRU JRRG KLOO IRUHVW P KDn IRU WUHHV FP GEKf PRVW FORVHO\ PDWFKHG WKDW RI WKH VWXG\ VLWH :RRG GHQVLWLHV ZHUH DYDLODEOH IRU RI WKH VSHFLHV RU VSHFLHV JURXSV UHFRUGHG LQ WKH SORWV %XUJHVV f 7R FRQYHUW ZRRG GHQVLWLHV GHWHUPLQHG DW b PRLVWXUH FRQWHQW DLUGU\ ZHLJKWf WR GHQVLW\ DW GU\ ZHLJKW DSSOLHG D UHJUHVVLRQ GHYHORSHG E\ 5H\HV HW DO f )RU QRQGLSWHURFDUS VSHFLHV ZKRVH ZRRG GHQVLW\ ZDV QRW NQRZQ XVHG WKH DULWKPHWLF PHDQ RI WKH NQRZQ VSHFLHV WKDW ZHUH QRW GLSWHURFDUSV J FPn 1 VSHFLHVf )RU GLSWHURFDUS VSHFLHV ZKRVH ZRRG GHQVLW\ ZDV QRW NQRZQ XVHG WKH PHDQ YDOXH RI WKH NQRZQ VSHFLHV ZLWKLQ WKH JHQXV RU VHFWLRQ RI WKH JHQXV ZKHQ DSSOLFDEOHf %LRPDVV RI OLDQDV FP GEK ZDV HVWLPDWHG IURP EDVDO DUHD XVLQJ D UHJUHVVLRQ HTXDWLRQ GHYHORSHG IRU 9HQH]XHODQ OLDQD VSHFLHV 3XW] f 7R VXSSOHPHQW WKH DYDLODEOH VWHP YROXPH HTXDWLRQV ZKLFK MXGJHG ZHUH LQDSSURSULDWH IRU WUHHV FP GEK KDUYHVWHG UDQGRPO\ VHOHFWHG WUHHV FP GEK UHSUHVHQWLQJ D PL[WXUH RI

PAGE 49

VSHFLHV DQG GHWHUPLQHG WKHLU DERYHJURXQG ELRPDVV 6DPSOLQJ ZDV FRQGXFWHG LQ SULPDU\ IRUHVW ZLWKLQ NP RI WKH VWXG\ VLWHV $ UHJUHVVLRQ HTXDWLRQ ZDV FDOFXODWHG ZLWK GEK DV WKH LQGHSHQGHQW YDULDEOH DQG WUHH ELRPDVV DV WKH GHSHQGHQW YDULDEOH 7R GHWHUPLQH WRWDO VPDOO WUHH ELRPDVV DSSOLHG WKH GEKELRPDVV HTXDWLRQ WR WKH WUHHV FP GEKf LQ WKH SHUPDQHQW SORWV 6KUXE KHUE SDOP DQG KHUEDFHRXV YLQH ELRPDVV ZDV PHDVXUHG LQ 5,/ DQG FRQYHQWLRQDO ORJJLQJ XQLWV XVLQJ P FLUFXODU FOLS SORWV m SHU XQLW 1 SHU WUHDWPHQWf UDQGRPO\ ORFDWHG LQ D VWUDWLILHG UDQGRP IDVKLRQ XVLQJ WKUHH WRSRJUDSKLFDO SRVLWLRQV DV VWUDWD (DFK SORW ZDV FRQVLGHUHG D VDPSOH DQG ORJJLQJ XQLW GLYLVLRQV ZHUH DVVXPHG WR EH LQFRQVHTXHQWLDO WR WKH HVWLPDWH DV WKH YDULDWLRQ ZLWKLQ D XQLW ZDV PXFK KLJKHU WKDQ WKDW EHWZHHQ XQLWV ,Q WKH FOLS SORWV DOO DERYHJURXQG SODQW ELRPDVV FP GLDPHWHU DW EDVHf ZDV FXW DW WKH VRLO VXUIDFH DQG ZHLJKHG DQG WKHQ D VXEVDPSOH ZDV RYHQGULHG DW r& WR FRQVWDQW PDVV )RU VHOIVXSSRUWLQJ VSHFLHV RQO\ SODQWV URRWHG LQVLGH SORWV ZHUH LQFOXGHG )RU YLQHV DOO VWHPV DQG OHDYHV RFFXUULQJ RYHU WKH FOLS SORWV ZHUH FROOHFWHG UHJDUGOHVV RI WKH URRWLQJ VLWH 3DOPV SULPDULO\ VWHPOHVV UDWWDQVf WKDW RFFXUUHG LQ WKH SORWV ZHUH DOVR FOLSSHG DQG FROOHFWHG $ FRQYHUVLRQ IDFWRU RI b LV IUHTXHQWO\ XVHG WR HVWLPDWH FDUERQ FRQWHQW RI SODQW WLVVXHV H J +DUPRQ HW DO +RHQ t 6ROEHUJ f 7R GHWHUPLQH ZKHWKHU ZRRG\ WLVVXH LQ P\ VLWH ZDV VLPLODUO\ DERXW b FDUERQ WHVWHG D VPDOO QXPEHU RI ZRRG VDPSOHV UDQGRPO\ FROOHFWHG IURP IUHVK ORJJLQJ GHEULV IRU FDUERQ FRQWHQW 7ZHQW\ VDPSOHV DSSUR[LPDWHO\ FP HDFK ZHUH FROOHFWHG IURP ORJ DQG EUDQFK GHEULV 7KH VDPSOHV ZHUH VSOLW LQWR VPDOO SLHFHV RYHQGULHG JURXQG DQG VLHYHG &DUERQ FRQWHQW ZDV GHWHUPLQHG XVLQJ D &DUOR(UED 1$ &DUERQ1LWURJHQ (OHPHQWDO $QDO\]HU ,VRWRSH 5DWLR 0DVV 6SHFWURPHWHU 'HSDUWPHQW RI 6RLO 6FLHQFH 8QLYHUVLW\ RI )ORULGD *DLQHVYLOOH )/f &DUERQ FRQWHQW DYHUDJHG b 6' 1 VWDWLVWLFDOO\ GLIIHUHQW IURP b W GI 3 f DVVXPH DOO SODQW WLVVXHV WR EH b FDUERQ E\ GU\ ZHLJKW WKRXJK UHFRJQL]H

PAGE 50

WKDW FHUWDLQ WLVVXHV RIWHQ KDYH FDUERQ FRQWHQWV WKDW DUH DERYH RU EHORZ WKLV SHUFHQWDJH HJVHHGV DQG ILQH URRWV UHVSHFWLYHO\ *ROOH\ :LOOLDPV f %HORZJURXQG %LRPDVV 3UHORJJLQJ URRW ELRPDVV ZDV VDPSOHG LQ WKH HLJKW ORJJLQJ XQLWV XVLQJ D VWUDWLILHG UDQGRP GHVLJQ WUDYHUVLQJ WHUUDLQ W\SLFDO IRU HDFK XQLW Q SLWV SHU XQLW WRWDO 1 SLWV SHU WUHDWPHQW ORJJLQJ XQLW GLYLVLRQV ZHUH GLVUHJDUGHG LQ WKH DQDO\VHVf &RDUVH URRWV PP GLDPHWHUf ZHUH VDPSOHG LQ [ FP PRQROLWKV RI VRLO H[WUDFWHG WR FP ZLWK D VOHGJHGULYHQ IODW EODGH 5RRWV ZHUH VHSDUDWHG IURP WKH VRLO LQ WKH ILHOG DQG ZDVKHG OLYH DQG GHDG URRWV ZHUH VHSDUDWHG DQG VRUWHG LQWR IRXU GLDPHWHU FODVVHV LQ WKH ODE DQG PP GLDPHWHUf DQG OLYH URRWV ZHUH ZHLJKHG DQG VXEVDPSOHG IRU GU\ ZHLJKW GHWHUPLQDWLRQ 'HDG URRWV ZHUH ZHLJKHG DQG VXEVDPSOHG LQ D VXEVHW RI WKH VDPSOHV 1 f GLG QRW VDPSOH GHHSHU WKDQ FP LQ WKH VRLO SURILOH IRU FRDUVH URRWV DQG FRQVHTXHQWO\ XQGHUHVWLPDWH FDUERQ VWRUHG LQ FRDUVH URRWV )LQH URRW PP GLDPHWHUf PDVV ZDV HVWLPDWHG XVLQJ FP GLDPHWHU FRUHV WDNHQ WR FP GHSWK WZR FRUHV ZHUH WDNHQ DW HDFK VDPSOLQJ VLWH FRPELQHG VRDNHG LQ ZDWHU DQG DJLWDWHG Q VDPSOH VLWHV SHU XQLW WRWDO 1 SHU WUHDWPHQW ORJJLQJ XQLW GLYLVLRQV ZHUH GLVUHJDUGHG LQ DQDO\VHVf 5RRWV ZHUH WKHQ VHSDUDWHG IURP VRLO RYHQ GULHG DQG ZHLJKHG 'XH WR GLIILFXOWLHV LQ FRQILGHQWO\ GLIIHUHQWLDWLQJ OLYH DQG GHDG URRWV RQO\ WRWDO ILQH URRW PDVV YDOXHV DUH UHSRUWHG $ IHZ RI WKH HDUO\ VDPSOHV ZHUH QRW LQFOXGHG DV RQO\ OLYH URRWV ZHUH GULHG DQG ZHLJKHG 7R GHWHUPLQH FRDUVH URRW ELRPDVV GLUHFWO\ EHQHDWK WUHHV ZKHUH FRUH VDPSOLQJ ZDV LPSUDFWLFDO KHUHDIWHU EXWW URRWVf SDUWLDOO\ XSURRWHG WUHHV FP GEKf DORQJ URDGVLGHV DQG VNLG WUDLOV ZLWKLQ WKH ORJJLQJ DUHD ZHUH RSSRUWXQLVWLFDOO\ VDPSOHG WR HVWDEOLVK WKH UHODWLRQVKLS EHWZHHQ EXWW URRW PDVV DQG GEK &RDUVH URRWV PP GLDPHWHU ZLWKLQ P RI WKH EROH RI WKH WUHH ZHUH VHSDUDWHG IURP WKH VRLO FXW LQWR SLHFHV NJ ZDVKHG ZHLJKHG DQG VXEVDPSOHG IRU GU\ ZHLJKW GHWHUPLQDWLRQ %XWW URRW PDVV ZDV ORJWUDQVIRUPHG DQG XVHG DV D GHSHQGHQW YDULDEOH LQ D

PAGE 51

UHJUHVVLRQ HTXDWLRQ ZLWK GEK DV WKH LQGHSHQGHQW YDULDEOH 7R GHWHUPLQH WRWDO URRW PDVV DSSOLHG WKH GEK EXWW URRW PDVV HTXDWLRQ WR WUHHV LQ WKH SHUPDQHQW SORWV DQG FDOFXODWHG WKH PHDQ EXWW URRW ELRPDVV SHU KD DFURVV WKH HLJKW ORJJLQJ XQLWV &RDUVH DQG ILQH URRW ELRPDVV DUH H[SUHVVHG RQ D SHU KD EDVLV WKH FDOFXODWLRQ RI ZKLFK H[FOXGHG DUHDV RFFXSLHG E\ EXWW URRWV 'DPDJH $VVHVVPHQW DQG 1HFURPDVV 3URGXFWLRQ 3HUPDQHQW SORWV ZHUH UHFHQVXVHG IRU WUHH GDPDJH DQG VXUYLYDO GD\V DIWHU ORJJLQJ DQG DJDLQ PRQWKV ODWHU $OO WUHHV DQG YLQHV ZHUH UHORFDWHG DQG DVVHVVHG IRU GDPDJH $OWKRXJK QXPHURXV GDPDJH FODVVHV ZHUH XVHG LQ WKH ILHOG KHUH FRPSUHVV WKHP LQWR WKH IROORZLQJ GHVWUR\HG XSURRWHG DQG FUXVKHGf VQDSSHGRII EHORZ FURZQ DQG RWKHU GDPDJH LQFOXGHV FURZQ VWHP EDUN RU URRW GDPDJH RI YDU\LQJ VHYHULW\f )URP WKH GDPDJH DVVHVVPHQW GDWD HVWLPDWHG E\ ORJJLQJ XQLWf WKH IROORZLQJ SDUDPHWHUV WLPEHU YROXPH H[WUDFWHG QHFURPDVV SURGXFHG IURP WKH EUDQFKHV OHDYHV VWXPSV DQG EXWW URRWV RI KDUYHVWHG WUHHV QHFURPDVV SURGXFHG IURP WUHHV GHVWUR\HG GXULQJ KDUYHVWLQJ DQG QHFURPDVV SURGXFHG IURP GDPDJHG WUHHV WKDW GLHG ZLWKLQ WKH ILUVW PRQWKV DIWHU ORJJLQJ $ERYHJURXQG DQG EXWW URRW ELRPDVV ZHUH LQFOXGHG LQ WKHVH FDOFXODWLRQV 7KH ELRPDVV RI VKUXEV DQG KHUEV LQ ORJJHG IRUHVW ZDV PHDVXUHG XVLQJ P FOLS SORWV Q f UDQGRPO\ ORFDWHG DORQJ WUDQVHFWV GLVSHUVHG WKURXJK HDFK RI VHYHQ ORJJLQJ XQLWV 5,/ FRQYHQWLRQDO ORJJLQJf \HDU DIWHU ORJJLQJ WKH VDPSOLQJ SURWRFRO ZDV VLPLODU WR WKDW XVHG IRU SUHn ORJJLQJ PHDVXUHPHQWV 7R GHWHUPLQH WKH ELRPDVV RI FRORQL]HUV DQG UHVSURXWHG SODQWV LQ DUHDV ZLWK VRLO GLVWXUEDQFH HJ VNLG WUDLOV ORJ ODQGLQJV DQG URDGVf \HDU DIWHU ORJJLQJ VDPSOHG VNLG WUDLOV LQ WKH VDPH VHYHQ ORJJLQJ XQLWV XVLQJ P FOLS SORWV Q SHU XQLW 1 f ORFDWHG UDQGRPO\ DORQJ VNLG WUDLOV $OWKRXJK VNLG WUDLOV DQG RWKHU DUHDV ZLWK VRLO GLVWXUEDQFH FRYHUHG D UHODWLYHO\ VPDOO SHUFHQWDJH RI WKH WRWDO DUHD FRQYHQWLRQDO ORJJLQJ DUHDV PHDQ b 6' M9 5,/ DUHDV PHDQ b 6' 1 &KDSWHU f ELRPDVV LQ WKHVH DUHDV ZDV H[SHFWHG WR EH PRUH YDULDEOH

PAGE 52

WKDQ WKDW LQ WKH UHVW RI WKH IRUHVW VR VDPSOLQJ LQWHQVLW\ ZDV KLJKHU $V ZLWK SUHORJJLQJ VKUXE DQG KHUE ELRPDVV PHDVXUHPHQWV ORJJLQJ XQLW GLYLVLRQV ZHUH GLVUHJDUGHG LQ WKH DQDO\VHV 3UH DQG SRVWn ORJJLQJ PHDVXUHPHQWV RI VKUXE DQG KHUE ELRPDVV DUH QRW SDLUHG DV VDPSOLQJ SRLQWV ZHUH ORFDWHG UDQGRPO\ LQ ORJJLQJ XQLWV &RDUVH URRW PDVV ERWK OLYLQJ DQG GHDGf ZDV PHDVXUHG PRQWKV DIWHU ORJJLQJ LQ IRXU ORJJLQJ XQLWV 5,/ &19f IROORZLQJ WKH SURWRFRO GHVFULEHG IRU WKH SUHORJJLQJ PHDVXUHPHQWV &RDUVHURRW SLWV ZHUH ORFDWHG UDQGRPO\ RQ VNLG WUDLOV SLWV SHU ORJJLQJ XQLW 1 f DQG LQ RWKHU DUHDV RI GLVWXUEHG IRUHVW SLWV SHU XQLW 1 f 7KH GLIIHUHQFH EHWZHHQ PHDQ FRDUVH URRW ELRPDVV EHIRUH DQG PRQWKV DIWHU ORJJLQJ FRUUHFWHG IRU SURSRUWLRQ DUHD LQ VNLG WUDLOV DQG GLVWXUEHG IRUHVWf ZDV FRQVLGHUHG WR KDYH HQWHUHG WKH QHFURPDVV SRRO LI ELRPDVVrA ELRPDVVDIWHU DW D f $V ZLWK XQGHUVWRU\ ELRPDVV ORJJLQJ XQLW GLYLVLRQV ZHUH GLVUHJDUGHG WKXV SUH DQG SRVWORJJLQJ VDPSOHV ZHUH QRW SDLUHG IRU VWDWLVWLFDO FRPSDULVRQV GLG QRW KDUYHVW ILQH URRWV DIWHU ORJJLQJ DQG DVVXPH WKDW ILQH URRW PDVV \HDU DIWHU ORJJLQJ LV VLPLODU WR PDVV EHIRUH ORJJLQJ )RU DOO RI VWDWLVWLFDO FRPSDULVRQV XVH D VLJQLILFDQFH OHYHO RI b EXW UHSRUW WHVW VWDWLVWLFV ZKHQ 3 YDOXHV DUH EHWZHHQ DQG 7WHVWV DUH WZRWDLOHG XVLQJ SRROHG YDULDQFHV XQOHVV VWDWHG RWKHUZLVH )RU WHVWV XVLQJ VHSDUDWH YDULDQFHV GHJUHHV RI IUHHGRP ZHUH FDOFXODWHG IROORZLQJ %URZQOHH LQ :LONLQVRQ f )RU WUHDWPHQW FRPSDULVRQV EDVHG RQ WKH DERYHJURXQG ELRPDVV SORWV UDWKHU WKDQ XVLQJ D JOREDO DQDO\VLV RI YDULDQFH XVH VHSDUDWH WWHVWV IRU HDFK GLDPHWHU FODVV 1HVWHG VXESORW VL]H ZDV VHOHFWHG IRU VDPSOLQJ FRQYHQLHQFH QRW WR DOORZ HTXDO YDULDQFHV DPRQJ WKH GLDPHWHU FODVVHV 7KH WHUP ELRPDVV DOZD\V UHIHUV WR OLYLQJ SODQW PDWHULDO

PAGE 53

5HVXOWV 3UHORJJLQJ &RQGLWLRQV 6WDQG VWUXFWXUH LQ 5,/ XQLWV ZDV VLPLODU WR WKDW LQ FRQYHQWLRQDO ORJJLQJ XQLWV SULRU WR ORJJLQJ )LJ f 7KH PHDQ QXPEHU RI KDUYHVWDEOH WUHHV SHU KHFWDUH FRPPHUFLDO VSHFLHV ZLWK GEK  FP GEKf UDQJHG IURP WR LQ WKH HLJKW ORJJHG XQLWV PHDQ 6' f GHQVLWLHV LQ 5,/ XQLWV GLG QRW GLIIHU IURP WKRVH LQ FRQYHQWLRQDO ORJJLQJ XQLWV W GI 3 f 7RWDO EDVDO DUHD RI WUHHV  FP GEK LQ WKH HLJKW ORJJLQJ XQLWV UDQJHG IURP WR ZLWK DQ RYHUDOO PHDQ RI P KDn 6' f 7UHH GHQVLWLHV IRU WKH WZR WUHDWPHQW DUHDV GLG QRW GLIIHU IRU DQ\ GLDPHWHU FODVV WHVWV D f ,Q WKH FRQYHQWLRQDO ORJJLQJ XQLWV GHQVLW\ RI OLDQDV FP GEK DYHUDJHG VWHPV SHU KD 6' 1 f DERXW b RI ZKLFK ZHUH FP GEK 2I WKH WUHHV  FP GEK LQ WKH SORWV b UHSUHVHQWLQJ b RI WKH WRWDO EDVDO DUHDf ZHUH LGHQWLILHG WR VSHFLHV RU VSHFLHV JURXS 'LSWHURFDUSDFHDH ZDV ZHOOUHSUHVHQWHG LQ WKH VWXG\ DUHD FRPSULVLQJ b RI WKH WDJJHG WUHHV  FP GEK DQG b RI WKH EDVDO DUHD 7DEOH f 7KH IRUHVW ZDV GRPLQDWHG E\ WZR GLSWHURFDUS VSHFLHV 3DUDVKRUHD WRPHQWHOOD DQG 6KRUHD MRKRUHQVLV ZKLFK WRJHWKHU PDGH XS b RI WKH VWHPV  FP GEK DQG b RI WKH EDVDO DUHD 7KH PRVW DEXQGDQW VSHFLHV RU VSHFLHV JURXSV ZHUH UHSUHVHQWHG VLPLODUO\ LQ WKH 5,/ DQG FRQYHQWLRQDO ORJJLQJ XQLWV 7KH VWHP YROXPH HTXDWLRQV XVHG LQ ELRPDVV FDOFXODWLRQV IRU WUHHV  FP GEKf DORQJ ZLWK WKH VSHFLHV DOORFDWHG WR HDFK DUH SUHVHQWHG LQ $SSHQGL[ % 7RWDO ELRPDVV LQ WKH WZR WUHDWPHQW DUHDV DYHUDJHG DERXW 0J KDn ZLWK DSSUR[LPDWHO\ b RFFXUULQJ EHORZ JURXQG 7DEOH f )RU HDFK GLDPHWHU FODVV DERYHJURXQG ELRPDVV SHU KD ZDV HTXLYDOHQW IRU WKH WZR WUHDWPHQWV 7DEOH f $SSUR[LPDWHO\ b RI WKH LQLWLDO DERYHJURXQG ELRPDVV ZDV LQ WUHHV  FP GEK 6PDOO WUHHV FP GEKf FRQWULEXWHG DSSUR[LPDWHO\ b RI WRWDO DERYHJURXQG ELRPDVV 7DEOH )LJ f 8QGHUVWRU\ SODQW ELRPDVV FRQWULEXWHG DSSUR[LPDWHO\ b RI WRWDO DERYHJURXQG ELRPDVV DQG ZDV VLPLODU LQ 5,/ DQG FRQYHQWLRQDO ORJJLQJ XQLWV 7DEOH f

PAGE 54

! 'LDPHWHU FODVV FP GEKf )LJXUH 6WHP GHQVLW\ PHDQ 6(f IRU ORJJLQJ XQLWV SULRU WR ORJJLQJ EODFN EDUV XQLWV ORJJHG DFFRUGLQJ WR WKH 5,/ JXLGHOLQHV RSHQ EDUV XQLWV ORJJHG FRQYHQWLRQDOO\ 1RWH GLIIHUHQW \D[HVf 3UHn ORJJLQJ VWHP GHQVLWLHV E\ GLDPHWHU FODVV GLG QRW GLIIHU IRU WKH WZR WUHDWPHQWV WHVWV ZLWK SRROHG YDULDQFHV D f

PAGE 55

7DEOH 7KH PRVW FRPPRQ VSHFLHV RU VSHFLHV JURXSV RI WUHHV FP GEK EDVHG RQ GHQVLW\ DQG EDVDO DUHD %$ P KDnf EHIRUH ORJJLQJ LQ WKH HLJKW ORJJLQJ XQLWV DOO SORWV 1 f 0HUFKDQWDEOH VSHFLHV RU VSHFLHV JURXSV DUH PDUNHG ZLWK DQ DVWHULVN 6SHFLHV RU 6SHFLHV *URXS b 6WHPV 6SHFLHV RU 6SHFLHV *URXS b %$ 3DUDVKRUHD WRPHQWHOODr 3DUDVKRUHD WRPHQWHOODr 6KRUHD MRKRUHQVLVr 6KRUHD MRKRUHQVLVr (XJHQLD VSS $QQRQDFHDH /DXUDFHDH 6KRUHD SDUYLIROLDr 'LRVS\URV VSS (XJHQLD VSS $QQRQDFHDH 'LRVS\URV VSS 6KRUHD SDUYLIROLDr 6KRUHD OHSURVXODr 6KRUHD OHSURVXODr 'U\REDODQRSV ODQFHRODWDr 'U\REDODQRSV ODQFHRODWDr /DXUDFHDH 6KRUHD VHFWLRQ 6KRUHDr 6KRUHD VHFWLRQ 6KRUHDr

PAGE 56

7$%/( $ERYH DQG EHORZJURXQG ELRPDVV IRU WKH WZR ORJJLQJ WUHDWPHQW DUHDV EHIRUH ORJJLQJ 9DOXHV DUH PHDQV 0J KDnf ZLWK 6' DQG 1 QRWHG SDUHQWKHWLFDOO\ )RU WUHHV YLQHV DQG EXWW URRW PDVV 6' GHVFULEHV YDULDWLRQ DPRQJ IRXU ORJJLQJ XQLWV DQG GRHV QRW LQFRUSRUDWH HUURU LQ ELRPDVV HTXDWLRQV 1R VLJQLILFDQW GLIIHUHQFHV ZHUH GHWHFWHG EHWZHHQ WUHDWPHQWV WHVWV 3 f %HIRUH /RJJLQJ &RQYHQWLRQDO /RJJLQJ 5HGXFHG,PSDFW /RJJLQJ 7UHHV FP GEK f f 7UHHV FP GEK f f 7UHHV FP GEK f f 7UHHV FP GEK f f 7UHHV FP GEK f f 9LQH %LRPDVV f fE 8QGHUVWRU\ %LRPDVV f f %XWW 5RRW 0DVV f f &RDUVH 5RRWV $OLYHfF f f &RDUVH 5RRWV 'HDGfG f f )LQH 5RRW 0DVV f f 7RWDO 0HDQ 6'f %LRPDVV %HIRUH /RJJLQJ fn fn (DFK ORJJLQJ XQLW FRQVLGHUHG D UHSOLFDWH DQG VXEVDPSOHG ZLWK SORWV E $VVXPHG WR EH HTXLYDOHQW WR FRQYHQWLRQDO ORJJLQJ XQLWV QR VWDWLVWLFDO FRPSDULVRQ PDGH EHWZHHQ WUHDWPHQWV F /RJWUDQVIRUPHG GDWD XVHG IRU VWDWLVWLFDO FRPSDULVRQ G 1RW LQFOXGHG DV ELRPDVV H 9DULDQFH IRU VXP RI PHDQV FDOFXODWHG XVLQJ D ZHLJKWHG HVWLPDWH eN NZcfVcfQMff ZKHUH N RI FRPSRQHQWV Zc PHDQ RI FRPSRQHQWVXP RI PHDQV

PAGE 57

/RJH'U\ :HLJKWf 'EK FPf )LJXUH 5HODWLRQVKLS EHWZHHQ GEK DQG WRWDO ELRPDVV IRU VPDOO WUHHV FP GEKf DOO VSHFLHV FRPELQHG 7KH OLQH UHSUHVHQWV WKH IROORZLQJ UHJUHVVLRQ HTXDWLRQ /RJH 'U\ :HLJKW LQ NJf r '%+ 5a 6(ORSH 6( nLQWHUFHSW )r 1 f

PAGE 58

$SSUR[LPDWHO\ b RI WKH DERYHJURXQG ELRPDVV LQ FRQYHQWLRQDO ORJJLQJ DUHDV ZDV LQ YLQHV VPDOO YLQHV FP GEKf FRQWULEXWHG DERXW b RI WKH YLQH ELRPDVV 7RWDO EHORZJURXQG ELRPDVV DYHUDJHG DSSUR[LPDWHO\ 0J KDn LQ WKH WZR WUHDWPHQW DUHDV DERXW b ZDV LQ EXWW URRWV DQG DERXW b ZDV LQ FRDUVH URRWV 7DEOH f (VWLPDWHG ELRPDVV LQ EXWW URRWV IRU WUHHV A FP GEK LQFUHDVHG ZLWK GLDPHWHU DFFRUGLQJ WR WKH IROORZLQJ UHODWLRQVKLS /RJO'U\ :HLJKWf r '%+ )LJ f $SSOLFDWLRQ RI WKH DERYH UHJUHVVLRQ HTXDWLRQ WR WUHHV A FP GEK LQ WKH SORWV XVHG IRU DERYHJURXQG ELRPDVV \LHOGV DQ RYHUDOO EXWW URRW ELRPDVV HVWLPDWH RI 0J KDn 6' 1 f &RDUVH URRW ELRPDVV PP GLDPHWHUf ZDV H[WUHPHO\ YDULDEOH RYHUDOO &9 b 7DEOH f RZLQJ WR WKH SUHVHQFH RI ZLGHO\ GLVSHUVHG ODUJH URRWV RI WKH FDQRS\ WUHHV WKDW PD\ H[WHQG PRUH WKDQ P DZD\ IURP WKH WUHHnV VWHP VHH %DLOOLH t 0DPLW IRU GLVFXVVLRQf &RDUVH URRW PDVV LQ WKH WZR WUHDWPHQW DUHDV ZHUH QRW GLIIHUHQW SULRU WR ORJJLQJ 7DEOH f 0HDQ ILQH URRW PDVV PPf LQ WKH XSSHU FP RI VRLO DOVR GLG QRW GLIIHUHQW LQ WKH WZR WUHDWPHQW DUHDV 7DEOH f 'HWDLOV RI /RJJLQJ /RJJLQJ VWDUWHG LQ -XO\ DQG HQGHG LQ 0DUFK 7DEOH f 7KH WLPH UHTXLUHG WR ORJ D XQLW YDULHG IURP WR ZHHNV /RJJLQJ LQ WZR RI WKH 5,/ XQLWV ZDV SURORQJHG GXH SULQFLSDOO\ WR ZHW ZHDWKHU 1R GU\ VHDVRQ RFFXUUHG GXULQJ WKH VWXG\ SHULRG XQSXEO GDWDf DQG HQYLURQPHQWDO FRQGLWLRQV GXULQJ ORJJLQJ ZHUH IDLUO\ VLPLODU IRU DOO XQLWV $ SRUWLRQ RI HDFK RI WKH 5,/ ORJJLQJ XQLWV PHDQ b 6' 1 UDQJH WR bf ZDV GHHPHG XQORJJDEOH E\ WKH UDQJHUV GXH WR VWHHS WHUUDLQ XQVWDEOH VXEVWUDWHV ODFN RI FRPPHUFLDO WUHHV RU LQDFFHVVLELOLW\ %HFDXVH WKH SULQFLSDO FRPSDULVRQ RI WKLV VWXG\ LQYROYHV LPSDFWV RI WZR KDUYHVWLQJ PHWKRGV HOLPLQDWHG WKHVH XQORJJHG DUHDV DQG DQ\ LQIOXHQFHG SORWVf IURP WKH DQDO\VLV 'LIILFXOWLHV DURVH ZKHQ WU\LQJ WR LGHQWLI\ WKHVH DUHDV D SRVWHULRUL EXW XVHG WKH IROORZLQJ FULWHULRQ LI QHLWKHU D VNLG WUDLO QRU D VWXPS RI D KDUYHVWHG WUHH ZDV LQVLGH D SORW RU ZLWKLQ

PAGE 59

/RJ MR 'U\ :HLJKWf 'EK FPf )LJXUH 5HODWLRQVKLS EHWZHHQ GEK DQG EXWW URRW ELRPDVV IRU WUHHV FP GEK 7KH OLQH UHSUHVHQWV WKH IROORZLQJ UHJUHVVLRQ HTXDWLRQ /RJ 'U\ :HLJKW LQ NJf r '%+ 5 6( _RSH 6(PWHUFHSW 3 1 f

PAGE 60

7DEOH 'DWHV RI ORJJLQJ DQG YROXPHV RI WLPEHU UHPRYHG IURP UHGXFHGLPSDFW ORJJLQJ XQLWV 5,/f DQG FRQYHQWLRQDO ORJJLQJ XQLWV &19f LQ 8OX 6HJDPD )RUHVW 5HVHUYH 9ROXPH H[WUDFWHG LV EDVHG RQ GDWD IURP P SORWV GLVWULEXWHG DPRQJ WKH IRXU XQLWV LQFOXGLQJ WRWDO DUHD DQG RQO\ ORJJDEOH DUHD 8QLW 1R 'DWHV /RJJHG 9ROXPH ([WUDFWHG 3HU 7RWDO $UHD 9ROXPH ([WUDFWHG 3HU /RJJDEOH $UHD 5,/ -XOn $XJn &19 -XOn 6HSn 5,/ $XJn $XJn &19 $XJn 6HSn 5,/ 2FW n $SUn &19 2FW n 1RYn 5,/ 1RYn $SUn &19 1RYn 'HFn 0HDQ5,/ 6' UMO 0HDQ 5Q 6'A 0HDQ FQY 6'r1 0HDQ FQY 6'PY

PAGE 61

P RI DQ\ SORW ERXQGDU\ WKH SORW ZDV FRQVLGHUHG WR EH ZLWKLQ DQ XQORJJDEOH DUHD %\ WKLV GHILQLWLRQ RI WKH SORWV LQ WKH 5L/ XQLWV ZHUH HOLPLQDWHG QRQH RI WKH SORWV LQ WKH FRQYHQWLRQDO ORJJLQJ XQLWV ZHUH HOLPLQDWHG 0HDQ YROXPH RI WLPEHU H[WUDFWHG SHU WRWDO XQLW DUHD UDQJHG IURP WR P KD 7DEOH f ,I RQO\ ORJJDEOH DUHDV DUH LQFOXGHG LQ WKH FDOFXODWLRQV PHDQ YROXPH H[WUDFWHG ZDV 6' f LQ FRQYHQWLRQDO ORJJLQJ DQG DQG 6' f LQ 5L/ DUHDV 7KH WZR WUHDWPHQWV GLG QRW VWDWLVWLFDOO\ GLIIHU LQ WHUPV RI YROXPH UHPRYHG IURP ORJJDEOH DUHDV 7DEOH f RU DVVRFLDWHG ELRPDVV FRQYHUWHG LQWR ORJJLQJ GHEULV 7DEOH f EXW VPDOO VDPSOH VL]HV DQG ODUJH YDULDQFHV OLPLW WKH SRZHU RI WKLV DQDO\VLV 7KH 3DFLILF +DUGZRRGV PLOO WKDW FRQYHUWV WKH WLPEHU H[WUDFWHG IURP 8OX 6HJDPD LQWR OXPEHU YHQHHU DQG EORFNERDUG GRHV VR ZLWK DERXW b HIILFLHQF\ (QJ : + SHUV FRPP f 7KHUHIRUH LQ DGGLWLRQ WR WKH ELRPDVV FRQYHUWHG WR QHFURPDVV LQ WKH IRUHVW LQFOXGHG b RI WKH ELRPDVV RI H[WUDFWHG WLPEHU LQ WKH QHFURPDVV SRRO 1RWH PRVW VFUDS DW WKH PLOO LV EXUQHG WR SURGXFH HOHFWULFLW\ 7DEOH f 'DPDJH $VVHVVPHQW DQG 1HFURPDVV 3URGXFWLRQ )RU DOO GEK FODVVHV SURSRUWLRQDOO\ PRUH WUHHV ZHUH GDPDJHG DOO W\SHV RI GDPDJH FRPELQHGf IURP ORJJLQJ LQ FRQYHQWLRQDO ORJJLQJ DUHDV WKDQ LQ 5,/ DUHDV RQHWDLOHG WHVWV DUFVLQH WUDQVIRUPHG GDWD D )LJ f 3URSRUWLRQ RI UHVLGXDO WUHHV GDPDJHG GLIIHUHG E\ GEK FODVV $129$ RQ DUFVLQH WUDQVIRUPHG GDWD ) GI 3 f *HQHUDOO\ SURSRUWLRQDOO\ PRUH VPDOO WUHHV ZHUH GDPDJHG WKDQ ODUJH WUHHV )LJ f 7KHUH ZDV QR LQWHUDFWLRQ LQ WKH SURSRUWLRQ RI WUHHV GDPDJHG EHWZHHQ ORJJLQJ PHWKRG DQG GEK FODVV ) GI 3 f 7KH SHUFHQWDJH RI WUHHV GHVWUR\HG GXULQJ ORJJLQJ ZDV KLJKHU LQ XQLWV ORJJHG FRQYHQWLRQDOO\ WKDQ LQ XQLWV ORJJHG DFFRUGLQJ WR WKH 5,/ JXLGHOLQHV IRU DOO GEK FODVVHV )LJ RQHWDLOHG WHVWV DUFVLQH WUDQVIRUPHG GDWD D f WKH PHDQ YDOXHV E\ GEK FODVV UDQJHG IURP WR b LQ

PAGE 62

7DEOH %LRPDVV FRQYHUWHG LQWR QHFURPDVV 9DOXHV DUH PHDQV 0J KDf ZLWK 6' QRWHG SDUHQWKHWLFDOO\ 6' GHVFULEHV YDULDWLRQ DPRQJ IRXU ORJJLQJ XQLWV DQG GRHV QRW LQFRUSRUDWH HUURU LQ ELRPDVV HTXDWLRQV &RQYHQWLRQDO /RJJLQJ 8QLWV 5HGXFHG,PSDFW /RJJLQJ 8QLWV b RI ([WUDFWHG 7LPEHU f f %UDQFKHV 6WXPSV DQG %XWW 5RRWV RI ([WUDFWHG 7UHHVE f f 'HVWUR\HG 7UHHV 8SURRWHG DQG &UXVKHGf f f 'DPDJHG 7UHHV 'HDG :LWKLQ 2QH
PAGE 63

'LDPHWHU FODVV FP GEKf 3URSRUWLRQ RI WUHHV 8SURRWHG DQG FUXVKHG , 6QDSSHGRII EHORZ FURZQ .66 2WKHU W\SHV RI GDPDJH )LJXUH 0HDQ SURSRUWLRQ RI WUHHV FRPSOHWHO\ GHVWUR\HG VQDSSHGRII RU RWKHUZLVH GDPDJHG VWHP EDUN FURZQ RU URRWf GXULQJ ORJJLQJ LQ XQLWV RI HDFK WUHDWPHQW 7KH SURSRUWLRQ RI WUHHV VQDSSHGRII RU RWKHUZLVH GDPDJHG GLG QRW GLIIHU IRU WKH WZR WUHDWPHQWV WHVWV DUFVLQH WUDQVIRUPHG GDWD DOSKD f 'HVWUR\HG WUHHV GR QRW LQFOXGH KDUYHVWHG WUHHVf

PAGE 64

FRQYHQWLRQDO ORJJLQJ DUHDV LQ FRQWUDVW WR WR b LQ 5,/ DUHDV )LJ f 7KH ELRPDVV LQ WKHVH GHVWUR\HG WUHHV ZDV DVVXPHG WR HQWHU WKH QHFURPDVV SRRO 7DEOH f 7KH SURSRUWLRQ RI WUHHV VQDSSHGRII EHORZ FURZQf UDQJHG IURP WR b DFURVV WKH GEK FODVVHV )LJ f DQG ZDV KLJKHU LQ FRQYHQWLRQDO ORJJLQJ WKDQ 5,/ DUHDV IRU RQO\ RQH RI WKH VL[ GLDPHWHU FODVVHV WUHHV FP GEK GI RQHWDLOHG WHVWV DUFVLQH WUDQVIRUPHG GDWDf 6QDSSHGRII WUHHV ZHUH GLVWLQJXLVKHG IURP RWKHU VHYHUHO\ GDPDJHG WUHHV EHFDXVH H[SHFWHG D SURSRUWLRQ RI WKHVH ZRXOG UHVSURXW DQG ZRXOG QRW HQWHU WKH QHFURPDVV SRRO 7KH LQFLGHQFH RI PLQRU WR PRGHUDWH GDPDJH HJ FURZQ RU EDUN GDPDJHf ZDV KLJKHU LQ FRQYHQWLRQDO ORJJLQJ XQLWV WKDQ LQ 5,/ XQLWV IRU WKUHH GLDPHWHU FODVVHV FP GEK DUFVLQH WUDQVIRUPHG GDWD W GI 3 f FP GEK GI 3 f DQG FP GEK GI 3 f WKH RWKHU WKUHH GLDPHWHU FODVVHV GLG QRW GLIIHU RQHWDLOHG WHVWV RQ DUFVLQH WUDQVIRUPHG GDWD D )LJ f 6L[W\VHYHQ SHUFHQW RI WKH YLQH VWHPV ZHUH NLOOHG GXULQJ ORJJLQJ LQ FRQYHQWLRQDO ORJJLQJ XQLWV FRQWULEXWLQJ DQ DYHUDJH RI 0J ELRPDVV SHU KD 6' f WR WKH QHFURPDVV SRRO 0RUWDOLW\ ZDV HYHQO\ GLVWULEXWHG DFURVV GLDPHWHU FODVVHV $129$ ) GI 3 f 9LQHV LQ WKH 5,/ XQLWV ZHUH QHLWKHU WDJJHG QRU PHDVXUHG SULRU WR FXWWLQJ 7R HVWLPDWH YLQH ELRPDVV NLOOHG LQ WKH 5,/ DUHDV DVVXPH WKDW YLQHV FXW ZHUH NLOOHG b RI VWHPV  FP GEK FXW ) ( 3XW] XQSXEO GDWDf DQG WKDW WKH\ UHSUHVHQWHG b RI WKH WRWDO YLQH ELRPDVV 7DEOHV t f 5HDVVHVVPHQW $W PRQWKV DIWHU ORJJLQJ PDQ\ RI WKH GDPDJHG WUHHV ZHUH GHDG 7DEOH f 2YHUDOO b RI WKH WUHHV FP GEKf VQDSSHGRII EHORZ WKH FURZQ KDG QRW UHVSURXWHG VR ZHUH FRQVLGHUHG GHDG ,Q JHQHUDO WUHHV VQDSSHG RII DW D KHLJKW P UHVSURXWHG UHJDUGOHVV RI ORJJLQJ WUHDWPHQW 7KH PRUWDOLW\ UDWHV IRU WUHHV UHFHLYLQJ RWKHU W\SHV RI GDPDJH UDQJHG E\ GEK FODVV IURP WR b LQ 5,/ DUHDV DQG IURP WR b LQ FRQYHQWLRQDO ORJJLQJ DUHDV 7DEOH f 7KH SHUFHQWDJH RI WKHVH

PAGE 65

7DEOH $ERYH DQG EHORZJURXQG ELRPDVV DQG QHFURPDVVf IRU WKH WZR ORJJLQJ WUHDWPHQW DUHDV PR DIWHU ORJJLQJ RU LQ WKH FDVH RI FRDUVH URRWV PR DIWHU ORJJLQJ 9DOXHV DUH PHDQV 0J KDnf ZLWK 6' DQG 1 QRWHG SDUHQWKHWLFDOO\ )RU WUHHV YLQHV DQG EXWW URRW PDVV 6' GHVFULEHV YDULDWLRQ DPRQJ ORJJLQJ XQLWV DQG GRHV QRW LQFRUSRUDWH HUURUV LQ ELRPDVV HTXDWLRQV 6WDWLVWLFDO WHVW UHVXOWV DUH JLYHQ IRU WUHDWPHQW FRPSDULVRQV SUH DQG SRVW KDUYHVW FRPSDULVRQV DUH SUHVHQWHG LQ WH[W $IWHU /RJJLQJ &RQYHQWLRQDO /RJJLQJ 5HGXFHG,PSDFW /RJJLQJ 6WDWLVWLFDO 7HVW 5HVXOWV 7UHHV FP GEK f f GI 3 7UHHV FP GEK f f GI 3 r 7UHHV FP GEK f f GI 3 7UHHV FP GEK f f GI 3 7UHHV FP GEK f f GI 3 9LQHV f fE QR WHVW SHUIRUPHG 8QGHUVWRU\ 6NLG 7UDLOVf f f GI 3 A 8QGHUVWRU\ 'LVWXUEHG )RUHVWf f f L GI 3 %XWW 5RRWV f f GI 3 r &RDUVH 5RRWV 6NLG 7UDLOV $OLYHf f f GI 3 F &RDUVH 5RRWV 6NLG 7UDLOV 'HDGf f f W GI 3 F &RDUVH 5RRWV 'LVWXUEHG )RUHVW $OLYHf f f GI 3 n &RDUVH 5RRWV 'LVWXUEHG )RUHVW 'HDGf f f W GI 3 0HDQ 6'f 7RWDO %LRPDVV $IWHU /RJJLQJr fn fn r 7WHVWV SHUIRUPHG XVLQJ VHSDUDWH YDULDQFHV E &DOFXODWHG DV b RI SUHORJJLQJ YLQH ELRPDVV F /RJWUDQVIRUPHG GDWD £ $GMXVWHG IRU DUHD LQ VNLG WUDLOV 5,/ b &19 b 'HDG FRDUVH URRWV QRW LQFOXGHG )LQH URRW PDVV LQFOXGHG DVVXPHG HTXLYDOHQW WR SUHORJJLQJ PDVV F 9DULDQFH IRU VXP RI PHDQV FDOFXODWHG XVLQJ D ZHLJKWHG HVWLPDWH eN NZfVcfQff ZKHUH N RI FRPSRQHQWV : PHDQ RI FRPSRQHQWVXP RI PHDQV

PAGE 66

7DEOH 3HUFHQWDJH RI WUHHV GHDG DW PR DIWHU ORJJLQJ IRU HDFK WUHDWPHQW 5,/ UHGXFHGLPSDFW ORJJLQJ &19 FRQYHQWLRQDO ORJJLQJf $OO WUHHV LQ WKH IRXU ORJJLQJ XQLWV ZHUH SRROHG IRU HDFK WUHDWPHQW WR JHQHUDWH PRUWDOLW\ ILJXUHV VDPSOH VL]HV LH QXPEHU RI WUHHVf DUH QRWHG SDUHQWKHWLFDOO\ $OO WUHHV XSURRWHG RU XSURRWHG DQG FUXVKHG ZHUH DVVXPHG GHDG 'EK 6QDSSHGRII 2WKHU 'DPDJH 8QGDPDJHG &19 5,/ &19 5,/ &19 5,/  FP b f b f b f b f b f b f FP b f b f b f b f b f b f FP b f b f b f b f b f b f FP b f b f b f b f b f b f FP b f b f b f b f b f b f FP b f b f b f b f b f b f

PAGE 67

GDPDJHG WUHHV WKDW GLHG GXULQJ WKH ILUVW \HDU DIWHU ORJJLQJ ZDV KLJKHU LQ FRQYHQWLRQDO ORJJLQJ DUHDV WKDQ LQ 5,/ DUHDV IRU DOO GLDPHWHU FODVVHV 7DEOH f 7KH WZR ORJJLQJ WUHDWPHQWV ZHUH QRW FRPSDUHG VWDWLVWLFDOO\ EHFDXVH QRQH RI WKH GDPDJHG WUHHV LQ PDQ\ ORJJLQJ XQLWV KDG GLHG $OWKRXJK PDQ\ RI WKH GDPDJHG WUHHV ZHUH H[SHFWHG WR GLH VRRQ RQO\ WKH SURSRUWLRQV WKDW GLHG EHIRUH WKH UHFHQVXV ZHUH LQFRUSRUDWHG LQWR WKH QHFURPDVV SRRO 7DEOH f %HWZHHQ WKH WLPH WKH SORWV ZHUH HVWDEOLVKHG DQG WKH UHFHQVXV DSSUR[LPDWHO\ PR DIWHU HVWDEOLVKPHQWf DQ DYHUDJH RI b RI WKH XQGDPDJHG WUHHV FP GEKf GLHG 7KH PRUWDOLW\ UDWHV IRU XQGDPDJHG WUHHV DSSHDUV VLPLODU IRU WKH WZR WUHDWPHQWV 7DEOH f 6KUXE DQG KHUE ELRPDVV PRQWKV DIWHU ORJJLQJ ZDV OHVV WKDQ EHIRUH ORJJLQJ ERWK RQ VNLG WUDLOV WHVW XVLQJ VHSDUDWH YDULDQFHV W GI 3 7DEOHV t f DQG LQ RWKHUZLVH GLVWXUEHG IRUHVW W GI 3 7DEOHV t f %LRPDVV RQ VNLG WUDLOV ZDV JUHDWHU LQ 5,/ XQLWV WKDQ LQ FRQYHQWLRQDO ORJJLQJ XQLWV 7DEOH f %LRPDVV LQ RWKHU DUHDV RI GLVWXUEHG IRUHVW GLG QRW GLIIHU IRU WKH WZR WUHDWPHQWV 7DEOH f 7KH GLIIHUHQFH EHWZHHQ VKUXE DQG KHUE ELRPDVV EHIRUH ORJJLQJ DQG DW PRQWKV DIWHU ORJJLQJ ZDV FRQVLGHUHG QHFURPDVV 7DEOH f 7KUHH PRQWKV DIWHU ORJJLQJ FRDUVH URRW ELRPDVV H[FOXVLYH RI EXWW URRWVf RQ VNLG WUDLOV GLG QRW GLIIHU EHWZHHQ WKH ORJJLQJ WUHDWPHQWV 7DEOH f EXW ZDV OHVV WKDQ SUHORJJLQJ OHYHOV ORJ WUDQVIRUPHG GDWD W GI 3 7DEOHV t f 7KLV GHFOLQH LV SUREDEO\ GXH WR ERWK URRW GHDWK DQG H[FDYDWLRQ DQG UHORFDWLRQ IURP EXOOGR]HU DFWLYLWLHV 'HDG FRDUVH URRW PDVV RQ VNLG WUDLOV GLG QRW GLIIHU EHWZHHQ WUHDWPHQWV 7DEOH f DQG ZDV VLPLODU WR GHDG URRW PDVV EHIRUH ORJJLQJ LQ ERWK FRQYHQWLRQDO ORJWUDQVIRUPHG GDWD W GI 3 7DEOHV t f DQG 5,/ DUHDV ORJWUDQVIRUPHG GDWD W GI 3 7DEOHV t f ,Q GLVWXUEHG IRUHVW QRW VNLG WUDLOVf PRQWKV DIWHU ORJJLQJ FRDUVH URRW ELRPDVV GLG QRW GLIIHU EHWZHHQ WUHDWPHQWV 7DEOH f DQG ZDV VLPLODU WR SUHORJJLQJ HVWLPDWHV ORJWUDQVIRUPHG GDWD W

PAGE 68

GI 3 7DEOHV t f 'HDG FRDUVH URRW PDVV LQ ORJJHGRYHU IRUHVW GLG QRW GLIIHU IURP SUHORJJLQJ PDVV ORJWUDQVIRUPHG GDWD W GI 3 7DEOHV t f QRU GLG WUHDWPHQWV GLIIHU 7DEOH f %HFDXVH FRQYHQWLRQDO ORJJLQJ XQLWV KDG SURSRUWLRQDOO\ PRUH DUHD ZLWK GLVWXUEHG VRLO RU VNLG WUDLOV WKDQ GLG 5,/ XQLWV DSSUR[ b DQG b UHVSHFWLYHO\ &KDSWHU f WKH FDOFXODWHG WRWDO VWDQGLQJ VWRFN RI FRDUVH URRW ELRPDVV LQ FRQYHQWLRQDO ORJJLQJ XQLWV ZDV OHVV WKDQ LQ 5,/ XQLWV 7DEOH f 0\ HVWLPDWHV RI QHFURPDVV SURGXFHG IURP FRDUVH URRW GHDWK ELRPDVVEHIRUHELRPDVVDIWHUf DUH DVVRFLDWHG ZLWK UHODWLYHO\ ODUJH VWDQGDUG GHYLDWLRQV 7DEOH f UHIOHFWLQJ WKH ODUJH YDULDQFH LQ WKH SUH DQG SRVW KDUYHVW ELRPDVV HVWLPDWHV 2QH \HDU DIWHU ORJJLQJ IRUHVW DUHDV ORJJHG E\ FRQYHQWLRQDO PHWKRGV DQG DFFRUGLQJ WR 5,/ JXLGHOLQHV FRQWDLQHG DSSUR[LPDWHO\ b DQG b RI WKHLU SUHORJJLQJ ELRPDVV UHVSHFWLYHO\ 7DEOHV t f 7KH GLIIHUHQFH LQ QHFURPDVV SURGXFHG ZDV 0J KDn 0J & KDn 7DEOH f 7KH JUHDWHU QXPEHU RI UHVLGXDO WUHHV GHVWUR\HG GXULQJ ORJJLQJ LQ FRQYHQWLRQDO ORJJLQJ DUHDV ZDV UHVSRQVLEOH IRU DSSUR[LPDWHO\ b RI WKH GLIIHUHQFH EHWZHHQ WKH WZR PHWKRGV WKH GLIIHUHQFH LQ GHEULV SURGXFHG IURP WUHHV IHOOHG DFFRXQWHG IRU DSSUR[LPDWHO\ b RI WKH GLIIHUHQFH $ ODUJH SURSRUWLRQ RI WKH VWDQGDUG GHYLDWLRQ DVVRFLDWHG ZLWK WKH HVWLPDWH RI WKH GLIIHUHQFH EHWZHHQ WKH WZR PHWKRGV LV GXH WR YDULDWLRQ LQ FRDUVH URRW GHDWK 'LVFXVVLRQ ,PSOHPHQWDWLRQ RI 5,/ KDUYHVWLQJ JXLGHOLQHV VXEVWDQWLDOO\ UHGXFHG ORJJLQJ GDPDJH 7KH UHVLGXDO IRUHVW LQ WKH WZR WUHDWPHQW DUHDV LV GUDPDWLFDOO\ GLIIHUHQW KHQFH HDFK IRUHVWnV SRWHQWLDO IRU ERWK VKRUW DQG ORQJWHUP FDUERQ VWRUDJH DOVR GLIIHU ,Q WKH IROORZLQJ VHFWLRQV FRPSDUH P\ ELRPDVV HVWLPDWHV WR RWKHU GLSWHURFDUS IRUHVWV DQG EULHIO\ GLVFXVV HVWLPDWLRQ PHWKRGV FRPSDUH OHYHOV RI ORJJPJ GDPDJH UHFRUGHG DW P\ VLWHV ZLWK RWKHU VHOHFWLYH FXWWLQJ RSHUDWLRQV DQG GLVFXVV HFRORJLFDO LPSOLFDWLRQV RI UHGXFWLRQV LQ GDPDJH IRU IRUHVW UHFRYHU\ DOVR GLVFXVV WKH DPRXQW RI

PAGE 69

FDUERQ UHWDLQHG GXH WR LPSOHPHQWDWLRQ RI WKH 5,/ JXLGHOLQHV KRZ LW FRXOG EH LQFUHDVHG DQG KRZ LW UHODWHV WR SRZHU SODQW HPLVVLRQV DQG RWKHU RIIVHW RSWLRQV )LQDOO\ LGHQWLI\ VHYHUDO LVVXHV UHOHYDQW WR IXWXUH HIIRUWV WR RIIVHW FDUERQ WKURXJK UHGXFHGLPSDFW ORJJLQJ DQG VXJJHVW WRSLFV QHHGLQJ IXUWKHU UHVHDUFK 5HVLGXDO )RUHVW %LRPDVV 3UHORJJLQJ DERYHJURXQG ELRPDVV HVWLPDWHV IRU P\ VLWHV 0J KDn PHDQ f DUH KLJKHU WKDQ DYHUDJH PRLVW IRUHVW ELRPDVV LQ VRXWKHDVW $VLD PHDQ 0J KDn $ VWDQG LQYHQWRU\ GDWD VHWV %URZQ HW DO f EXW DUH FRPSDUDEOH WR HVWLPDWHV IRU XQORJJHG IRUHVWV LQ 6DUDZDN 0J KDn %URZQ HW DO f %LJ WUHHV FP GEKf PDGH XS DERXW b RI WKH SUHORJJLQJ ELRPDVV DW P\ VLWHV 'HJUDGHG IRUHVWV WHQG WR KDYH IHZ ELJ WUHHV DQG FRQVHTXHQWO\ KDYH PXFK ORZHU VWRUHV RI ELRPDVV VHH %URZQ HW DO f FDOFXODWHG WUHH ELRPDVV XVLQJ SXEOLVKHG UHJUHVVLRQ HTXDWLRQV DQG FRQYHUVLRQ IDFWRUV %RWK VWHP YROXPH HTXDWLRQV DQG ELRPDVV H[SDQVLRQ IDFWRUV %()f DUH DVVRFLDWHG ZLWK VWDQGDUG HUURUV EXW WKHVH HUURUV ZHUH QRW LQFRUSRUDWHG LQWR P\ HVWLPDWHV DVVXPH WKDW WKH YDULDQFH LQKHUHQW LQ FDOFXODWHG HVWLPDWHV DSSO\ HTXDOO\ WR WKH WZR WUHDWPHQWV 6WHP YROXPH HTXDWLRQV XVHG LQ WKLV VWXG\ ZHUH JHQHUDWHG IURP WUHHV ZLWKLQ WKH 8OX 6HJDPD DUHD )RUHVWDO ,QWHUQDWLRQDO /LPLWHG f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f PDNLQJ P\ HVWLPDWH FRQVHUYDWLYH $OVR WUHHV VQDSSHGRII

PAGE 70

EHORZ WKH FURZQ ZKLFK KDG UHVSURXWHG DW WKH PRQWKV FHQVXV ZHUH FRQVLGHUHG DOLYH DOWKRXJK PDQ\ RI WKHVH WUHHV ZLOO SUREDEO\ GLH ZLWKLQ WKH VHFRQG \HDU SRVWKDUYHVW 3XW] t %URNDZ f 'DWD SXEOLVKHG RQ EHORZJURXQG ELRPDVV LQ WURSLFDO PRLVW IRUHVWV DUH VSDUVH DQG JHQHUDOO\ EDVHG RQ IHZ VDPSOHV )RU H[DPSOH (GZDUGV DQG *UXEE f H[FDYDWHG URRWV IURP SLWV [ Pf WR D GHSWK RI DERXW FP 6LP DQG 1\NYLVW f H[FDYDWHG URRWV IURP SLWV [ Pf WR FP GHSWK 0\ HVWLPDWH DERXW b RI DERYHJURXQG ELRPDVVf IDOOV FORVH WR WKH PHDQ RI UHSRUWHG YDOXHV IRU WURSLFDO PRLVW IRUHVWV PHDQ b UDQJH b 1 2JDZD HW DO +R]XPL HW DO -HQLN .OLQJH t 5RGULJXHV (GZDUGV t *UXEE %XOORFN 6LP t 1\NYLVW f $OWKRXJK XQGHUHVWLPDWH FRDUVH URRW ELRPDVV E\ VDPSOLQJ RQO\ WR FP GHSWK D PRUH FRPSUHKHQVLYH URRW ELRPDVV VWXG\ LQ GLSWHURFDUS IRUHVW RQ VLPLODU WHUUDLQ LQ 6DUDZDN IRXQG PRVW RI WKH ODWHUDO FRDUVH URRWV WR EH DW FP EHORZ WKH VXUIDFH %DLOOLH t 0DPLW f )RU ILQH URRWV P\ VDPSOLQJ RI WKH XSSHU FP SUREDEO\ LQFOXGHG b RI WRWDO ILQH URRW PDVV *UHHQ f %LDV LQ P\ EXWW URRW PHDVXUHV DUH KDUGHU WR SUHGLFW 8SURRWHG WUHHV DORQJ URDGV DQG VNLG WUDLOV PD\ QRW KDYH FRPSOHWH URRW V\VWHPV DQG GR QRW UHSUHVHQW D UDQGRP VDPSOH IURP WKH SRSXODWLRQ IXUWKHUPRUH PDGH QR HIIRUW WR VHSDUDWH OLYH DQG GHDG VHFWLRQV RI URRW /RJJLQJ GDPDJH ,Q WKLV VWXG\ WKHUH Z DV QR FRUUHODWLRQ EHWZHHQ WKH SURSRUWLRQ RI VWHPV IDWDOO\ GDPDJHG DQG WLPEHU YROXPH H[WUDFWHG 5 3 1 )LJ f 7KLV UHVXOW LV FRQWUDU\ WR 1LFKROVRQfV f ILQGLQJ WKDW ORJJLQJ GDPDJH DQG YROXPH H[WUDFWHG DUH SRVLWLYHO\ FRUUHODWHG $FURVV WKH EURDG UDQJH RI YROXPHV H[WUDFWHG LQ 5,/ XQLWV IDWDO GDPDJH ZDV OHVV WKDQ b RI WKH VWDQG OHQGLQJ VXSSRUW WR WKH FRQFOXVLRQ WKDW WUHDWPHQW GLIIHUHQFHV LQ ORJJLQJ GDPDJH ZHUH GXH WR ORJJLQJ WHFKQLTXH QRW KDUYHVWLQJ LQWHQVLW\ 5HODWLYH WR RWKHU VHOHFWLYHO\ ORJJHG WURSLFDO IRUHVWV WKH DPRXQW RI WLPEHU UHPRYHG IURP P\ VWXG\ VLWH ZDV KLJK DV ZDV WKH OHYHO RI ORJJLQJ GDPDJH )LUVW FXWV LQ $PD]RQLDQ PRLVW IRUHVW

PAGE 71

3URSRUWLRQ RI VWHPV IDWDOO\ GDPDJHG L 7LPEHU YROXPH H[WUDFWHG P KD f )LJXUH 0HDQ SURSRUWLRQ RI VWHPV FP GEKf IDWDOO\ GDPDJHG SORWWHG DJDLQVW PHDQ WLPEHU YROXPH H[WUDFWHG P KD RSHQ FLUFOHV FRQYHQWLRQDO ORJJLQJ XQLWV VROLG FLUFOHV UHGXFHGLPSDFW ORJJLQJ XQLWVf

PAGE 72

JHQHUDOO\ WDNH P KDn 8KO t 9LHLUD 7KLROOD\ 9HULVVLPR HW DO f LQ $IULFDQ IRUHVWV JHQHUDOO\ P KDn RI WLPEHU LV KDUYHVWHG 1ZRERVKL 2OD$GDPV .LR t (NZHEHODP :LONLH HW DO :KLWH f (YHQ WKRXJK WKH ODFN RI VWDQGDUG PHWKRGRORJLHV SUHFOXGHV GLUHFW FRPSDULVRQV RI UHVXOWV IRU IRXU VWXGLHV ZKHUH ORJJLQJ GDPDJH ZDV UHSRUWHG GDPDJH WR UHVLGXDO WUHHV FP GEK DYHUDJHG b *DERQ :KLWH f b 1LJHULD 2OD$GDPV f b %UD]LO 8KO t 9LHLUD f DQG b %UD]LO 9HULVVLPR HW DO f 7KH GDPDJH UHFRUGHG LQ P\ FRQYHQWLRQDO ORJJLQJ DUHDV DSSUR[LPDWHO\ bf WKRXJK KLJKHU WKDQ WKH ILJXUHV IURP $PD]RQLD DQG 1LJHULD LV VLPLODU WR ILJXUHV UHSRUWHG IRU RWKHU VLWHV LQ 6DEDK )R[ &KDL t 8GDUEH f 6DUDZDN 1LFKROVRQ 0DP t -RQNHUV f DQG :HVW .DOLPDQWDQ ,QGRQHVLD &DQQRQ HW DO f ,PSOHPHQWDWLRQ RI 5,/ JXLGHOLQHV LQ WKH VWXG\ DUHD ZDV DVVRFLDWHG ZLWK D UHGXFWLRQ LQ GDPDJH WR WKH UHVLGXDO VWDQG ERWK LQ H[WHQW DQG VHYHULW\ ,Q UHGXFHGLPSDFW ORJJLQJ DUHDV r b RI WUHHV FP GEK ZHUH GDPDJHG DQG c b ZHUH GHDG ZLWKLQ WKH ILUVW \HDU DIWHU ORJJLQJ FRPSDUHG ZLWK V b GDPDJHG DQG c b GHDG LQ FRQYHQWLRQDO ORJJLQJ DUHDV (IIRUWV WR FRQWURO GDPDJH LQ WURSLFDO PRLVW IRUHVW LQ 6XULQDPH +HQGULVRQ f DQG ,QGRQHVLD %HUWDXOW t 3 6LVW SHUV FRPPf DOVR UHGXFHG GDPDJH E\ DERXW KDOI DV FRPSDUHG ZLWK XQFRQWUROOHG RU FRQYHQWLRQDO ORJJLQJ 7KH VORSHV LQ P\ VLWHV RQ DYHUDJH H[FHHGHG WKRVH UHFRPPHQGHG IRU JURXQGEDVHG VNLGGLQJ 6ZLWFKLQJ WR DQ DHULDO \DUGLQJ V\VWHP HJ VN\OLQH FDEOH \DUGLQJf DV LV JHQHUDOO\ UHFRPPHQGHG IRU VORSHV GHJUHHV 'YNVWUD f FRXOG IXUWKHU UHGXFH GDPDJH DV PLJKW IXUWKHU WUDLQLQJ RI IHOOHUV DQG EXOOGR]HU RSHUDWRUV 5,/ DUHDV KDG DERXW b IHZHU VHYHUHO\ GDPDJHG UHVLGXDO WUHHV DOO GEK FODVVHVf WKDQ FRQYHQWLRQDO ORJJLQJ DUHDV 2IWHQ VHYHUH GDPDJH HJ XSURRWHG FUXVKHG RU VQDSSHGRIIf LV DVVRFLDWHG ZLWK VNLGGLQJ RSHUDWLRQV DQG IHOOLQJ WUHHV ODGHQ ZLWK OLDQDV )R[ $SSDQDK t 3XW] f 9LQHFXWWLQJ SODQQLQJ VNLG WUDLO ORFDWLRQV DQG FRQWUROOLQJ VNLGGLQJ RSHUDWLRQV PD\ KDYH

PAGE 73

EHHQ LQVWUXPHQWDO LQ UHGXFLQJ VHYHUH GDPDJH LQ 5,/ DUHDV 5HGXFWLRQV LQ OHVV VHYHUH GDPDJH LH FURZQ DQG EDUN GDPDJHf LQ 5,/ DUHDV PD\ KDYH EHHQ UHODWHG WR GLUHFWLRQDO IHOOLQJ 'LUHFWLQJ WUHHV RQWR VNLG WUDLOV RU LQWR JDSV FUHDWHG E\ SUHYLRXVO\ IHOOHG WUHHV IXUWKHU UHGXFHG RYHUDOO JDS VL]H DQG IHOOLQJ GDPDJH +HQGULVRQ f ,PSOLFDWLRQV IRU )RUHVW 5HFRYHQn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f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f (OHYDWHG PRUWDOLW\n UDWHV PD\ EH GXH WR DQ\ RU DOO RI WKH IROORZLQJ Df GDPDJH LQFXUUHG GXULQJ ORJJLQJ Ef LQFUHDVHG H[SRVXUH DQG HGJH HIIHFWV HJ .DSRV
PAGE 74

PRUWDOLW\ UDWHV .RUVJDDUG f 7KH GLIIHUHQFH LQ PRUWDOLW\ GXULQJ WKH ILUVW \HDU RI SRVW KDUYHVW REVHUYDWLRQV VXSSRUWV WKLV FRQMHFWXUH *URZWK UDWHV LQ ORJJHG IRUHVW KDYH EHHQ IRXQG WR EH FRUUHODWHG ZLWK FURZQ H[SRVXUH .RUVJDDUG 'DDOHQ f DQG LQ JHQHUDO LQFUHDVHG JURZWK UDWHV DUH IUHTXHQWO\ REVHUYHG LQ UHVLGXDO WUHHV IROORZLQJ VHOHFWLYH ORJJLQJ -RQNHUV :DQ 5D]DOL f WKLQQLQJ RSHUDWLRQV )R[ t &KDL .RUVJDDUG f RU QDWXUDO JDS IRUPDWLRQ %URZQ t :KLWPRUH f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t 8GDUEH &DQQRQ HO DO f 5HVLGXDO WUHHV LQIHVWHG ZLWK YLQHV RU RYHUWRSSHG E\ SLRQHHU WUHHV PD\ H[SHULHQFH UHGXFHG JURZWK UDWHV /RZH t :DONHU 3XW] HW DO f 9LQH LQYDVLRQV LQ 5,/ DUHDV DUH H[SHFWHG WR EH OHVV FRPPRQ WKDQ LQ FRQYHQWLRQDO ORJJLQJ DUHDV GXH WR YLQH FXWWLQJ EHIRUH ORJJLQJ DQG PRUH FORVHG FDQRS\ FRQGLWLRQV DIWHU ORJJLQJ $SSDQDK t 3XW] f 3LRQHHU WUHHV PD\ EH PRUH OLNHO\ WR FRORQL]H FRQYHQWLRQDO ORJJLQJ DUHDV EHFDXVH RI PRUH H[WHQVLYH FDQRS\ RSHQLQJV DQG VRLO GLVWXUEDQFH &KDL t 8GDUEH f 3LRQHHU WUHHV EHFDXVH RI WKHLU ORZ ZRRG GHQVLWLHV DQG VKRUW OLIH VSDQV PD\ QRW DFFXPXODWH DV PXFK ELRPDVV SHU XQLW DUHD DV VLPLODUVL]HG SHUVLVWHQW IRUHVW VSHFLHV -RUGDQ t )DPZRUWK f 6HFRQG 5,/ DUHDV FRQWDLQ PRUH XQGDPDJHG WUHHV DQG PRUH WUHHV LQ WKH ODUJHU GEK FODVVHV WKDQ FRQYHQWLRQDO ORJJLQJ DUHDV VR WKH UHVLGXDO WUHHV LQ 5,/ VLWHV ZLOO SUREDEO\ KDYH ODUJHU YROXPH LQFUHPHQWV WKDQ UHVLGXDO WUHHV LQ FRQYHQWLRQDO VLWHV 7KLUG VLWHV ZLWK VFUDSHG DQG FRPSDFWHG VRLOV DFFXPXODWH ELRPDVV PRUH VORZO\ WKDQ VLWHV IUHH RI KHDY\ VRLO GLVWXUEDQFH HJ 0D\FRFN t &RQJGRQ f DQG SURSRUWLRQDOO\ PRUH VRLO ZDV VHYHUHO\

PAGE 75

GDPDJHG LQ FRQYHQWLRQDO ORJJLQJ DUHDV )RU WKH VNLG WUDLOV WKDW ZHUH RSHQHG LQ 5,/ DUHDV KLJKHU ELRPDVV \HDU DIWHU ORJJLQJ UHODWLYH WR VNLG WUDLOV LQ FRQYHQWLRQDO ORJJLQJ DUHDV PD\ UHIOHFW OHVV VHYHUH VRLO GLVWXUEDQFH GXH WR FRQWUROOHG ORJJLQJ HJUHVWULFWLRQV RQ VRLO VFUDSLQJ DQG ZHW ZHDWKHU ORJJLQJf 7KH HIIHFW RI D ODUJHU LQSXW RI QXWULHQWV IURP ORJJLQJ GHEULV LQ FRQYHQWLRQDO DUHDV DV FRPSDUHG ZLWK 5,/ DUHDV LV GLIILFXOW WR SUHGLFW 7KH LQSXW PD\ VWLPXODWH WUHH JURZWK EXW FRXOG OHDG DOVR WR QXWULHQW LPPRELOL]DWLRQ E\ PLFUREHV GHFUHDVLQJ QXWULHQW DYDLODELOLW\ IRU WUHHV /RGJH HW DO f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n 7D\ SHUV FRPP f ,I WKH FDUERQ VDYLQJV ZDV FRQVLGHUHG WKURXJK WKH QH[W URWDWLRQ HJ \Uf WKH GLIIHUHQFH LQ FDUERQ VWRUHG LQ 5,/ DUHDV FRPSDUHG ZLWK FRQYHQWLRQDO ORJJLQJ DUHDV LV H[SHFWHG WR EH JUHDWHU WKDQ 0J KDn +RZ SROLF\ PDNHUV ZLOO WUDQVODWH WKLV HIIRUW LQWR FDUERQ FUHGLWV LV XQFHUWDLQ 'L[RQ HW DO 86'2( f :LWKRXW GRXEW KRZHYHU WKH WLPH SURILOH RI HPLVVLRQ UHGXFWLRQV RU FDUERQ VHTXHVWUDWLRQ ZLOO EH LPSRUWDQW IRU GHWHUPLQLQJ WKH FRQVHTXHQFHV RI WKH DFWLRQ IRU FOLPDWH FKDQJH HJ 3ULFH t :LOOLV f )RUHVWU\EDVHG FDUERQ RIIVHW SURJUDPV OLNH WKH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW FDQ VXSSOHPHQW EXW QRW UHSODFH RWKHU HIIRUWV VXFK DV HQHUJ\ FRQVHUYDWLRQ IXHO VZLWFKLQJ DQG LQFUHDVHG

PAGE 76

SRZHU SODQW HIILFLHQFLHV )RU H[DPSOH DSSOLFDWLRQ RI P\ HVWLPDWH 0J KDnf WR WKH ORJJDEOH SRUWLRQ RI WKH SURMHFW DUHD b RI KDf \LHOGV 0J & HTXLYDOHQW WR DERXW b RI WKH DQQXDO HPLVVLRQV IURP D 0: FRDOEXUQLQJ HQHUJ\ SODQW )UHHGPDQ HW DO f *LYHQ WKH XELTXLW\ RI SRRU WLPEHU KDUYHVWLQJ SUDFWLFHV FRQVLGHUDEOH VFRSH H[LVWV IRU DSSOLFDWLRQ RI UHGXFHG LPSDFW ORJJLQJ LQ RWKHU WURSLFDO VXEWURSLFDO DQG WHPSHUDWH]RQH IRUHVWV 7KLV DSSURDFK WR RIIVHWWLQJ FDUERQ PD\ QRW EH DSSURSULDWH IRU IRUHVWV ZLWK ODUJH SURSRUWLRQV RI WKHLU HFRV\VWHP FDUERQ VWRUHG LQ IDOOHQ ORJV DQG VRLO RUJDQLF PDWWHU EHFDXVH KDUYHVWLQJ RSHUDWLRQV FDQ UHVXOW LQ ODUJH QHW ORVVHV LQ FDUERQ RYHU WLPH +DUPRQ HW DO f $ IRUHVWnV SRWHQWLDO IRU UHWDLQLQJ FDUERQ E\ DOWHULQJ KDUYHVWLQJ SUDFWLFHV LV SULPDULO\ D IXQFWLRQ RI WKH IRUHVWnV ELRPDVV WKH EDVHOLQH WR ZKLFK WKH GDPDJH FRQWUROOHG VLWH LV FRPSDUHG SRVVLELOLWLHV IRU GDPDJH UHGXFWLRQ DQG WKH YROXPH RI WLPEHU H[WUDFWHG ,Q WKH SLORW SURMHFW LQ 6DEDK DERXW b RU 0J & KDn f RI WKH DGGLWLRQDO FDUERQ UHWDLQHG LQ 5,/ DUHDV ZDV UHODWHG WR YROXPH H[WUDFWHG DQG GHEULV IURP IHOOHG WUHHV LH WUHHWRSV VWXPSV EXWW URRWVf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f 'HVFULELQJ WKH FRVWV DQG EHQHILWV RI UHGXFHGLPSDFW ORJJLQJ DV D KDUYHVWLQJ WHFKQLTXH LV FRPSOLFDWHG E\ H[WHUQDOLWLHV DQG XQGHUYDOXHG HQYLURQPHQWDO VHUYLFHV .UDPHU HW DO f $VVHVVPHQW RI WKH FRVWHIIHFWLYHQHVV RI DSSO\LQJ 5,/ WHFKQLTXHV IRU RIIVHWWLQJ FDUERQ ZLOO UHTXLUH DQ HYHQ PRUH FRPSOH[ DQDO\VLV 5HGXFHGLPSDFW ORJJLQJ FDUERQ RIIVHW SURJUDPV PD\ EH DWWUDFWLYH WR SRZHU FRPSDQLHV EHFDXVH UHODWLYH WR PDQ\ WUHH SODQWLQJ SURJUDPV WKH FDUERQ EHQHILWV FRPH HDUOLHU DQG

PAGE 77

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n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f EXW IHZ GDWD H[LVW GHVFULELQJ FKDQJHV LQ IUXLWLQJ SKHQRORJ\ RU IUXLW DEXQGDQFH IROORZLQJ ORJJLQJ EXW VHH :RQJ -RKQV f 7KH LQFLGHQFH RI ZHHG LQYDVLRQV LQ ORJJHGRYHU IRUHVW DSSHDU UHODWHG WR JDS VL]H VRLO GLVWXUEDQFH DQG SUHORJJLQJ VSHFLHV FRPSRVLWLRQ 5HVHDUFK GLUHFWHG WRZDUGV HOXFLGDWLRQ RI WKHVH UHODWLRQVKLSV FRXOG EH XVHIXO IRU SUHGLFWLQJ LPSDFWV RI KDUYHVWLQJ FOXVWHUV RI WUHHV LQ FRPSDULVRQ ZLWK VFDWWHUHG LQGLYLGXDOV DQG WUHHV JURZLQJ LQ DUHDV ZLWK FOLPELQJ EDPERR 'LQRFKORD VSSf DQG WKH LPSRUWDQFH RI PLQLPL]LQJ VRLO GLVWXUEDQFH )XUWKHU HIIRUWV WR TXDQWLI\ WKH LPSDFWV RI IRUHVW PDQDJHPHQW DFWLYLWLHV RQ FDUERQ VWRUDJH RU VHTXHVWUDWLRQ UDWHV WKURXJK PRGHOV HJ &URSSHU t

PAGE 78

(ZHO 'HZDU 'HZDU t &DQQHOO f DQG WKH YDOLGDWLRQ RI PRGHOV ZLOO FRQWULEXWH WR WKH GDWDEDVH IURP ZKLFK SURSRVHG FDUERQ RIIVHW SURMHFWV FDQ EH DVVHVVHG

PAGE 79

&+$37(5 $ 6,08/$7,21 02'(/ 2) &$5%21 '<1$0,&6 )2//2:,1* /2**,1* 5HGXFWLRQV LQ ORJJLQJ GDPDJH FDQ UHVXOW LQ LQFUHDVHG FDUERQ UHWHQWLRQ LQ IRUHVW ELRPDVV &KDSWHU f ,Q WKLV FKDSWHU H[DPLQH WKH HIIHFW RI WKLV ELRPDVV UHWHQWLRQ RQ ORQJWHUP FDUERQ VWRUDJH RYHU D \HDU SHULRG LQ GLSWHURFDUS IRUHVW SUHVHQW D VLPXODWLRQ PRGHO RI GLSWHURFDUS IRUHVW GHYHORSPHQW EDVHG RQ )250,; D PRGHO GHYHORSHG E\ %RVVHO t .ULHJHU f 0\ PRGHO WUDFNV FDUERQ VWRUHG LQ IRUHVW ELRPDVV DQG QHFURPDVV SRROV RYHU WLPH DQG LV LQWHQGHG WR VLPXODWH IRUHVW UHFRYHU\ IROORZLQJ ORJJLQJ 7KH DPRXQW RI FDUERQ VWRUHG LQ D ORJJHG RU VLOYLFXOWXUDOO\ PDQDJHG IRUHVW LV LQIOXHQFHG E\ IDFWRUV DQG SURFHVVHV WKDW DUH ERWK LQWHUQDO WR WKH V\VWHP HJ VSHFLHV FRPSRVLWLRQ JURZWK UDWHV GHFD\ UDWHVf DQG H[WHUQDO WR WKH V\VWHP HJ URWDWLRQ WLPHV ORJJLQJ GDPDJH WLPEHU YROXPH H[WUDFWHGf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

PAGE 80

FDUERQ VWRUDJH LQFUHDVH 2YHU WLPH DQG LQ WKH DEVHQFH RI ODUJHVFDOH GLVWXUEDQFH HFRV\VWHP FDUERQ VWRUDJH PD\ DSSURDFK DQ DV\PSWRWH WKH SRVLWLRQ RI ZKLFK PD\ RU PD\ QRW EH WKH VDPH DV EHIRUH ORJJLQJ /RJJLQJ PD\ LQIOXHQFH D VLWHfV SRWHQWLDO WR VWRUH FDUERQ m KHLJKW RI WKH DV\PSWRWHf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nV YXOQHUDELOLW\ WR ILUH 8KO t .DXIIPDQ f $Q LQFUHDVH LQ ILUH IUHTXHQF\ DOVR UHGXFHV WKH IRUHVWf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f VKRUW OLIHVSDQV \HDUVf SURGXFH FRSLRXV TXDQWLWLHV RI VHHGV WKDW UHTXLUH UHODWLYHO\ KLJK OLJKW DQG WHPSHUDWXUHV IRU JHUPLQDWLRQ DQG HVWDEOLVKPHQW DQG GR QRW PDLQWDLQ DQ XQGHUVWRU\ VHHGOLQJ EDQN XVH fSHUVLVWHQWf IRUHVW VSHFLHV LQ UHIHUHQFH WR WUHH VSHFLHV WKDW DUH DEOH WR HVWDEOLVK LQ VKDGH DQG WKDW PDLQWDLQ D VHHGOLQJ EDQN UDWKHU WKDQ D VHHG EDQN

PAGE 81

HIIHFWV RI QRQIDWDO WUHH GDPDJH WKH GXUDWLRQ RI HOHYDWHG PRUWDOLW\ UDWHV IROORZLQJ ORJJLQJ DQG LPSDFWV RI VRLO GDPDJH RQ YHJHWDWLRQ UHFRYHU\ ,Q WKLV SDSHU XVH D FRPSXWHU VLPXODWLRQ PRGHO RI FDUERQ IORZ LQ GLSWHURFDUS IRUHVW IROORZLQJ ORJJLQJ WR H[SORUH WKH SRWHQWLDO LQIOXHQFH RI VHYHUDO IDFWRUV RQ FDUERQ UHFRYHU\ 6SHFLILFDOO\ XVH RXWSXW RI VLPXODWLRQV WR DGGUHVV WKH IROORZLQJ TXHVWLRQV f 2YHU \HDUV KRZ GRHV PHDQ FDUERQ VWRUDJH LQ D ORJJHG IRUHVW FKDQJH ZLWK UHGXFWLRQV LQ ORJJLQJ GDPDJH" f +RZ GR FKDQJHV LQ SRVWORJJLQJ PRUWDOLW\ UDWHV DIIHFW PHDQ FDUERQ VWRUDJH DQG WKH ILQDO ELRPDVV VWRUDJH RYHU \HDUV" DQG f +RZ PLJKW D WHPSRUDU\ SRVWORJJLQJ VKLIW LQ VSHFLHV FRPSRVLWLRQ DIIHFW HFRV\VWHP FDUERQ VWRUDJH SDWWHUQV RYHU WLPH" %DFNJURXQG DQG %DVLF 0RGHO 6WUXFWXUH 3UHYLRXV UHVHDUFK KDV FODULILHG VRPH DVSHFWV RI IRUHVW GHYHORSPHQW DQG WKH FDUERQ F\FOH LQ GLSWHURFDUS IRUHVW 3ULPDU\ SURGXFWLYLW\ DQG RUJDQLF PDWWHU G\QDPLFV ZHUH VWXGLHG LQ D GLSWHURFDUS IRUHVW HFRV\VWHP LQ WKH HDUO\ V DV SDUW RI WKH ,QWHUQDWLRQDO %LRORJLFDO 3URJUDP ,%3f LQ 0DOD\VLD V\QWKHVL]HG LQ .LUD f 7KH UHVHDUFKHUV SUHVHQWHG D SRRO DQG IOX[ PRGHO RI HFRV\VWHP FDUERQ F\FOLQJ IRU VWHDG\VWDWH FRQGLWLRQV .LUD f 8VLQJ D SRUWLRQ RI WKH ,%3 GDWD %RVVHO DQG .ULHJHU f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

PAGE 82

PRUWDOLW\ UDWHV FKDQJHV LQ VHHGOLQJ VXUYLYDO DQG LQFUHDVHG UHSUHVHQWDWLRQ RI SLRQHHU WUHHV DPRQJ WKH UHFUXLWV 7KH PRGHO XVHG LQ WKLV FKDSWHU ZKLFK UHIHU WR DV &5(& IRU FDUERQ UHFRYHU\f WUDFNV FDUERQ VWRUHG LQ GLSWHURFDUS IRUHVW DQG LV LQWHQGHG WR VLPXODWH IRUHVW G\QDPLFV ERWK EHIRUH DQG DIWHU ORJJLQJ $SSHQGLFHV & DQG 'f 7KH EDVLF V\VWHP LV VFDOHG WR KD XVHV DQQXDO WLPH VWHSV DQG LQFOXGHV FDUERQ SRROV IRU DERYHJURXQG ELRPDVV DQG QHFURPDVV )LJ f &DUERQ VWRUDJH LQ WKH SRROV LV IROORZHG DV WUHHV JURZ VKHG OLWWHU GLH DQG DUH UHSODFHG 7KH EDVLF VWUXFWXUH RI &5(& LV LGHQWLFDO WR )250,; DV DUH SURFHVVHV GHVFULELQJ FDUERQ JDLQ WKURXJK SKRWRV\QWKHVLV WUDQVLWLRQ UDWHV EHWZHHQ OD\HUV UHFUXLWPHQW DQG PRUWDOLW\ UDWHV &5(& GLIIHUV IURP )250,; LQ WKDW LW VLPXODWHV FDUERQ WUDQVIHU IURP ELRPDVV WR QHFURPDVV WKURXJK WUHH PRUWDOLW\n DQG OLWWHUIDOO 1HFURPDVV GHFRPSRVLWLRQ LV VLPXODWHG DV SURSRUWLRQDO PDVV ORVV &RDUVH ZRRG\ VPDOO ZRRG\ DQG ILQH GHEULV GHFD\ LQFOXGH WUDQVIHU RI FDUERQ WR VRLO RUJDQLF PDWWHU &DUERQ LV ORVW IURP WKH VRLO RUJDQLF PDWWHU SRRO DW b PDVV ORVV SHU \HDU EDVHG RQ
PAGE 83

)LJXUH 'LDJUDP RI VWRUDJHV WUDQVIHU SDWKZD\V DQG DWPRVSKHULF H[FKDQJHV LQ WKH &5(& PRGHO RI FDUERQ IORZ LQ D GLSWHURFDUS IRUHVW

PAGE 84

7UHHV 'HEULV &RDUVH :RRG 'HFRPSRVLWLRQ ; 6PDOO :RRG 'HFRPSRVLWLRQ L /HDI DQG 7ZLJ a-7 6RLO 2UJDQLF 0DWWHU 'HFRPSRVLWLRQ ; 'HFRPSRVLWLRQ

PAGE 85

UHODWLRQVKLSV ZRRG GHQVLW\ 7DEOH f 'LSWHURFDUSDFHDH GRPLQDWH WKLV IRUHVW LQ WHUPV RI EDVDO DUHD DQG WUHH VWHP GHQVLW\ &KDSWHU f 8VLQJ WKHVH GDWD VWHP EUDQFK OHDI DQG WRWDO ELRPDVV DUH FDOFXODWHG IRU HDFK WUHH XVLQJ GLDPHWHUELRPDVV UHJUHVVLRQ HTXDWLRQV .LUD %URZQ HW DO f /D\HUV DUH GHILQHG DQG WUDFNHG E\ WRWDO ELRPDVV DQG WUHH QXPEHUV &DUERQ *DLQ $QQXDO JURVV SKRWRV\QWKDWH SURGXFWLRQ LV FDOFXODWHG IRU HDFK OD\HU DQG LV EDVHG RQ WRWDO OD\HU OHDI DUHD LQFLGHQW VRODU UDGLDWLRQ OLJKW DWWHQXDWLRQ WKURXJK WKH FDQRS\ DQG SKRWRV\QWKHWLF FDSDFLW\ IROORZLQJ D OLJKW UHVSRQVH FXUYH 7DEOHV DQG f /LWWHU SURGXFWLRQ DQG UHVSLUDWLRQ E\ ILQH URRWV OHDYHV DQG VWHPV DUH VXEWUDFWHG IURP JURVV SKRWRSURGXFWLRQ WR \LHOG QHW DQQXDO ELRPDVV SURGXFWLRQ SHU OD\HU $ FRPSOHWH GHVFULSWLRQ RI WKH EDVLF PRGHO LV IRXQG LQ %RVVHO t .ULHJHU f 7UDQVLWLRQV $OORPHWULF UHODWLRQVKLSV DUH XVHG WR FDOFXODWH PHDQ VWHP GLDPHWHUV DQG FURZQ SURMHFWLRQ DUHDV IRU HDFK OD\HU 7DEOH f :KHQ D OD\HUfV PHDQ VWHP GLDPHWHU H[FHHGV WKH PD[LPXP GLDPHWHU VHW IRU WKH OD\HU D JLYHQ SURSRUWLRQ RI WKH WUHHV DQG DVVRFLDWHG ELRPDVVf DUH WUDQVIHUUHG WR WKH QH[W OD\HU 7UDQVLWLRQ SUREDELOLWLHV ZHUH FDOFXODWHG E\ %RVVHO DQG .ULHJHU f (DFK OD\HU LV DVVRFLDWHG ZLWK WZR VSHFLILF PRUWDOLW\ UDWHV D VWDQGDUG UDWH DQG D KLJKHU UDWH ZKLFK DSSOLHV WR FURZGHG FRQGLWLRQV &URZGHG FRQGLWLRQV H[LVW ZKHQ WKH OD\HUfV FDQRS\ LV FRPSOHWHO\ FORVHG DV GHWHUPLQHG E\ FURZQ DUHDVWHP GLDPHWHU UDWLR PHDQ VWHP GLDPHWHU DQG QXPEHU RI WUHHV SHU OD\HU 7DEOHV DQG f 5HFUXLWPHQW LQWR WKH VHHGOLQJ OD\HU LV FRQWUROOHG E\ WKH QXPEHU RI WUHHV FP GEK HDFK PDWXUH WUHH FRQWULEXWHV VHHGOLQJV SHU \HDU 7DEOH f WKH EDVH VXUYLYDO UDWH IRU HVWDEOLVKHG VHHGOLQJV LV b SHU \HDU

PAGE 86

7DEOH &KDUDFWHULVWLFV ZLWK FRGH QDPHf RI WKH W\SHV RI WUHH VSHFLHV XVHG LQ WKH PRGHO 9DOXHV WKDW GLIIHU IURP WKRVH XVHG LQ )250,; %RVVHO t .ULHJHU f DUH QRWHG E\ VXSHUVFULSWV 9DULDEOHV QRW GHILQHG KHUH DUH GHILQHG LQ 7DEOH 3HUVLVWHQW )RUHVW 6SHFLHV 3LRQHHU 6SHFLHV 3QD[ J & QU KUf D 0 J & KUn :f E 35 F 3KRWRV\QWKHWLF 3URGXFWLRQ IRU /LWWHUIDOO36' SURSRUWLRQf 6WHPZRRG IUDFWLRQ 75f :RRG GHQVLW\ J FPnf G G &URZQ GLDPHWHU UDWLR &' P Pf F D %D]DD] E :DOWHUV t )LHOG F )R[ E G %XUJHVV

PAGE 87

7DEOH (TXDWLRQV GHVFULELQJ FDUERQ JDLQ WDNHQ IURP %RVVHO t .ULHJHU f 6XEVFULSWV UHIHU WR VSHFLILF OD\HUV WKDW DUH GHILQHG LQ WKH WH[W DQG )LJXUH 6RODU 5DGLDWLRQ 5HFHLYHG %\ D /D\HU , L r (;3 L r /$, f *URVV 3KRWRV\QWKHWLF 3URGXFWLRQ 36 &r3PD[. fr/2*HO 0 3P-r, cfO 03PD[fr, fff 3KRWRV\QWKHWLF 3URGXFWLRQ $GMXVWHG IRU &URZQ $UHD 37 36 r $7 3KRWRV\QWKHWLF 3URGXFWLRQ $GMXVWHG IRU /HDI DQG 5RRW 5HVSLUDWLRQ 3% 37 r 35 c 3KRWRV\QWKHWLF 3URGXFWLRQ $GMXVWHG IRU 6WHP 5HVSLUDWLRQ &JDLQ 3% 5 r % f UDGLDWLRQ DERYH WKH FDQRS\ : P OLJKW H[WLQFWLRQ FRHIILFLHQW YDOXHV SHU OD\HU LQ 7DEOH f /$, OD\HU OHDI DUHD LQGH[ PD[LPXP YDOXHV SHU OD\HU LQ 7DEOH f & FRQYHUVLRQ IDFWRU IURP J & Pn KU WR PHWULF WRQV RI RYHQ GU\ PDVV SHU KD SHU \U 0 LQLWLDO VORSH RI WKH OLJKW UHVSRQVH FXUYH YDOXHV LQ 7DEOH f 3Pp PD[LPXP UDWH RI SKRWRV\QWKHVLV DW OLJKW VDWXUDWLRQ YDOXHV LQ 7DEOH f $7 FXUUHQW FURZQ ILOO UDWLR UHSUHVHQWV FURZQ FRYHU SHU OD\HU 35 OHDI SURSRUWLRQDO HQHUJ\ XVH HIILFLHQF\ DFFRXQWV IRU OHDI DQG ILQH URRW UHVSLUDWLRQ 5 ELRPDVV SURSRUWLRQDO HQHUJ\ ORVV UDWH DFFRXQWV IRU VWHP UHVSLUDWLRQ % OD\HU WRWDO ELRPDVV 0J RYHQ GU\ PDVV KDf

PAGE 88

7DEOH 9DULDEOHV GHVFULELQJ WKH WZR VSHFLHV JURXSV UHSUHVHQWHG LQ WKH &5(& PRGHO E\ OD\HU 3HUVLVWHQW VSHFLHV UHIHUV WR WUHH VSHFLHV DEOH WR HVWDEOLVK LQ VKDGH DQG WKDW PDLQWDLQ D VHHGOLQJ EDQN UDWKHU WKDQ D VHHG EDQN 3LRQHHU VSHFLHV UHIHUV WR WUHH VSHFLHV WKDW UHTXLUH UHODWLYHO\ KLJK OLJKW IRU VHHGOLQJ HVWDEOLVKPHQW DQG WKDW GR QRW PDLQWDLQ D VHHGOLQJ EDQN /D\HU /D\HU /D\HU /D\HU /D\HU FP FP FP FP 6HHGOLQJV 3HUVLVWHQW 6SHFLHV 0RUWDOLW\ 5DWH PQfD &URZGLQJ 0RUWDOLW\ 5DWH PFfD 3RVWKDUYHVW 0RUWDOLW\ 5DWH POfD 0D[LPXP /HDI $UHD ,QGH[ /$,f 7UDQVLWLRQ 5DWH 76fD QD 3LRQHHU 6SHFLHV 0RUWDOLW\ 5DWH PQfD &URZGLQJ 0RUWDOLW\ 5DWH PFfD 3RVWKDUY HVW 0RUWDOLW\f 5DWH POfD QD QD QD QD QD 0D[LPXP /HDI $UHD ,QGH[ /$,3f 7UDQVLWLRQ 5DWH 763fD QD &RPPRQ WR %RWK *URXSV /LJKW ([WLQFWLRQ &RHIILFLHQW .f )RUP )DFWRU )f +HLJKW'LDPHWHU +' P Pnf 0D[LPXP 'LDPHWHU '0 Pf QD ([SUHVVHG DV SURSRUWLRQV RI LQGLYLGXDOV SHU KHFWDUH

PAGE 89

1HFURPDVV 1HFURPDVV H[LVWV LQ ILYH FRPSDUWPHQWV FRDUVH ZRRG\ GHEULV EUDQFKHV RU ORJV ZLWK GLDPHWHU FPf VPDOO ZRRG\ OLWWHU GLDPHWHU UDQJLQJ IURP WR FPf ILQH OLWWHU OHDYHV IUXLWV WZLJV FP GLDPHWHUf DQG VRLO RUJDQLF PDWWHU 'HDG URRWV DUH QRW LQFOXGHG LQ WKH PRGHO ,QLWLDO SRRO VL]HV DQG GHFD\ UDWHV ZHUH WDNHQ IURP SXEOLVKHG GDWD IRU 0DOD\VLDQ GLSWHURFDUS IRUHVWV 7DEOH f $QQXDO LQSXWV WR WKH QHFURPDVV SRROV LQFOXGH ELRPDVV IURP G\LQJ WUHHV DQG SKRWRV\QWKHWLF SURGXFWLRQ WKDW JRHV WRZDUGV OLWWHUIDOO 6RLO RUJDQLF PDWWHU UHFHLYHV DQQXDO LQSXWV RI FRDUVH ZRRG\ GHEULV VPDOO ZRRG\ GHEULV DQG ILQH OLWWHU $ SURSRUWLRQ RI WKH VRLO FDUERQ LV HYROYHG DV & 6RLO FDUERQ EHORZ FP GHSWK LV DVVXPHG WR EH VWDWLF DQG LV QRW LQFOXGHG LQ WKH PRGHO WKLV SUREDEO\ UHSUHVHQWV DERXW 0J & KD 2KWD t (IIHQGL f 5RRW ELRPDVV DOVR LV QRW LQFOXGHG LQ WKH PRGHO WKLV SUREDEO\ UHSUHVHQWV DERXW b RI DERYHJURXQG WUHH ELRPDVV &KDSWHU f /RJJLQJ ,PSDFWV RI ORJJLQJ RQ WKH IRUHVW DUH YDULDEOH DQG GHSHQG LQ SDUW RQ WLPEHU YROXPH H[WUDFWHG WKH KDUYHVWLQJ V\VWHP XVHG DQG WKH H[WHQW RI GDPDJH WR WKH UHVLGXDO VWDQG DQG WR WKH VRLO 6HOHFWLYH ORJJLQJ DV FXUUHQWO\ SUDFWLFHG LQ 6DEDK UHPRYHV D SURSRUWLRQ RI WUHHV FP GEK JHQHUDOO\ WUHHV SHU KDf GDPDJHV D SRUWLRQ RI WKH UHVLGXDO VWDQG DQG JHQHUDWHV ORJJLQJ GHEULV 7KH PRGHO LQFRUSRUDWHV WKH HIIHFWV RI ORJJLQJ LQ D VHTXHQFH RI VWHSV )LUVW WLPEHU YROXPH H[WUDFWHG SHU KD LV HQWHUHG DV D YDULDEOH Pf 7KH YDOXH LV FRQYHUWHG LQWR ELRPDVV 0Jf XVLQJ DQ PHDQ VSHFLILF JUDYLW\ 7DEOH f DQG LV WUDQVODWHG LQWR QXPEHU RI WUHHV SHU KD EDVHG RQ WKH DVVXPSWLRQ WKDW VWHP ELRPDVV UHSUHVHQWV b RI WRWDO WUHH ELRPDVV %LRPDVV ([SDQVLRQ )DFWRU WDNHQ IURP %URZQ HW DO f 7KH ELRPDVV DQG QXPEHU RI WUHHV IHOOHG DUH VXEWUDFWHG IURP WKH WRS OD\HU RI WKH IRUHVW WUHHV FP GEKf 1RQVWHP ELRPDVV LH EUDQFKHV OHDYHV VWXPSVf HQWHUV WKH QHFURPDVV SRROV b FRDUVH ZRRG\ GHEULV b VPDOO ZRRG\ GHEULV b ILQH OLWWHUf

PAGE 90

7DEOH 9DULDEOHV ZLWK FRGH QDPHVf GHVFULELQJ QHFURPDVV VWRUHV DQG IOX[HV LQLWLDO FRQGLWLRQV OLVWHG ZLWK UHIHUHQFH 2'0 UHIHUV WR RYHQ GU\ PDVV ,QLWLDO &RQGLWLRQV 5HIHUHQFH &RDUVH :RRG\ 'HEULV TFf 0J 2'0 KD
PAGE 91

6HFRQG WKH SURSRUWLRQ RI WUHHV UHFHLYLQJ IDWDO GDPDJH GXULQJ ORJJLQJ LV HQWHUHG D VLQJOH YDOXH LV XVHG WR GHVFULEH IDWDO GDPDJH IRU DOO GLDPHWHU FODVVHV 7KLV SURSRUWLRQ RI HDFK OD\HUfV ELRPDVV DQG LQGLYLGXDO WUHHV LV WUDQVIHUUHG WR WKH QHFURPDVV SRROV IRU DOORFDWLRQ VHH $SSHQGL[ &f 7KLV LQSXW YDULDEOH PHDQ SURSRUWLRQ RI WUHHV IDWDOO\ GDPDJHG DFURVV DOO OD\HUVf LV WKHQ XVHG WR UHSUHVHQW WKH SURSRUWLRQ RI WKH KD VWDQG WKDW ZLOO EH FRORQL]HG E\ SLRQHHU WUHH VSHFLHV UDWKHU WKDQ E\ SHUVLVWHQW IRUHVW VSHFLHV GXULQJ WKH ILUVW WZR \HDUV DIWHU ORJJLQJ 3ULRU WR ORJJLQJ SLRQHHU WUHH VSHFLHV DUH XQFRPPRQ LQ WKH GLSWHURFDUS IRUHVWV RI 6DEDK :KLWPRUH &RPHU f EXW WKH\ DUH D GRPLQDQW FRPSRQHQW RI ORJJHG IRUHVWV LQ 6DEDK RIWHQ RFFXUULQJ DV PRQRGRPLQDQW VWDQGV )R[ Ef 3LRQHHU WUHHV DUH LQFRUSRUDWHG LQWR WKH PRGHO WR SURYLGH D ZD\ RI H[SORULQJ WKH LPSDFWV RI D WHPSRUDU\ VKLIW LQ FRPSRVLWLRQ D VKLIW DZD\ IURP GRPLQDQFH E\ UHODWLYHO\ VORZ JURZLQJ SHUVLVWHQW VSHFLHV WR UHODWLYHO\ IDVWJURZLQJ FRORQL]LQJ VSHFLHV ZLWK ORZ ZRRG GHQVLWLHV 3LRQHHU WUHHV DUH UHSUHVHQWHG E\ D VXLWH RI SK\VLRORJLFDO DQG DOORPHWULF DWWULEXWHV GLVWLQFW IURP WKH WUHHV WKDW GRPLQDWHG WKH VLWH EHIRUH ORJJLQJ LH WKH GLSWHURFDUSV 7DEOH f %RUQHDQ VSHFLHV RI SLRQHHU WUHHV WHQG WR HVWDEOLVK LQ GLVWXUEHG VLWHV ZLWK RSHQ FDQRS\ (VWDEOLVKPHQW SDWWHUQV VXJJHVW WKDW SLRQHHU UHFPLWPHQW LQFUHDVHV ZLWK VRPH VRLO GLVWXUEDQFH 3XW] .HQQHG\ f EXW RQ FRPSDFWHG VRLOV DQG VXEVRLOV W\SLFDO RI VNLG WUDLOV DQG ORJ ODQGLQJV LQ 6DEDK SLRQHHU WUHH UHFPLWPHQW LV VSDUVH 3LQDUG HW DO f ,Q WKH PRGHO SLRQHHU WUHH VHHGOLQJV HVWDEOLVK DW VHHGOLQJV SHU KD HTXLYDOHQW WR 0J 2'0 KDn 3LQDUG HO DO &KDSWHU f 7KH PRGHO WUDFNV SLRQHHU WUHH VWDQG GHYHORSPHQW VHSDUDWHO\ IURP WKH UHVLGXDO IRUHVW &DUERQ JDLQ DQG WUDQVLWLRQV ZLWKLQ WKH SLRQHHU WUHH VWDQG VXEVHW IROORZ WKH VDPH SURFHVVHV GHVFULEHG HDUOLHU IRU WKH SHUVLVHQW IRUHVW VSHFLHV WKRXJK VSHFLILF SDUDPHWHUV GLIIHU 7DEOH f /D\HU WUDQVLWLRQ SUREDELOLWLHV IRU SLRQHHUV DUH VHW WR VLPXODWH GHYHORSPHQW RI DQ HYHQDJHG LH RQH OD\HUf VWDQG

PAGE 92

6HHGOLQJV RI SHUVLVWHQW WUHH VSHFLHV EHJLQ WR HVWDEOLVK XQGHU WKH SLRQHHU WUHH IRUHVW \HDUV DIWHU ORJJLQJ 0DWXUH UHVLGXDO WUHHV FP GEKf SURYLGH VHHGOLQJV WR WKH SLRQHHU WUHH IRUHVW *HQHUDOO\ IUXLWV RI GLSWHURFDUS WUHHV GR QRW GLVSHUVH IDU IURP SDUHQW WUHHV $VKWRQ f VR ERWK WKH GHQVLW\ DQG GLVWULEXWLRQ RI PDWXUH UHVLGXDO WUHHV DUH LPSRUWDQW IRU VHHGOLQJ HVWDEOLVKPHQW XQGHU SLRQHHUV 7KH PRGHO DVVXPHV WKDW DV WKH DUHD RFFXSLHG E\ SLRQHHU WUHHV LQFUHDVHV m SURSRUWLRQ RI VWDQG IDWDOO\ GDPDJHGf WKH SURSRUWLRQ RI UHVLGXDO WUHHV DEOH WR GLVSHUVH VHHGV LQWR WKH SLRQHHU IRUHVW GHFUHDVHV 7KH IROORZLQJ HTXDWLRQ GHVFULEHV WKH UHODWLRQVKLS XVHG LQ WKH PRGHO WR GHWHUPLQH WKH QXPEHU RI LQGLYLGXDOV FRQWULEXWLQJ VHHGOLQJV RI SHUVLVWHQW IRUHVW VSHFLHV XQGHU WKH SLRQHHU VWDQG 167 1 1f r '$0)ff ZKHUH 167 HTXDOV WKH QXPEHU RI WUHH FRQWULEXWLQJ VHHGV LQ D JLYHQ \HDU 1f WKH QXPEHU RI WUHHV LQ D OD\HU DQG '$0) WKH SURSRUWLRQ RI WKH VWDQG UHFHLYLQJ IDWDO GDPDJH ,Q 8OX 6HJDPD )RUHVW 5HVHUYH REVHUYDWLRQV RI SODQWHG GLSWHURFDUS VHHGOLQJV VXJJHVW WKDW VHHGOLQJV RQ VNLG WUDLOV H[SHULHQFH KLJKHU PRUWDOLW\ UDWHV WKDQ VHHGOLQJV RII VNLG WUDLOV LQ ORJJHG IRUHVW 3 0RXUD&RVWD SHUV FRPPf 7KH UHODWLYHO\ KLJK VHHGOLQJ PRUWDOLW\ UDWHV RQ VNLG WUDLOV DUH GXH P SDUW WR LQFUHDVHG LQFLGHQFH RI DQLPDO EURZVLQJ DQG WUDPSOLQJ 3LQDUG XQSXEO GDWDf ,Q WKH PRGHO VXUYLYDO RI VHHGOLQJV RI SHUVLVWHQW WUHH VSHFLHV LQ WKH SLRQHHU VWDQG LV FDOFXODWHG XVLQJ WKH IROORZLQJ HTXDWLRQ VXUY3' EDVHVXUYLYDO r $67f ZKHUH VXUY3' HTXDOV SHUVLVWHQW IRUHVW VSHFLHV VHHGOLQJ VXUYLYDO LQ WKH SLRQHHU VWDQG EDVHVXUYLYDO LV WKH EDVHOLQH DQQXDO VHHGOLQJ VXUYLYDO UDWH $67 LV WKH SURSRUWLRQ RI DUHD ZLWK VRLO GLVWXUEDQFH $OWKRXJK VHHGOLQJ JURZWK UDWHV DUH DOVR DIIHFWHG E\ DGYHUVH VRLO FRQGLWLRQV RQ VNLG WUDLOV HJ FRPSDFWHG VRLOV RU QXWULHQW SRRU VXEVRLOVf WKH PRGHO GRHV QRW LQFRUSRUDWH DQ\ FKDQJHV UHODWHG WR FDUERQ JDLQ IRU WUHHV RQ VNLG WUDLOV

PAGE 93

$OWKRXJK PD[LPXP OLIHVSDQV RI FRORQL]LQJ WUHH VSHFLHV DUH YDULDEOH WKH PD[LPXP OLIHVSDQ IRU WKH VSHFLHV RI 0DFDUDQJD WKDW GRPLQDWH WKH SLRQHHUV LQ 8OX 6HJDPD LV SUREDEO\ FORVH WR \HDUV )R[ Ef 7R VLPXODWH VHQHVFHQFH RI SLRQHHUV DQQXDO PRUWDOLW\ UDWHV RI WKH SLRQHHU WUHHV LQFUHDVH WR b DW \HDUV DIWHU ORJJLQJ 7KH PRGHO FRQWLQXHV WR WUDFN WKH fSLRQHHUf VWDQG EXW DIWHU \HDUV WKH VXEVHW LV SUHGRPLQDQWO\ WUHHV RI SHUVLVWHQW VSHFLHV 'XULQJ ORJJLQJ D SURSRUWLRQ RI WKH UHVLGXDO VWDQG LV GDPDJHG EXW VRPH WKLV GDPDJH HJ FURZQ RU EDUN GDPDJHf GRHV QRW DOZD\V FDXVH LPPHGLDWH WUHH GHDWK 7KLV GDPDJH LV DVVXPHG WR LQIOXHQFH JURZWK UDWHV RI DIIHFWHG WUHHV VLPXODWHG E\ UHPRYLQJ b RI WKH FURZQ DUHD RI GDPDJHG WUHHV *URZWK DQG \LHOG SORW VWXGLHV LQ ORJJHG GLSWHURFDUS IRUHVW GRFXPHQW DQ HOHYDWLRQ LQ PRUWDOLW\ UDWHV IRU WR \HDUV IROORZLQJ ORJJLQJ :DQ 5D]DOL .RUVJDDUG f 7KHVH WUHH GHDWKV PD\ EH UHODWHG WR GDPDJH UHFHLYHG GXULQJ ORJJLQJ RU PD\ EH UHODWHG WR FKDQJHV LQ HQYLURQPHQWDO FRQGLWLRQV LQ WKH UHVLGXDO VWDQG 7KH PRGHO UHSUHVHQWV WKLV SKHQRPHQRQ E\ XQLIRUP DSSOLFDWLRQ RI b PRUWDOLW\ UDWHV IRU ILYH \HDUV IROORZLQJ ORJJLQJ 0HWKRGV IRU 6LPXODWLRQV DQG (YDOXDWLRQ 6LPXODWLRQV ZHUH UXQ XQGHU ERWK QR ORJJLQJ DQG ORJJLQJ VFHQDULRV $OO FDUERQ SRROV ZHUH WUDFNHG RYHU D \HDU SHULRG /RQJHU VLPXODWLRQV \UVf ZHUH DOVR SHUIRUPHG WR HYDOXDWH WKH PRGHOnV VWDELOLW\ $V SDUW RI WKH PRGHO HYDOXDWLRQ SURFHVV D VHOHFWLRQ RI YDULDEOHV FRQVWDQWV DQG SDUDPHWHUV XVHG LQ WKH PRGHO ZDV LQFUHDVHG E\ b VLPXODWLRQV ZHUH UXQ DQG RXWSXW YDOXHV RI UHVSRQVH YDULDEOHV ZHUH UHFRUGHG 7KH UHVSRQVH YDULDEOHV XVHG LQ WKH fVHQVLWLYLW\f DQDO\VHV IRU D QRn ORJJLQJ VFHQDULR ZHUH DV IROORZV PHDQ WRWDO FDUERQ VWRUDJH RYHU DQG \HDUV HQGLQJ WRWDO FDUERQ VWRUDJH DW DQG \HDUV DQG HQGLQJ WRWDO ELRPDVV LQ ELJ WUHHV FP GEKf DW \HDUV %HFDXVH D VXEVHW RI WKH YDULDEOHV DQG SDUDPHWHUV ZDV DSSOLFDEOH RQO\ WR D ORJJLQJ VFHQDULR DQRWKHU VHW RI fVHQVLWLYLW\f DQDO\VHV ZDV FRQGXFWHG DVVXPLQJ P RI WLPEHU ZHUH H[WUDFWHG b

PAGE 94

RI WKH UHVLGXDO VWDQG IDWDOO\ GDPDJHG b RI WKH DUHD ZLWK VRLO GLVWXUEDQFH DQG b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n &KDSWHU f VR XVHG WKLV YDOXH IRU DOO VXEVHTXHQW VLPXODWLRQV 7KH UDWLRQDOH IRU SURPRWLQJ UHGXFHGLPSDFW ORJJLQJ DV D FDUERQ RIIVHW LV EDVHG RQ WKH DVVXPSWLRQ WKDW PRUH FDUERQ LV UHWDLQHG LQ IRUHVW ELRPDVV ZKHQ ORJJLQJ GDPDJH LV OHVVHQHG 7R HYDOXDWH WKH LPSRUWDQFH RI UHGXFHG ORJJLQJ GDPDJH IRU HFRV\VWHP FDUERQ VWRUDJH UDQ D VHULHV RI VLPXODWLRQV KROGLQJ FRQVWDQW WKH YROXPH H[WUDFWHG Pf QRQIDWDO GDPDJH bf DQG DUHD LQ VNLG WUDLOV bf EXW LQFUHDVHG WKH SURSRUWLRQ RI UHVLGXDO VWDQG NLOOHG LQ b LQWHUY DOV IURP WR b NLOOHG ,Q WKH VWXG\ VLWHV DERXW b RI WKH LQGLYLGXDOV LQ WKH UHVLGXDO VWDQGV LQ ERWK FRQYHQWLRQDO DQG 5,/ DUHDV UHFHLYHG GDPDJH WKDW GLG QRW LPPHGLDWHO\ UHVXOW LQ WUHH GHDWK &KDSWHU f 7R HYDOXDWH WKH SRWHQWLDO LPSRUWDQFH RI QRQOHWKDO GDPDJH WR FDUERQ VWRUDJH UDQ WZR VHULHV RI VLPXODWLRQV LQ

PAGE 95

ZKLFK YDULHG PRUWDOLW\ UDWHV IROORZLQJ ORJJLQJ ,Q WKH ILUVW VHULHV WKH GXUDWLRQ RI HOHYDWHG PRUWDOLW\ UDWHV IRU DOO OD\HUVf ZDV LQFUHDVHG LQ \HDU LQFUHPHQWV IURP WR \HDUV ,Q WKH VHFRQG VHULHV GXUDWLRQ ZDV VHW DW \HDUV DQG SRVWORJJLQJ DQQXDO PRUWDOLW\ UDWHV UDQJHG IURP WR b 7R H[DPLQH WKH XQSDFWV RI UHGXFLQJ FURZQ DUHD IRU WKH SURSRUWLRQ RI WUHHV UHFHLYLQJ QRQIDWDO GDPDJH UDQ VLPXODWLRQV UHGXFLQJ FURZQ DUHD RI GDPDJHG WUHHV IURP b WR b RI IXOO FURZQ DOVR UDQ D VHULHV RI VLPXODWLRQV LQ ZKLFK WKH SURSRUWLRQ RI QRQIDWDOO\ GDPDJHG WUHHV ZDV LQFUHDVHG LQ b LQFUHPHQWV IURP WR b KROGLQJ YROXPH H[WUDFWHG DUHD LQ VNLG WUDLOV DQG IDWDO GDPDJH FRQVWDQW &RQYHQWLRQDO DQG UHGXFHGLPSDFW ORJJLQJ DV GHVFULEHG E\ WKH GDWD LQ WKLV GLVVHUWDWLRQ &KDSWHUV DQG f GLIIHU LQ WHUPV RI YROXPH H[WUDFWHG IDWDO GDPDJH DQG VRLO GDPDJH 7R FRPSDUH WKH LQWHJUDWHG HIIHFWV RI WKHVH GLIIHUHQFHV IRU FDUERQ VWRUDJH UDQ WKH PRGHO XVLQJ YDOXHV REVHUYHG IRU HDFK ORJJLQJ PHWKRG )RU FRQYHQWLRQDO ORJJLQJ WKH LQSXW YDULDEOHV ZHUH P KDn WLPEHU H[WUDFWHG b DUHD ZLWK VRLO GLVWXUEDQFH b RI WKH VWDQG IDWDOO\ GDPDJHG DQG b RI WKH VWDQG ZLWK PLQRU GDPDJH )RU UHGXFHGLPSDFW ORJJLQJ WKH LQSXW YDULDEOHV ZHUH P KD WLPEHU H[WUDFWHG b DUHD ZLWK VRLO GLVWXUEDQFH b RI WKH VWDQG IDWDOO\ GDPDJHG DQG b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f DQG \HDUV WR DOORZ PH WR LGHQWLI\ WUHQGV VSHFLILF WR D VKRUWHU WLPH SHULRG

PAGE 96

5HVXOWV DQG 'LVFXVVLRQ (YDOXDWLRQ RI 0RGHO 6LPXODWLRQV 2YHU D \HDU WLPH VSDQ VLPXODWHG FDUERQ VWRUHV LQ WKH XQORJJHG IRUHVW IOXFWXDWH EHWZHHQ DQG 0J KDn )LJ $f PHDQ FDUERQ VWRUDJH RYHU D \HDU VLPXODWLRQ ZDV 0J KDn 6' f $ERYHJURXQG ELRPDVV UDQJHG IURP WR 0J & KDn DQG VKRZHG D PHDQ YDOXH RI 0J & KDn 6' f RYHU D \U VLPXODWLRQ DQG 0J & KDn 6' f RYHU D \U VLPXODWLRQ 7KH GLVWULEXWLRQ RI ELRPDVV DFURVV GLDPHWHU FODVVHV IHOO ZLWKLQ WKH UDQJH RI YDOXHV REVHUYHG LQ 8OX 6HJDPD EHIRUH ORJJLQJ 7DEOH f 0HDQ QHFURPDVV VWRUH RYHU D \HDU VLPXODWLRQ ZDV 0J & KDn 6' )LJ &f &RDUVH ZRRG\ GHEULV VWRUHV IOXFWXDWHG EHWZHHQ DQG 0J & KD DQG WUHQGV ZHUH QHJDWLYHO\ DVVRFLDWHG ZLWK IOXFWXDWLRQV LQ WRWDO ELRPDVV VWRUHV )LJ % DQG &f 7KH PHDQ TXDQWLW\ RI FRDUVH ZRRG\ GHEULV RYHU D \HDU VLPXODWLRQ 0J & KDn 6' f ZDV VLPLODU WR WKH PHDQ YDOXH UHFRUGHG LQ RXU SORWV LQ 8OX 6HJDPD PHDQ 0J & KD 6' XQSXEO GDWDf 6LPXODWHG ELRPDVV VWRUHV F\FOHG ZLWK DQ DSSUR[LPDWH \HDU IUHTXHQF\ )LJ $f 6WDQG G\QDPLFV LQYROYLQJ IOXFWXDWLRQV RI WKH PDJQLWXGH REVHUYHG LQ VLPXODWLRQ UHVXOWV FRXOG EH H[SHFWHG LQ DQ DUHD SURQH WR UHJXODUO\ RFFXUULQJ ODUJH VWRUPV GURXJKWV RU ILUHV EXW ZRXOG QRW EH H[SHFWHG LI LQGLYLGXDO WUHHIDOO JDS G\QDPLFV ZHUH WKH SULQFLSDO VWUXFWXULQJ SKHQRPHQRQ LQ WKH IRUHVW +RZHYHU RQH RI WKH OLPLWDWLRQV RI WKH &5(& PRGHO LV WKDW WKH HQWLUH KHFWDUH EHKDYHV DV D XQLW :KHQ WKH RYHUVWRU\ LV fILOOHGf ZLWK WUHHV RYHUVWRU\ PRUWDOLW\ UDWHV VZLWFK WR D KLJKHU UDWH FDXVLQJ D GHFOLQH LQ ELRPDVV WKDW DIIHFWV WKH IXOO KHFWDUH VLPLODU WR KHFWDUH JDSV 1DWXUDO IRUHVW FDQRS\ JDSV DUH JHQHUDOO\ PXFK VPDOOHU c KD $ VSDWLDOO\ H[SOLFLW PRGHO WKDW LQFRUSRUDWHV D PRVDLF RI LQWHUFRQQHFWHG SDWFKHV ZRXOG VLPXODWH QDWXUDO IRUHVW G\QDPLFV PRUH UHDOLVWLFDOO\ WKDQ WKH &5(& PRGHO PHDQLQJ WKDW WKH H[WUHPH IOXFWXDWLRQV ZRXOG EH GDPSHG H J)250,; %RVVHO t .ULHJHU f

PAGE 97

0J & KD %LRPDVV 1HFURPDVV )LJXUH $ 5HVXOWV IURP VLPXODWLRQ ZLWK QR ORJJLQJ &DUERQ VWRUHG LQ DERYHJURXQG ELRPDVV QHFURPDVV DQG ERWK WRWDOf RYHU \HDUV

PAGE 98

7LPH \HDUVf )LJXUH % DQG & 5HVXOWV IURP VLPXODWLRQ ZLWK QR ORJJLQJ %f &KDQJHV LQ FDUERQ VWRUDJH LQ FDQRS\ OD\HUV LGHQWLILHG E\ GEK FODVV &f &KDQJHV LQ FDUERQ VWRUDJH LQ VRLO FRDUVH ZRRG\ GHEULV ILQH OLWWHU DQG VPDOO ZRRG\ OLWWHU

PAGE 99

7DEOH 0HDQ DERYHJURXQG ELRPDVV 0J & KDnf IRU RXWSXW IURP PRGHO VLPXODWLRQV RYHU D \HDU UXQ ZLWKRXW ORJJLQJ FRPSDUHG ZLWK PHDQ ELRPDVV IRU H[SHULPHQWDO ORJJLQJ XQLWV EHIRUH ORJJLQJ &KDSWHU f 'EK FODVV 0RGHO 5HVXOWV 'EK FODVV )LHOG 0HDVXUHPHQWV FP GEK FP f FP FP f FP FP f FP FP f FP FP f

PAGE 100

)ROORZLQJ VHOHFWLYH ORJJLQJ FDUERQ VWRUDJH GURSSHG WR D ORZ RI 0J & KDn \HDUV DIWHU KDUYHVWLQJ )LJ $f (FRV\VWHP FDUERQ VWRUDJH GLG QRW UHDFK SUHORJJLQJ OHYHOV 0J & KDf ZLWKLQ WKH \HDUV DIWHU ORJJLQJ )LJ $f &DUERQ VWRUDJH SHDNHG DSSUR[LPDWHO\ \HDUV DIWHU ORJJLQJ DERXW 0J & KDf DIWHU ZKLFK WLPH F\FOLQJ ZDV VLPLODU WR WKDW VHHQ LQ VLPXODWLRQV ZLWKRXW ORJJLQJ 7KH PHDQ FDUERQ VWRUDJH RYHU \HDUV DIWHU ORJJLQJ ZDV 0J & KD 6' f DERXW b RI WKH OHYHO IRU WKH QRORJJLQJ VFHQDULR 7KH VPDOO SHDN LQ FDUERQ VWRUDJH WKDW RFFXUUHG DERXW \HDUV DIWHU ORJJLQJ ZDV UHODWHG WR D SHDN LQ SLRQHHU WUHH ELRPDVV DQG QHFURPDVV SURGXFWLRQ DVVRFLDWHG ZLWK WKH GHDWK RI WKH SLRQHHU WUHHV )LJ $ % DQG &f 'XULQJ WKH ILUVW \HDUV DIWHU ORJJLQJ RQO\ b RI PHDQ WRWDO IRUHVW ELRPDVV ZDV LQ SLRQHHU WUHHV HYHQ WKRXJK WKH SLRQHHU IRUHVW GRPLQDWHG b RI WKH VLWH )LJ %f 'XULQJ WKH ILUVW \HDUV DIWHU ORJJLQJ b RI WKH PHDQ ELRPDVV ZDV LQ UHVLGXDO WUHHV )LJ %f 3HUVLVWHQW WUHH VSHFLHV WKDW HVWDEOLVK EHQHDWK WKH SLRQHHU WUHH FDQRS\ LQFUHDVH LQ LPSRUWDQFH IRU ELRPDVV VWRUDJHf EH\RQG \HDUV DIWHU ORJJLQJ 3ULRU WR WKLV WKHVH WUHHV UHSUHVHQW RQO\ b RI WKH PHDQ ELRPDVV VWRUHG SHU \HDU 0J & KDf %HIRUH ORJJLQJ WKH PRGHO IRUHVW SORW FRQWDLQHG WUHHV FP GEK SHU KD \HDUV DIWHU ORJJLQJ WKH OD\HU FRQWDLQHG WUHHV FP GEK SHU KD 5HVXOWV IURP D VLPXODWLRQ RI ORJJLQJ P b VRLO GLVWXUEDQFH b IDWDO GDPDJH b QRQIDWDO GDPDJHf JHQHUDWHG SLRQHHU WUHH GHQVLWLHV VLPLODU WR WKRVH REVHUYHG LQ ORJJHG IRUHVW LQ 8OX 6HJDPD )RUHVW 5HVHUYH &KDSWHU f $W \HDUV DIWHU ORJJLQJ VLPXODWHG SLRQHHU WUHH GHQVLW\ ZDV VWHPV KD ZLWK WUHHV EHORQJLQJ WR OD\HU FP GEKf $W \HDUV DIWHU ORJJLQJ VLPXODWHG GHQVLW\ ZDV VWHPV KD DW ZKLFK WLPH DOO SLRQHHU WUHHV ZHUH LQ WKH XSSHUPRVW OD\HU FP GEKf 2EVHUYHG SLRQHHU WUHH GHQVLWLHV LQ ORJJHG IRUHVW \HDUV DIWHU ORJJLQJ RYHUODSSHG ZLWK VLPXODWHG YDOXHV SLRQHHU WUHHV FP GEK PHDQ 6' f EXW IHZ SLRQHHUV ZHUH IRXQG ZLWK GEK JUHDWHU WKDQ FP

PAGE 101

)LJXUH 5HVXOWV IURP VLPXODWLRQV IROORZLQJ ORJJLQJ P H[WUDFWHG b VRLO GLVWXUEDQFH b IDWDO GDPDJH b RWKHU GDPDJHf $f &DUERQ VWRUDJH LQ DERYHJURXQG ELRPDVV QHFURPDVV DQG ERWK WRWDOf DFURVV \HDUV IROORZLQJ ORJJLQJ %f &DUERQ VWRUDJH LQ FDQRS\ OD\HUV E\ GEK FODVVf DQG SLRQHHU WUHHV &f &DUERQ VWRUDJH LQ VRLO FRDUVH ZRRG\ GHEULV &:'f VPDOO ZRRG\ OLWWHU 6:/f DQG ILQH OLWWHU

PAGE 102

0J 2' 0 KDn 0J F KD

PAGE 103

1HFURPDVV VWRUHV UHDFK D ORZ SRLQW DW \HDUV DIWHU ORJJLQJ )LJ $ &f 7KH LQLWLDO GHFOLQH LQ FRDUVH ZRRG\ GHEULV HYLGHQW GXULQJ WKH ILUVW \HDUV DIWHU ORJJLQJ UHIOHFWV FDUERQ ORVVHV ZLWK WKH GHFRPSRVLWLRQ RI ORJJLQJ GHEULV VRLO RUJDQLF PDWWHU VWRUDJH LQFUHDVHV RQO\ VOLJKWO\ GXULQJ WKLV WLPH 7KH UDSLGO\ JURZLQJ SLRQHHU IRUHVW FRQWULEXWHV D UHODWLYHO\ ODUJH DPRXQW RI FRDUVH ZRRG\ GHEULV EHWZHHQ \HDUV DQG )RU PRVW RI WKLV SHULRG FRQGLWLRQV LQ WKH SLRQHHU IRUHVW DUH FURZGHG VR PRUWDOLW\ UDWHV DUH UHODWLYHO\ KLJK 7KH SODWHDX WKDW LV UHDFKHG LQ SLRQHHU WUHH ELRPDVV DW \HDU )LJ %f UHIOHFWV FURZGHG FRQGLWLRQV ZKHQ WKH WUHHV DUH SDVVLQJ WKURXJK OD\HU FP GEKf SLRQHHU WUHH GHQVLW\ LV KLJK FDUERQ JDLQ LV UHODWLYHO\ KLJK PHDQ GLDPHWHU LV LQFUHDVLQJ DQG PDQ\ WUHHV DUH G\LQJ GXH WR FRPSHWLWLRQ 2QFH WKH WKUHVKROG GLDPHWHU FPf LV UHDFKHG DW DSSUR[ \HDU f WKH VWDQG DJDLQ VKRZV DQ LQFUHDVH LQ ELRPDVV 7KH GHFOLQH LQ FRDUVH ZRRG\ GHEULV WKDW RFFXUV DW DERXW \HDU UHIOHFWV WKH ORZ LQSXW RI GHEULV DVVRFLDWHG ZLWK ORZn WUHH GHQVLWLHV DQG OHVV PRUWDOLW\ 3LRQHHU WUHH VHQHVFHQFH FDXVHV WKH QHFURPDVV SHDN WR \HDUV DIWHU ORJJLQJ %\ \HDUV DIWHU ORJJLQJ WKH SDWWHUQ RI FDUERQ VWRUDJH LQ FRDUVH ZRRG\ SRRO EHJLQV WR UHVHPEOH VLPXODWLRQ UHVXOWV IRU WKH QRORJJLQJ VFHQDULR )LQH OLWWHU DQG VPDOO ZRRG\ OLWWHU GHFOLQH GXULQJ WKH ILUVW \HDUV EXW E\ \HDUV ERWK SRROV EHJLQ WR H[KLELW IOXFWXDWLRQV VLPLODU WR WKDW REVHUY HG LQ UHVXOWV IURP VLPXODWLRQV RI WKH QRORJJLQJ VFHQDULR )LJ &f 7KH UHVXOWV RI VLPXODWLRQV RI ORJJLQJ DUH VLPLODU WR GLUHFW FDOFXODWLRQV RI ORJJLQJ GHEULV SURGXFHG &KDSWHU f DQG ILHOG PHDVXUHPHQWV RI FRDUVH ZRRG\ GHEULV LQ ORJJHG IRUHVW \HDUV DIWHU ORJJLQJ ,PPHGLDWHO\ DIWHU FRQYHQWLRQDO ORJJLQJ WKH VLPXODWHG TXDQWLW\f RI GHWULWXV FRDUVH DQG VPDOO ZRRG\ GHEULV DQG ILQH OLWWHU ZDV 0J & KD 7KH HVWLPDWH RI DERYHJURXQG GHEULV SURGXFHG GXULQJ ORJJLQJ RI WKH FRQYHQWLRQDO DUHDV EDVHG RQ VWDQG LQYHQWRU\ DQG ORJJLQJ GDPDJH GDWD ZDV 0J & KD &KDSWHU f 6LPXODWLRQ RI 5,/ ORJJLQJ GHVFULEHG LQ &KDSWHUV DQG f JHQHUDWHG 0J & KDn 0J & KD KLJKHU WKDQ WKH PHDVXUHG YDOXH

PAGE 104

7KH VLPXODWHG YDOXH RI FRDUVH ZRRG\ GHEULV VWRUHV \HDUV DIWHU FRQYHQWLRQDO ORJJLQJ ZDV 0J & KDn YHU\ VLPLODU WR WKH REVHUYHG PHDQ YDOXH RI 0J & KDn 6' XQSXEO GDWDf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b )LJ f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b DV WLPEHU H[WUDFWHG ZDV LQFUHDVHG IURP P WR P )RU DQG \HDU LQWHUYDOV WKH UDWH RI FKDQJH LQ PHDQ FDUERQ VWRUDJH ZLWK LQFUHDVHG YROXPH H[WUDFWHG ZDV OHVV )LJ f $V YROXPH H[WUDFWHG LQFUHDVHG IURP WR P? PHDQ FDUERQ VWRUDJH FKDQJHG RQO\ b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f 5HVXOWV IURP WKHVH VLPXODWLRQV VXJJHVW WKDW JDLQV LQ JURZWK FRPSHQVDWH IRU

PAGE 105

9ROXPH H[WUDFWHG Pf )LJXUH &KDQJHV LQ PHDQ FDUERQ VWRUDJH RYHU DQG \HDUV IROORZLQJ ORJJLQJ DV YROXPH RI WLPEHU H[WUDFWHG LQFUHDVHV /RJJLQJ GDPDJH ZDV KHOG FRQVWDQW IRU DOO VLPXODWLRQV b VRLO GDPDJH b IDWDO GDPDJH b RWKHU ORJJLQJ GDPDJHf

PAGE 106

WKH GHFUHDVH LQ VWDQGLQJ ELRPDVV UHODWHG WR KLJKHU OHYHOV RI WLPEHU H[WUDFWLRQ 7KH LQFUHDVHV LQ FDUERQ VWRUDJH RYHU DQG \HDUV DV YROXPH H[WUDFWHG LQFUHDVHV DERYH P )LJ f DUH DQ DUWLIDFW RI WKH DVVXPSWLRQ WKDW ORJJLQJ GDPDJH ZDV FRQVWDQW DFURVV WKH UDQJH RI H[WUDFWLRQ OHYHOV ,Q SUDFWLFH ORJJLQJ GDPDJH W\SLFDOO\ LQFUHDVHV DV YROXPH RI WLPEHU H[WUDFWHG LQFUHDVHV 6HQVLWLYLW\ $QDO\VHV 6LPXODWLRQ UHVXOWV RYHU \HDUV ZLWKRXW ORJJLQJ ZHUH PRVW VHQVLWLYH WR SDUDPHWHUV GHVFULELQJ WUHH DOORPHWULF UHODWLRQVKLSV DQG SK\VLRORJLFDO FDSDFLWLHV 7DEOH $SSHQGL[ (f ,Q JHQHUDO ELRPDVV LQ WUHHV FP GEK DW \HDUV ZDV PRVW VHQVLWLYH WR VPDOO FKDQJHV LQ LQSXW YDULDEOHV FRQVWDQWV RU SDUDPHWHUV )RU WKH RWKHU UHVSRQVH YDULDEOHV H[DPLQHG QR FKDQJH JUHDWHU WKDQ b ZDV REVHUY HG ZLWK DQ LQFUHDVH RI b LQ DQ\ RQH LQSXW YDULDEOH FRQVWDQW RU SDUDPHWHU 7KH PRGHOfV VHQVLWLYLW\ WR FKDQJHV LQ VWHPZRRG IUDFWLRQ DQG FURZQ DUHDVWHP GLDPHWHU UDWLR LV SUREDEO\ GXH WR WKH LQIOXHQFH RI WKHVH YDULDEOHV RQ HDFK OD\HUfV OHDI DUHD /HDI DUHD VHWV WKH XSSHU OLPLW IRU FDUERQ JDP LQ SKRWRV\QWKHVLV DQG LV DOVR XVHG WR GHWHUPLQH ZKHWKHU FRQGLWLRQV DUH FURZGHG RU QRW WKXV VHWWLQJ PRUWDOLW\ UDWHV 7KH DOORPHWULF VWDWLVWLFV XVHG LQ WKH PRGHO ZHUH GHYHORSHG IURP WKH GHVWUXFWLYH KDUYHVWLQJ RI WUHHV LQ :HVW 0DOD\VLD .DWR HW DO f 7KH PRGHOfV UHOLDQFH RQ RQH VHW RI DOORPHWULF VWDWLVWLFV WR GHVFULEH DOO QRQSLRQHHU WUHH VSHFLHV VLPSOLILHV IRUHVW GHYHORSPHQW SURFHVVHV DQG GRHV QRW DOORZ IRU YDU\LQJ VWDWXUH DUFKLWHFWXUH RU ZRRG GHQVLWLHV 7KH VHOHFWHG UHVSRQVH YDULDEOHV ZHUH VHQVLWLYH WR VPDOO LQFUHDVHV LQ SK\VLRORJLFDO SDUDPHWHUV VSHFLILFDOO\ WKH OLJKW H[WLQFWLRQ FRHIILFLHQW IRU WKH WRS OD\HU .f VWHP UHVSLUDWLRQ UDWH 5f UDWH RI SKRWRV\QWKHVLV DW OLJKW VDWXUDWLRQ 3PD[f WKH VORSH RI WKH OLJKW UHVSRQVH FXUYH 0f OHDI HQHUJ\ XVH HIILFLHQF\ 35f FRQYHUVLRQ IDFWRU IRU SKRWRV\QWKHWLF JDLQ WR RUJDQLF PDWWHU SURGXFWLRQ &f DQG /$, 7KH PRGHOnV VHQVLWLYLW\ WR XSSHU OD\HUfV OHDI DUHD LQGLFHV DQG OLJKW DWWHQXDWLRQ IDFWRUV VXJJHVW WKDW ZRRG\ ELRPDVV DFFXPXODWLRQ FRXOG EH DIIHFWHG E\ LQYDVLRQ RI WKH VWDQG E\ YLQHV

PAGE 107

7DEOH 5HVXOWV IURP VHQVLWLYLW\ DQDO\VHV 9DULDEOHV ZHUH LQFUHDVHG E\ b DQG UHVSRQVH YDULDEOHV ZHUH UHSRUWHG LI WKH YDOXH FKDQJHG E\ b RU PRUH 3HUFHQW FKDQJH IURP EDVH UXQ XQORJJHG VFHQDULR ORJJLQJ VFHQDULR IRU ILQDO WKUHH YDULDEOHVf DUH SUHVHQWHG &RPSOHWH UHVXOWV IURP VHQVLWLYLW\ DQDO\VHV DUH SUHVHQWHG LQ $SSHQGL[ ( )RU WKH UHVSRQVH YDULDEOHV VXEVFULSWV V\PEROL]H WKH QXPEHU RI \HDUV RYHU ZKLFK WKH VLPXODWLRQ ZDV UXQ %LR UHIHUV WR DERYHJURXQG ELRPDVV & UHIHUV WR FDUERQ VWRUHG LQ DERYHJURXQG ELRPDVV DQG QHFURPDVV VRLO RUJDQLF PDWWHU FRDUVH ZRRG\ GHEULV VPDOO ZRRG\ GHEULV DQG ILQH OLWWHUf HQG % UHIHUV WR DERYHJURXQG ELRPDVV LQ WKH XSSHU OD\HU LH WUHHV FP GEKf GXULQJ WKH ILQDO \HDU RI WKH VLPXODWLRQ 1XPHULFDO VXEVFULSWV XVHG IRU LQSXW YDULDEOHV UHIHU WR FDQRS\ OD\HU ,QSXW 9DULDEOH PHDQ PHDQ %LRr1 HQG %LRr1 5HVSRQVH 9DULDEOHV PHDQ &f PHDQ %LRr1 HQG %r1 3LRQHHUVr1 % LQLWLDO ELRPDVV OD\HU f b /$, OHDI DUH LQGH[ OD\HU f b /$, OHDI DUHD LQGH[ OD\HU f b 75 VWHPZRRG IUDFWLRQf b b b b &' FURZQ GLDPHWHU UDWLRf b b b YR Y2 IXOO VXQ LOOXPLQDWLRQf b OLJKW H[WLQFWLRQ FRHIILFLHQWf b b b b 3PD[ PD[LPXP SKRWRV\QWKHWLF UDWHf b b 0 VORSH RI OLJKW UHVSRQVH FXUYHf b & FRQYHUVLRQ 3V WR RUJDQLF PDWWHUf b b b b b 35 OHDI HQHUJ\ XVH HIILFLHQF\f b b b b 5 VWHP UHVSLUDWLRQf b b b b /$,S OHDI DUHD LQGH[ SLRQHHUVf b 3PD[S PD[ UDWH IRU SLRQHHUVf PFWL FURZGLQJ PRUWDOLW\ UDWH OD\HU f b b

PAGE 108

7KH VHOHFWHG UHVSRQVH YDULDEOHV ZHUH LQVHQVLWLYH WR VPDOO FKDQJHV LQ LQLWLDO DPRXQWV RI GHWULWXV FRQYHUVLRQ IDFWRUV RUJDQLF PDWWHU WR FDUERQf DQG PRUWDOLW\ UDWHV 7KH UHVSRQVH YDULDEOHV FKDQJHG OLWWOH ZLWK D b LQFUHDVH LQ LQLWLDO OD\HU ELRPDVV 2QH H[FHSWLRQ ZDV ELRPDVV LQ WKH VXEFDQRS\ WUHH OD\HU FP GEKf WKH HQGLQJ ELRPDVV LQ WKH FDQRS\ OD\HU ZDV b OHVV ZKHQ LQLWLDO FRQGLWLRQV ZHUH UDLVHG IURP WR 0J 2'0 KD 7DEOH f 7KLV LQFUHDVH FDXVHG FKDQJHG OLWWOH ZLWK D b LQFUHDVH LQ LQLWLDO OD\HU ELRPDVV 2QH H[FHSWLRQ ZDV ELRPDVV LQ WKH VXEFDQRSY WUHH OD\HU FP GEKf WKH HQGLQJ ELRPDVV LQ WKH FDQRS\ OD\HU ZDV b OHVV ZKHQ LQLWLDO FRQGLWLRQV ZHUH UDLVHG IURP WR 0J 2'0 KD 7DEOH f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b LQFUHDVH $SSHQGL[ ( 7DEOH f 3LRQHHU WUHH ELRPDVV DW \HDUV ZDV VHQVLWLYH WR D FKDQJH LQ PD[LPXP OHDI DUHD LQGH[ IRU WKH SLRQHHUV /$,3f PD[LPXP SKRWRV\QWKHWLF UDWH 3UQD[3f DQG FURZGLQJ PRUWDOLW\ UDWH IRU SLRQHHUV LQ OD\HU PFf 0HDQ FDUERQ VWRUDJH RYHU DQG \HDUV DSSHDUHG WR EH LQVHQVLWLYH WR VPDOO FKDQJHV LQ YDULDEOHV FRQVWDQWV DQG SDUDPHWHUV ZLWKLQ WKH PRGHO /RJJLQJ 'DPDJH DQG &DUERQ 6WRUDJH )DWDO 'DPDJH ,Q JHQHUDO DV IDWDO VWDQG GDPDJH LQFUHDVHV PHDQ FDUERQ VWRUDJH LQ DERYHJURXQG ELRPDVV GHFUHDVHV DQG PHDQ FDUERQ VWRUDJH LQ QHFURPDVV LQFUHDVHV )LJ $ % DQG &f 7KH UHODWLRQVKLS EHWZHHQ IDWDO GDPDJH DQG PHDQ FDUERQ VWRUDJH LQ ELRPDVV LV QRW OLQHDU DQ LQIOHFWLRQ SRLQW LV DSSDUHQW DW DERXW WR b VWDQG GDPDJH IRU DOO WKUHH WLPH LQWHUYDOV H[DPLQHG 7KH LQIOHFWLRQ SRLQW PDUNV WKH OHYHO RI GDPDJH DVVRFLDWHG ZLWK GHFUHDVHG LPSRUWDQFH RI ELRPDVV VWRUDJH DQG LQFUHDVHG

PAGE 109

f 7RWDO ‘ %LRPDVV A 1HFURPDVV 2YHU \UV )DWDO VWDQG GDPDJH bf XOWV RI VLPXODWLRQV LQ ZKLFK WKH SURSRUWLRQ RI WKH VWDQG UHFHLYLQJ IDWDO GDPDJH ZDV QFUHDVHG LQ b LQFUHPHQWV 0HDQ FDUERQ VWRUDJH LQ ELRPDVV DQG QHFURPDVV ZDV DQG \HDU SHULRGV IROORZLQJ ORJJLQJ

PAGE 110

LPSRUWDQFH RI QHFURPDVV VWRUDJH ,I PRUH WKDQ b RI WKH IRUHVW LV GDPDJHG VWDQGLQJ ELRPDVV VWRUHV DUH ORZ UHJDUGOHVV RI WKH WLPH LQWHUYDO FRQVLGHUHG :KHQ OHVV WKDQ b RI WKH VWDQG LV NLOOHG PHDQ IRUHVW ELRPDVV LQFUHDVHV ZLWK ORQJHU WLPH LQWHUYDOV 1HFURPDVV SURGXFHG IURP WUHHV NLOOHG GXULQJ ORJJLQJ GRHV QRW GLVDSSHDU LPPHGLDWHO\ %HFDXVH RI WKLV GHOD\ WKH WKUHH WLPH LQWHUYDOV FRQVLGHUHG DQG \HDUV DUH DVVRFLDWHG ZLWK VOLJKWO\ GLIIHUHQW SDWWHUQV RI FKDQJH LQ FDUERQ VWRUDJH DV LQFLGHQFH RI IDWDO GDPDJH LQFUHDVHV $V WKH WLPH LQWHUYDO FRQVLGHUHG GHFUHDVHV WKH UHGXFWLRQ LQ PHDQ FDUERQ VWRUDJH DVVRFLDWHG ZLWK DQ LQFUHDVH LQ IDWDO GDPDJH LV OHVV )LJ $ % DQG &f /RJJLQJ 'DPDJH DQG &DUERQ 6WRUDJH 1RQIDWDO 'DPDJH ,QFUHDVLQJ SRVWORJJLQJ PRUWDOLW\ UDWHV HLWKHU WKH GXUDWLRQ RI HOHYDWHG UDWHV RU WKH UDWH LWVHOI FDXVHG D GHFOLQH LQ PHDQ FDUERQ VWRUDJH XS WR b )LJ f ,QFUHDVHG GXUDWLRQ RI D UHODWLYHO\ KLJK PRUWDOLW\ UDWH b \Uf ZDV DVVRFLDWHG ZLWK DQ DSSUR[LPDWHO\ OLQHDU GHFOLQH LQ PHDQ FDUERQ VWRUDJH LQFUHDVLQJ PRUWDOLW\ UDWH IURP WR b FDXVHG D b GHFOLQH LQ PHDQ FDUERQ VWRUDJH RYHU \HDUV ,Q JURZWK DQG \LHOG SORW VWXGLHV LQ GLSWHURFDUS IRUHVW RQ DYHUDJH PRUWDOLW\ UDWHV DSSHDU WR UHPDLQ UHODWLYHO\ KLJK IRU DERXW ILYH \HDUV :DQ 5D]DOL f ,I PRUWDOLW\ UDWHV DUH KLJK IRU RQO\ RQH \HDU UDWKHU WKDQ ILYH \HDUV PHDQ FDUERQ VWRUDJH RYHU RU \HDUV LV b KLJKHU ,I HOHYDWHG PRUWDOLW\ UDWHV ODVW \HDUV UDWKHU WKDQ ILYH \HDUV WKH PHDQ FDUERQ VWRUDJH RYHU D \HDU SHULRG GURSV E\ b ,I QRQIDWDO GDPDJH PHUHO\ UHGXFHV LQGLYLGXDO WUHH FURZQ DUHDV UHVXOWV IURP VLPXODWLRQV LQGLFDWH WKDW PHDQ FDUERQ VWRUDJH LV DIIHFWHG YHU\ OLWWOH ,QFUHDVLQJ WKH SURSRUWLRQ RI WUHHV ZLWK QRQIDWDO GDPDJH IURP WR b FKDQJHG PHDQ FDUERQ VWRUDJH RYHU DQG \HDUV E\ OHVV WKDQ b ,QFUHDVLQJ WKH SURSRUWLRQ RI WKH FURZQ UHPRYHG GXH WR QRQIDWDO GDPDJH IURP WKH b WR b DOVR KDG OLWWOH HIIHFW RQ PHDQ FDUERQ RU PHDQ ELRPDVV VWRUDJH RYHU WLPH +RZHYHU OLWWOH LV NQRZQ DERXW WKH HIIHFWV RI ZRXQGLQJ RQ GLSWHURFDUS JURZWK DQG VXUYLYDO :RXQGLQJ WKDW GRHV QRW FDXVH

PAGE 111

0HDQ FDUERQ VWRUDJH RYHU \UV 0J KDnf 0HDQ FDUERQ VWRUDJH RYHU \UV 0J KDnf )LJXUH 5HVXOWV IURP VLPXODWLRQV LQ ZKLFK DQQXDO SRVWORJJLQJ PRUWDOLW\ ZDV V\VWHPDWLFDOO\ LQFUHDVHG 0HDQ FDUERQ VWRUDJH RYHU D \U SHULRG ZLWK $f FKDQJHV LQ WKH QXPEHU RI \HDUV PRUWDOLW\ UDWHV ZHUH KHOG DW b DQG %f FKDQJHV LQ WKH PRUWDOLW\ UDWH IRU WKH ILUVW ILYH \UV IROORZLQJ ORJJLQJ

PAGE 112

GHDWK PD\ FDXVH GHIRUPLWLHV RU URWV WKDW ZLOO UHGXFH WKH TXDOLW\ RI WKH WLPEHU SURGXFHG 7D\ f &HUWDLQ VSHFLHV RI GLSWHURFDUSV DSSHDU WR EH SDUWLFXODUO\ YXOQHUDEOH WR KHDUW URWV %XUJHVV f 3LRQHHU 7UHHV 6LWH RFFXSDQF\ E\ SLRQHHU WUHHV DV UHSUHVHQWHG LQ WKH PRGHO LV DVVRFLDWHG ZLWK UHGXFWLRQV LQ WRWDO PHDQ ELRPDVV RYHU WLPH 5HVXOWV IURP VLPXODWLRQV VXJJHVW WKDW ZKHQ b RI WKH VWDQG LV NLOOHG GXULQJ ORJJLQJ DV ZDV WKH FDVH LQ WKLV VWXG\ &KDSWHU f UHSODFLQJ SHUVLVWHQW IRUHVW VSHFLHV ZLWK SLRQHHU WUHH VSHFLHV FDQ UHGXFH WKH VLWHfV SRWHQWLDO IRU FDUERQ VWRUDJH E\ WR b RYHU WR \HDUV :KHQ WKH VLWHV DUH KHDYLO\ GDPDJHG DV ZKHQ PRUH WKDQ b RI WKH VWDQG LV IDWDOO\ GDPDJHG SLRQHHU WUHH LQYDVLRQ LV QRW DVVRFLDWHG ZLWK VLJQLILFDQW LQFUHDVHV LQ PHDQ ELRPDVV VWRUDJH RYHU RU \HDUV ,Q VLPXODWLRQV WKH HVWDEOLVKPHQW RI SHUVLVWHQW WUHH VSHFLHV XQGHU SLRQHHUV LV OLPLWHG E\ D ODFN RI VHHGOLQJV ZKHQ VWDQG GDPDJH H[FHHGV b $W OHYHOV RI VWDQG GDPDJH OHVV WKDQ b WKH VHHGOLQJV DSSURDFKHV SUHORJJLQJ VWHP GHQVLWLHV DQG ELRPDVV ZLWKLQ \HDUV WKH JURZWK RI SHUVLVWHQW WUHH VSHFLHV WR XSSHU OD\HUV LV RQO\ OLPLWHG E\ SK\VLRORJLFDO FRQVWUDLQWV &RQYHQWLRQDO DQG 5HGXFHG,PSDFW /RJJLQJ 5HVXOWV IURP VLPXODWLRQV LQGLFDWH WKDW WKH DPRXQW RI FDUERQ VWRUHG LQ WKH IRUHVW IROORZLQJ UHGXFHGLPSDFW ORJJLQJ ZDV EHWZHHQ DQG 0J KDn KLJKHU WKDQ WKDW IROORZLQJ FRQYHQWLRQDO ORJJLQJ )LJ PHDQ GLIIHUHQFH RYHU \HDUV 0J & KDn PHDQ GLIIHUHQFH RYHU \HDUV 0J & KD ff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f %LRPDVV VWDELOL]HG DW

PAGE 113

)LJXUH 5HVXOWV IURP VLPXODWLRQV IRU FRQYHQWLRQDO ORJJLQJ &19 P KDn b DUHD ZLWK VRLO GLVWXUEDQFH b VWDQG ZLWK IDWDO GDPDJH b VWDQG ZLWK PLQRU GDPDJHf DQG UHGXFHGLPSDFW ORJJLQJ 5,/ P KDn b DUHD ZLWK VRLO GLVWXUEDQFH b VWDQG ZLWK IDWDO GDPDJH b VWDQG ZLWK PLQRU GDPDJHf 7RWDO FDUERQ LQFOXGHV ELRPDVV DQG QHFURPDVV /RJJLQJ RFFXUUHG LQ \HDU

PAGE 114

0J & KD 0J & KDf 0J & KDf

PAGE 115

DSSUR[LPDWHO\ 0J & KD DIWHU \HDU IROORZLQJ UHGXFHGLPSDFW ORJJLQJ ZKHUHDV LW VWDELOL]HG DW DSSUR[LPDWHO\ 0J & KDn DIWHU \HDU IROORZLQJ FRQYHQWLRQDO ORJJLQJ 7KH GLIIHUHQFH LQ WLPH WR UHDFK VWDELOL]DWLRQ ZDV UHODWHG WR UHHVWDEOLVKPHQW RI WKH FDQRS\ OD\HU 'XULQJ WKH ILUVW \HDUV IROORZLQJ FRQYHQWLRQDO ORJJLQJ UHODWLYHO\ OLWWOH ELRPDVV H[LVWHG LQ WKH FDQRS\ OD\HU )LJ f $OWHUQDWHO\ IROORZLQJ UHGXFHGLPSDFW ORJJLQJ WKH FDQRS\ OD\HU UHFRYHUHG WR SUHORJJLQJ ELRPDVV OHYHOV DIWHU DERXW \HDUV &RQFOXVLRQV 7KH &5(& PRGHO ZDV GHYHORSHG DV D WRRO IRU H[DPLQLQJ WKH HIIHFWV RI UHGXFWLRQV LQ ORJJLQJ GDPDJH IRU HFRV\VWHP FDUERQ VWRUDJH RYHU WLPH 6LPXODWLRQ UHVXOWV LQGLFDWH WKDW WKH UHODWLRQVKLS EHWZHHQ IDWDO VWDQG GDPDJH DQG HFRV\VWHP FDUERQ VWRUDJH LV QRW OLQHDU DQG WKDW DW b IDWDO VWDQG GDPDJH ELRPDVV UHFRYHU\ IROORZLQJ ORJJLQJ LV VHYHUHO\ OLPLWHG 7KLV WKUHVKROG GDPDJH OHYHO LV RIWHQ UHDFKHG ZLWK FRQYHQWLRQDO ORJJLQJ SUDFWLFHV LQ 6DEDK 5HGXFLQJ IDWDO GDPDJH IURP WR b DQG DUHD ZLWK VRLO GDPDJH IURP b WR b DV ZDV WKH FDVH LQ WKH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW LQ 6DEDK &KDSWHU f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

PAGE 116

, 7LPH \HDUVf E\ FDQRS\ OD\HU GEK FODVVf IRU VLPXODWLRQV RI UHGXFHGLPSDFW 5,/f DQG ORJJLQJ

PAGE 117

PD\ QRW EH VDWLVIDFWRU\ $ PRUH FRPSOH[ PRGHO KRZHYHU ZRXOG EH GLIILFXOW WR SDUDPHWHUL]H GXH WR D ODFN RI GDWD VLPXODWLRQV ZRXOG EH FRPSXWDWLRQDOO\ LQWHQVLYH DQG HYDOXDWLRQ ZRXOG EH PRUH SUREOHPDWLF ,Q VRPH ROG JURZWK WHPSHUDWH IRUHVWV SRO\F\FOLF WLPEHU KDUYHVWLQJ LV DVVRFLDWHG ZLWK D VXEVWDQWLDO GHFUHDVH LQ HFRV\VWHP FDUERQ VWRUDJH GXH WR WKH HURVLRQ RI QHFURPDVV VWRUHV +DUPRQ HW DO f ,Q XQORJJHG GLSWHURFDUS IRUHVWV RQO\ DERXW b RI HFRV\VWHP FDUERQ VWRUDJH LV LQ QHFURPDVV OLWWHU DQG VRLOf DQG UHVXOWV IURP VLPXODWLRQV VXJJHVW WKDW QHFURPDVV VWRUHV UHFRYHU WR SUHn ORJJLQJ OHYHOV ZLWKLQ D \HDU FXWWLQJ F\FOH &DUERQ VWRUDJH LQ GLSWHURFDUS IRUHVW LV SULQFLSDOO\ LQ VWDQGLQJ ELRPDVV +DUYHVWLQJ DFWLYLWLHV WKDW LQIOXHQFH ELRPDVV UHFRYHU\ IRU H[DPSOH E\ DIIHFWLQJ VLWH TXDOLW\ VSHFLHV FRPSRVLWLRQ DQG YXOQHUDELOLW\ WR ILUH DUH RI FRQVHTXHQFH WR FDUERQ VWRUDJH ,Q GLSWHURFDUS IRUHVWV PDQDJLQJ WKH IRUHVW IRU WLPEHU LV FRPSDWLEOH ZLWK PD[LPL]LQJ FDUERQ VWRUDJH LI DSSURSULDWH KDUYHVWLQJ SUDFWLFHV DUH XVHG

PAGE 118

&+$37(5 5('8&(',03$&7 /2**,1* $6 $ &$5%21 2))6(7 ,QWURGXFWLRQ )RUHVWU\ DFWLYLWLHV VXFK DV UHIRUHVWDWLRQ IRUHVW SUHVHUYDWLRQ HQULFKPHQW SODQWLQJ ILUH SURWHFWLRQ UHGXFHGLPSDFW ORJJLQJ &KDSWHU 3LQDUG HW DO f DQG RWKHU PDQDJHPHQW VWUDWHJLHV SURYLGH FDUERQ VHTXHVWUDWLRQ VHUYLFHV )ROORZLQJ WKH 8QLWHG 1DWLRQV &RQIHUHQFH RQ WKH (QYLURQPHQW DQG 'HYHORSPHQW DQG WKH VLJQLQJ RI WKH )UDPHZRUN &RQYHQWLRQ RQ &OLPDWH &KDQJH )&&&f LQ LQWHUHVW LQ FDUERQ VHTXHVWUDWLRQ SURMHFWV WKURXJK IRUHVWU\ KDV JURZQ VXEVWDQWLDOO\ 1DWLRQDO SROLFLHV DQG SLORW SURJUDPV DUH GHYHORSLQJ LQ UHVSRQVH WR D FRPPLWPHQW WR UHGXFH JUHHQKRXVH JDV HPLVVLRQV WR OHYHOV E\ WKH \HDU ,Q WKLV ILQDO FKDSWHU SURYLGH DQ RYHUYLHZ RI SROLF\ GHYHORSPHQWV WR $XJXVW f LQ WKH 86 FULWHULD IRU HYDOXDWLQJ SRWHQWLDO MRLQW LPSOHPHQWDWLRQ -,f SURMHFWV H[DPSOHV RI KRZ UHGXFHGLPSDFW ORJJLQJ DGGUHVVHV WKHVH FULWHULD DQG WKH FRVW HIIHFWLYHQHVV RI UHGXFHGLPSDFW ORJJLQJ DV D FDUERQ RIIVHW $IWHU UDWLILFDWLRQ RI WKH )&&& LQ 2FWREHU WKH 8 6 'HSDUWPHQW RI (QHUJ\n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

PAGE 119

,OO /DZ f 6HFWLRQ LQFOXGHG QR VSHFLILF UHIHUHQFH WR LQWHUQDWLRQDO RU RYHUVHDV HIIRUWV .LQVPDQ t 7UH[OHU f $ 6HFUHWDULDW IRU 86 ,PSOHPHQWDWLRQ RI -RLQW ,PSOHPHQWDWLRQ 868,f ZLWKLQ '2( ZDV DSSRLQWHG WR GHYHORS JXLGHOLQHV IRU WKH YROXQWDU\ SURJUDP 7KH 86,-,fV JXLGHOLQHV IRU MRLQW LPSOHPHQWDWLRQ SURMHFWV UHFRJQL]H VRPH RI WKH FRPPRQO\ FLWHG FRQFHUQV DQG FULWLFLVPV DJDLQVW WKH -, FRQFHSW 6HYHUDO GHYHORSLQJ FRXQWULHV SULQFLSDOO\ 0DOD\VLD KDYH EHHQ RXWVSRNHQ RSSRQHQWV RI MRLQW LPSOHPHQWDWLRQ 3ULQFLSDO FULWLFLVPV RI -, LQFOXGH WKH IROORZLQJ f -, SURMHFWV EHFDXVH RI WKHLU UHODWLYH FRVWHIIHFWLYHQHVV PLJKW HVFDODWH DQG GHWHU GRPHVWLF HIIRUWV DQG f -, SURMHFWV PD\ EHQHILW GHYHORSHG FRXQWULHV PRUH WKDQ GHYHORSLQJ FRXQWULHV PD\ EXUGHQ GHYHORSLQJ FRXQWULHV DQG PD\ FDUU\ XQDQWLFLSDWHG RSSRUWXQLW\ FRVWV IRU KRVW FRXQWULHV UHYLHZHG E\ .KRU f )RU H[DPSOH D FDUERQ RIIVHW SURJUDP EDVHG RQ IRUHVW SUHVHUYDWLRQ ZRXOG QHFHVVDULO\ LPSRVH UHVWULFWLRQV DJDLQVW LQFRPSDWLEOH ODQG XVHV LQ WKH SURMHFW DUHD H J PLQHUDO H[SORUDWLRQf 2QH JRDO RI WKH 86 SLORW SURJUDP LV WR GHYHORS FULWHULD WKDW FDQ EH XVHG IRU HYDOXDWLQJ SRWHQWLDO -, SURMHFWV WR LQVXUH WKDW WKH\ VXSSRUW WHFKQRORJ\ WUDQVIHU SURPRWH VXVWDLQDEOH GHYHORSPHQW LPSURYH ORFDO FDSDFLWLHV DQG VHTXHVWHU FDUERQ &ULWHULD IRU -RLQW ,PSOHPHQWDWLRQ 3URMHFWV &ULWHULD XSRQ ZKLFK MRLQW LPSOHPHQWDWLRQ SURMHFWV PD\ EH HYDOXDWHG LQFOXGH WKH IROORZLQJ f 'RHV WKH SURMHFW LQFOXGH DFWLYLWLHV DERYH DQG EH\RQG ZKDW ZRXOG KDYH KDSSHQHG RWKHUZLVH" f 'RHV VXIILFLHQW LQIRUPDWLRQ H[LVW WR GHVFULEH ZKDW ZRXOG KDYH KDSSHQHG ZLWKRXW WKH SURMHFW LH LV WKHUH D FOHDU EDVHOLQHf" f +DYH VHFRQGDU\ HIIHFWV ERWK JUHHQKRXVH JDV DQG QRQJUHHQKRXVH JDV UHODWHG EHHQ DQWLFLSDWHG DQG LGHQWLILHG" $UH ORFDO FDSDELOLWLHV DQG WHFKQRORJLHV EHLQJ GHYHORSHG" f $UH VSHFLILF PHDVXUHV EHLQJ LPSOHPHQWHG WR UHGXFH RU VHTXHVWHU JUHHQKRXVH JDV HPLVVLRQV DQG KDYH SURYLVLRQV EHHQ PDGH IRU PRQLWRULQJ DQG YHULI\LQJ JUHHQKRXVH JDV HPLVVLRQ UHGXFWLRQV RU VHTXHVWUDWLRQ" f $UH WKH SDUWLFLSDQWV UHVSRQVLEOH IRU JUHHQKRXVH JDV HPLVVLRQV WDNLQJ PHDVXUHV ZLWKLQ WKHLU RZQ

PAGE 120

FRXQWU\ WR UHGXFH HPLVVLRQV 868, XQSXEO GRFXPHQWf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fV LQYHVWPHQW ,QQRSULVH &RUSRUDWLRQ ZRXOG QRW KDYH LPSOHPHQWHG D WUDLQLQJ SURJUDP RU WKH 5,/ KDUYHVWLQJ JXLGHOLQHV LQ WKH SURMHFW DUHD +LVWRULFDO WUHQGV LQ ORJJLQJ SUDFWLFHV GRFXPHQW IHZ VXEVWDQWLDO LPSURYHPHQWV LQ SUDFWLFHV VLQFH WKH V WKRXJK VHYHUDO IRUHLJQ DVVLVWDQFH SURMHFWV KDYH SUHVHQWHG DOWHUQDWLYHV WR FRQFHVVLRQDLUHV DQG WKH VWDWH IRUHVWU\ GHSDUWPHQW HJ )RUHVWDO 0DOYDV f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f $V WLPH SDVVHV WKH EDVHOLQH IRU QHZ SURMHFWV VKRXOG VKLIW LI ORJJLQJ SUDFWLFHV LPSURYH LQ 6DEDK ,I

PAGE 121

WKH LQIXVLRQ RI EHWWHU KDUYHVWLQJ SUDFWLFHV KDSSHQV DV D UHVXOW RI WKH 1HZ (QJODQG (OHFWULF V\VWHPV ,QQRSULVH &RUSRUDWLRQ 6GQ %KG 5,/ SURMHFW WKH DVVRFLDWHG HPLVVLRQV UHGXFWLRQV ZRXOG EH FRQVLGHUHG SRVLWLYH VHFRQGDU\ HIIHFWV LH OHDNDJHf 6HFRQGDU\n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f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fV PRQLWRULQJ SURJUDP LQFOXGHV UH

PAGE 122

PHDVXUHPHQWV RI WUHHV LQ SHUPDQHQW SORWV DQG \HDUV DIWHU ORJJLQJ 9HULILFDWLRQ RI FRPSOLDQFH ZLWK WKH KDUY HVWLQJ JXLGHOLQHV DQG PDLQWHQDQFH RI WKH PRQLWRULQJ SURJUDP LV DFKLHYHG WKURXJK DQ HQYLURQPHQWDO DXGLW FRPPLWWHH WKDW YLVLWV WKH VLWHV DW URXJKO\ PRQWK LQWHUY DOV &KDSWHU f 7KH DXGLW FRPPLWWHH LV FRPSRVHG RI DQ DSSRLQWHH RI 1HZ (QJODQG (OHFWULF V\VWHPV D UHSUHVHQWDWLYH IURP 5DLQIRUHVW $OOLDQFHf RQH DSSRLQWHH RI ,QQRSULVH &RUSRUDWLRQ D UHSUHVHQWDWLYH IURP WKH )RUHVW 5HVHDUFK ,QVWLWXWH RI 0DOD\VLDf DQG RQH MRLQW DSSRLQWHH D UHSUHVHQWDWLYH IURP WKH 'HSDUWPHQWV RI )RUHVWU\ DQG %RWDQ\ RI WKH 8QLYHUVLW\ RI )ORULGDf 2WKHU 'RPHVWLF $FWLRQV %HLQJ 7DNHQ E\ 1HZ (QJODQG (OHFWULF V\VWHPV 1HZ (QJODQG (OHFWULF SODQV WR UHGXFH WKHLU JUHHQKRXVH JDV HPLVVLRQV E\ b RU PRUH EHORZ OHYHOV 7 6XOOLYDQ SHUV FRPP f 7KHLU HPLVVLRQV UHGXFWLRQ SODQ LQFOXGHV WUHH SODQWLQJ ODQGILOO PHWKDQH UHFRYHU\ FRDO DVK UHF\FOLQJ &)&UHF\FOLQJ IXHOVZLWFKLQJ LPSURYHG IRUHVWU\ SURJUDPV LQ WKHLU KDUGZRRG IRUHVW LQ 0DVVDFKXVHWWV DQG HQHUJ\ FRQVHUYDWLRQ SURJUDPV 2I WKH WRWDO FDUERQ GLR[LGH HPLVVLRQV UHGXFWLRQV LQFOXGHG LQ 1HZ (QJODQG (OHFWULFfV SODQ WKH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW LQ 6DEDK UHSUHVHQWV EHWZHHQ b ,Q VXPPDU\ WKH 5HGXFHG,PSDFW /RJJLQJ 3URMHFW DV LPSOHPHQWHG LQ 6DEDK PHHWV WKH FULWHULD IRU MRLQW LPSOHPHQWDWLRQ SURMHFWV SURSRVHG E\ WKH 868, 6HFUHWDULDW $GGLWLRQDO FULWHULD ZLOO SUREDEO\ GHYHORS GXULQJ WKH LQWHUQDWLRQDO &23 SLORW SKDVH &RVWHIIHFWLYHQHVV IRU H[DPSOH ZLOO FHUWDLQO\ EH SDUW RI WKH VHOHFWLRQ FULWHULD XVHG E\ LQGXVWULHV VXFK DV HOHFWULF XWLOLW\ FRPSDQLHV FRQVLGHULQJ -, SURJUDPV ,Q WKH 86,-,fV ILUVW FDOO IRU MRLQW LPSOHPHQWDWLRQ SURMHFW SURSRVDOV WKH 1HZ (QJODQG (OHFWULF V\VWHPV ,QQRSULVH &RUSRUDWLRQ 6GQ %KG 5HGXFHG,PSDFW /RJJLQJ 3URMHFW ZDV MXGJHG WR KDYH PHW DOO WKH FULWHULD IRU IXOO DFFHSWDQFH LQWR WKH SURJUDP EXW ZDV FODVVLILHG DV D fSURMHFW LQ GHYHORSPHQW SHQGLQJ DSSURYDO E\ WKH 0DOD\VLDQ *RYHUQPHQW 7 6XOOLYDQ SHUV FRPP f

PAGE 123

9DOXDWLRQ RI WKH &DUERQ 2IIVHW $VVRFLDWHG ZLWK 5HGXFHG,PSDFW /RJJLQJ 3ROLFLHV RU PDUNHW IRUFHV ZLOO DW VRPH SRLQW DVVLJQ D ILQDQFLDO YDOXH WR HPLVVLRQV UHGXFWLRQV RU VHTXHVWUDWLRQ 3XEOLVKHG HVWLPDWHV RI WKH FRVW RI FDUERQ GLR[LGH HPLVVLRQV UDQJH IURP WR SHU 0J & HPLWWHG LQ 3ULFH t :LOOLV f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f 6HFRQG HIIRUWV WR UHGXFH HPLVVLRQV RU VHTXHVWHU FDUERQ YDU\ WHPSRUDOO\ )RU H[DPSOH VRPH SURSRVHG MRLQW LPSOHPHQWDWLRQ SURMHFWV LQYROYH LPPHGLDWH DQG SHUPDQHQW UHGXFWLRQV LQ HPLVVLRQV HJ IXHOn VZLWFKLQJ IRVVLO IXHOV WR ZLQGSRZHUf ZKLOH RWKHUV LQYROYH WHPSRUDU\ FDUERQ VWRUDJH HJ SXOSZRRG SODQWDWLRQVf ,Q UHFRJQLWLRQ RI WKH WHPSRUDO YDULDELOLW\ DPRQJ SURMHFWV GLVFXVVLRQV RI YDOXLQJ FDUERQ RIIVHWV KDYH LQFOXGHG FRQFHSWV VXFK DV FDUERQ OHDVLQJ 0RXUD&RVWD LQ UHYLHZf DQG WKH UHOHYDQFH RI GLVFRXQWLQJ 3ULFH t :LOOLV f 7R HTXDWH FDUERQ VHTXHVWUDWLRQ HIIRUWV WKDW YDU\ LQ WLPH 5LFKDUGV f GHYHORSHG D PHWKRG WR H[SUHVV WHPSRUDU\ FDUERQ VWRUDJH LQ XQLWV HTXLYDOHQW WR SHUPDQHQW FDUERQ VWRUDJH 7KH YDOXH RI WKH FDUERQ VWRUDJH FDQ WKHQ EH GHVFULEHG DV DQQXDO RIIVHW SD\PHQWV RU FUHGLWV ZLWK WKH FDUERQ VWRUHG HDFK \HDU H[SUHVVHG DV SHUPDQHQW WRQ HTXLYDOHQWV 37(f 7KH QHW SUHVHQW YDOXH RI WKH SURMHFW FDQ WKHQ EH FDOFXODWHG DW D JLYHQ GLVFRXQW UDWH

PAGE 124

7KUHH VWHSV DUH LQYROYHG LQ 5LFKDUGfV FDOFXODWLRQ RI QHW SUHVHQW YDOXH RI D FDUERQ RIIVHW )LUVW DQQXDO FDUERQ VWRUDJH RU HPLVVLRQV UHGXFWLRQf GXH WR WKH RIIVHW HIIRUW LV GHVFULEHG E\ \HDU RI WKH SURMHFW 0J & KDnf \HDUK ZKHUH L LV WKH \HDU LQ ZKLFK D SDUWLFXODU DPRXQW RI FDUERQ LV VWRUHG SHU KHFWDUH 6HFRQG D OLQHDU UHODWLRQVKLS EHWZHHQ DWPRVSKHULF FRQFHQWUDWLRQV RI & DQG GDPDJH WR WKH SODQHW UHVXOWLQJ IURP HPLVVLRQV RI & LV DVVXPHG 7KH YDOXH RU FDUERQ FUHGLW IRU WKH FDUERQ VWRUDJH E\ \HDU LV FRQVLGHUHG HTXDO WR OWK RI D SHUPDQHQW WRQ HTXLYDOHQW RI VWRUDJH 7KLUG WKH VHULHV RI DQQXDO FDUERQ FUHGLWV LV H[SUHVVHG LQ WHUPV RI FXUUHQW HTXLYDOHQWV XVLQJ WKH IROORZLQJ HTXDWLRQ 1HW SUHVHQW YDOXH e >OOUfDffr37(@ IURP \HDU WR \HDUB ZKHUH D LV WKH \HDU ZKHQ WKH DQQXDO VWRUDJH LV DFKLHYHG DQG U LV WKH GLVFRXQW UDWH %HORZ SUHVHQW ILJXUHV GHVFULELQJ WKH QHW SUHVHQW YDOXH RI WKH FDUERQ VWRUDJH DFKHLYHG E\ WKH 5,/ SURMHFW 7KH DPRXQW RI FDUERQ UHWDLQHG GXH WR UHGXFHG ORJJLQJ GDPDJH FDQ EH GHVFULEHG DV WKH GLIIHUHQFH EHWZHHQ HFRV\VWHP FDUERQ VWRUDJH LQ FRQYHQWLRQDO DQG UHGXFHGLPSDFW ORJJLQJ DUHDV )LJ $f 3URMHFWLRQV RI WKH GLIIHUHQFH EHWZHHQ WKH WZR ORJJLQJ PHWKRGV LQ WHUPV RI WKH UDWH RI FDUERQ VWRUDJH RYHU WLPH LQYROYH PDQ\ DVVXPSWLRQV H J UDWHV RI JURZWK VXUYLYDO DQG ZRRG GHFD\ VHH &KDSWHU f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b GLVFRXQW UDWH DQQXDO FDUERQ FUHGLWV DUH FDOFXODWHG DV 37(fV SHU KD )LJ ,%f 7KH QHW SUHVHQW YDOXH H[SUHVVHG DV 37(V KDn RYHU WKH SURMHFW OLIHVSDQ LV 0J & KDn )LJ &f &RVW SHU KHFWDUH IRU WKH SLORW SURMHFW ZDV DERXW WKXV WKH FRVW SHU WRQ DVVXPLQJ D \HDU SURMHFW OLIHVSDQ LV HVWLPDWHG WR EH SHU 0J & KD &RVW HVWLPDWHV IRU FDUERQ RIIVHW SURMHFWV IRXQG LQ

PAGE 125

)LJXUH $f 6FKHPDWLF GLDJUDP RI HFRV\VWHP FDUERQ VWRUDJH LQ GLSWHURFDUS IRUHVW EHIRUH DQG DIWHU ORJJLQJ E\ FRQYHQWLRQDO &19f DQG UHGXFHGLPSDFW 5,/f ORJJLQJ %f 3HUPDQHQW WRQ HTXLYDOHQWV 37(f SHU KD RYHU WLPH DIWHU ORJJLQJ FDOFXODWHG IURP DQQXDO GLIIHUHQFHV LQ FDUERQ VWRUHG LQ FRQYHQWLRQDO DQG UHGXFHGLPSDFW ORJJLQJ DUHDV &f &XPXODWLYH SHUPDQHQW WRQ HTXLYDOHQWV GLVFRXQWHG RYHU WKH SURMHFW \U OLIHVSDQ

PAGE 126

7LPH R 1HW SUHVHQW YDOXH f§ WR

PAGE 127

WKH OLWHUDWXUH DUH GLIILFXOW WR FRPSDUH GXH WR D ODFN RI FRQVLVWHQW PHWKRGRORJ\ 8VLQJ WKH DERYH PHWKRGRORJ\ FRVW SHU 0J & IRU D UDQJH RI IRUHVWU\ FDUERQ RIIVHW SURMHFWV LH FRQYHUVLRQ RI DJULFXOWXUDO ODQGV WR IRUHVW HQULFKPHQW SODQWLQJ DQG UHGXFHGLPSDFW ORJJLQJf SUREDEO\ UDQJH IURP WR SHU 0J & KD EDVHG RQ GDWD LQ 5LFKDUGV f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f 7KH HQYLURQPHQWDO EHQHILWV RI PDLQWDLQLQJ IRUHVW VWUXFWXUH DQG FRQVHUYLQJ VRLO DUH GLIILFXOW WR GHILQH LQ ILQDQFLDO WHUPV ,I WKH LQWHUQDWLRQDO FRPPXQLW\ SDUWLHV WR WKH )UDPHZRUN &RQYHQWLRQf DFFHSWV MRLQW LPSOHPHQWDWLRQ SURJUDPV DQG LI SROLF\PDNHUV DVVLJQ D ILQDQFLDO YDOXH WR FDUERQ VHTXHVWUDWLRQ VHUYLFHV WKDW LV DERYH WKH FRVW RI FRQWUROOLQJ ORJJLQJ GDPDJH SHU 0J & VWRUHG KDf IRUHLJQ XWLOLWLHV PD\ SURGXFH DSSURSULDWH ILQDQFLDO LQFHQWLYHV WR ORJJHUV WR LPSURYH KDUYHVWLQJ SUDFWLFHV

PAGE 128

$33(1',; $ 5('8&(',03$&7 /2**,1* +$59(67,1* *8,'(/,1(6 5HGXFHGLPSDFW ORJJLQJ SODQQLQJ DQG KDUYHVWLQJ JXLGHOLQHV FRQGHQVHG IURP 5DN\DW %HLMD\D ,QQRSULVH &RUSRUDWLRQ XQSXEOLVKHG GRFXPHQW YHUVLRQ URDG VSHFLILFDWLRQV QRW LQFOXGHGf +DUYHVW 3ODQ )RUPDO SODQ WR EH SUHSDUHG EDVHG RQ VWRFN PDS VFDOHf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r &RQVWUXFWLRQ RI VNLG WUDLOV WKDW FDQ QRW HDVLO\ EH GUDLQHG LV WR EH DYRLGHG

PAGE 129

7UHH )HOOLQJ 6NLGGLQJ /DQGLQJV &ORVLQJ 2SHUDWLRQV 'HFLVLRQV RQ IHOOLQJ GLUHFWLRQV WR EH EDVHG RQ VDIHW\ WR IHOOHU HDVH RI VNLGGLQJ DQG DYRLGDQFH RI GDPDJH WR KDUYHVWHG WUHH DQG SRWHQWLDO FURS WUHHV 7UHHV WR EH IHOOHG ZLWKLQ r RI LQGLFDWHG GLUHFWLRQ )HOOHUV WR EH WUDLQHG LQ XVH RI ZHGJHV DQG HTXLSSHG ZLWK WKHP 8VH RI WKH EXOOGR]HUfV EODGH LV SHUPLWWHG RQO\ GXULQJ VNLG WUDLO FRQVWUXFWLRQ RQ VORSHV r 6NLG WUDLO JUDGLHQWV QRW WR H[FHHG r H[FHSW RYHU VKRUW GLVWDQFHV 6NLGGLQJ VKRXOG QRW RFFXU RQ VORSHV r :KHUH SRVVLEOH DOO ORJ ODQGLQJ RSHUDWLRQV WR EH FDUULHG RXW RQ H[LVWLQJ URDGV :KHUH UHTXLUHG ODQGLQJV WR EH ORFDWHG RQ ULGJHV DQG DUH QRW WR H[FHHG KD 5RDGV DQG VNLG WUDLOV WR EH GUDLQHG WHPSRUDU\ VWUHDP FURVVLQJ VWUXFWXUHV WR EH UHPRYHG DQG ODQGLQJV VKRXOG EH UHVKDSHG WR DVVXUH DGHTXDWH GUDLQDJH $YDLODEOH ORJJLQJ GHEULV IURP SHULPHWHU WR EH UHGLVWULEXWHG RQ ODQGLQJ VXUIDFH

PAGE 130

$33(1',; % 67(0 92/80( (48$7,216 $1' :22' '(16,7,(6 %LRPDVV FDOFXODWLRQV LQ &KDSWHU ZHUH EDVHG RQ VWHP YROXPH HTXDWLRQV )RUHVWDO ,QWHUQDWLRQDO /LPLWHG f DQG ELRPDVV H[SDQVLRQ IDFWRUV %URZQ HW DO f XVHG VWHP YROXPH HTXDWLRQV GHYHORSHG IURP GHVWUXFWLYH VDPSOLQJ RI WUHHV ZLWKLQ WKH /DKDG 'DWX GLVWULFW 8OX 6HJDPD )RUHVW 5HVHUYHf 0HDVXUHPHQWV PDGH RQ IHOOHG WUHHV ZHUH VSHFLILFDOO\ WR GHWHUPLQH WKH WRWDO JURVV ZRRG YROXPH EHWZHHQ D VWXPS KHLJKW RI P RU DW WRS RI EXWWUHVVHVf WR D WRS KHLJKW DW WKH FURZQ SRLQW 'LDPHWHU RYHU EDUN DQG EDUN WKLFNQHVV ZHUH PHDVXUHG DW DQG DW VXFFHVVLYH P LQWHUYDOV XQWLO WKH FURZQ SRLQW ZDV UHDFKHG f %ROH OHQJWK IURP VWXPS WR GLDPHWHUV FP DQG FPf DQG WR FURZQ SRLQW ZDV PHDVXUHG 'HWDLOHG GHVFULSWLRQV RI VDPSOLQJ SURWRFROV FDQ EH IRXQG LQ )RUHVWDO ,QWHUQDWLRQDO /LPLWHG f +HLJKW GLDPHWHU HTXDWLRQV ZHUH SUHSDUHG XVLQJ WKH JHQHUDO HTXDWLRQ IRUP RI + D E' F' ZKHUH + LV KHLJKW DQG LV GEK 9ROXPH RI HDFK PHDVXUHG WUHH ZDV FDOFXODWHG XVLQJ 6PDKDQnV IRUPXOD $ IRUP IDFWRU DFWXDO YROXPH RI WUHH EROHYROXPH RI D F\OLQGHU RI VDPH OHQJWK DQG EDVDO GLDPHWHUf ZDV GHULYHG IRU HDFK WUHH PHDVXUHG DQG VSHFLHV ZKLFK KDG VLPLODU IRUP IDFWRUV ZHUH JURXSHG 9ROXPH HTXDWLRQV ZHUH GHULYHG IRU HDFK RI WKH VSHFLHV JURXSV XVLQJ WKH JHQHUDO IRUP RI 9 D E '+f F '+ff ZKHUH 9 LV YROXPH 7DEOH %Of :RRG GHQVLWLHV ZHUH WDNHQ IURP %XUJHVV 7DEOH %f

PAGE 131

7DEOH %O +HLJKW DQG VWHP YROXPH HTXDWLRQV XVHG LQ &KDSWHU WDNHQ IURP )RUHVWDO ,QWHUQDWLRQDO /LPLWHG f + KHLJKW Pf GLDPHWHU DW EUHDVW KHLJKW FPf 1 QXPEHU RI WUHHV VDPSOHG 9 VWHP YROXPH Pf 1R +HLJKW 1 5 6WHP YROXPH 1 5 + r'r'f 9 r'fr+f + r'r'f 9 r'fr+f + r'r'f 9 r'fr+fr'fr+ff + r'r'f 9 r'fr+f + r'r'f 9 r'fr+f r'fr+ff + r'r'f 9 r'fr+fr'fr+ff + r'r'f 9 r'fr+fO r'fr+ff + r'r'f 9 rr'fr+f + r'r'f 9 r'fr+f + r'r'f 9 r'fr+f + r' r'f 9 r'fr+f + r'r'f 9 r'fr+fO + r'r'f 9 r'fr+f + r'r'f 9 r'fr+fO r'fr+ff + r'r'f 9 r'fr+f

PAGE 132

7DEOH % 6SHFLHV RU VSHFLHV JURXS DOORFDWLRQV WR YROXPH HTXDWLRQV EDVHG RQ &KDL HW DO XQSXEO GRFf DQG ZRRG GHQVLWLHV J FPf XVHG IRU FDOFXODWLRQV LQ &KDSWHU EDVHG RQ %XUJHVV f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

PAGE 133

7DEOH % FRQWLQXHGf 7D[D )DPLO\ 9ROXPH HTXDWLRQ :RRG GHQVLW\ 'XDEDQJD PROXFFDQD 6RQQHUDWLDFHDH 'XULR VS %RPEDFDFHDH '\HUD VSS $SRF\QDFHDH (QGRVSHUPXP SHOWDWXP (XSKRUELDFHDH (XJHQLD VSS 0\UWDFHDH (XVLGHUR[\ORQ PDODJDQJDL /DXUDFHDH WR f (XVLGHUR[\ORQ ]ZDJHUL /DXUDFHDH )DJUDHD IUDJUDQV /RJDQLDFHDH +HULWLHUD VLPSOLFLIROLD 6WHUFXOLDFHDH +RSHD EHFFDULDQD 'LSWHURFDUSDFHDH +RSHDVDQJDO 'LSWHURFDUSDFHDH +RSHD VSS 'LSWHURFDUSDFHDH ,QWVLD SDOHPEDQLFD /HJXPLQRVDH .RRPSDVVLD H[FHOVD /HJXPLQRVDH .RRPSDVVLD PDODFFHQVLV )DEDFHDH .RRUGHUVLRGHQGURQ SLQQDWXP $QDFDUGLDFHDH /DXUDFHDH /DXUDFHDH /LWKRFDUSXV t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

PAGE 134

7DEOH % FRQWLQXHGf 7D[D )DPLO\ 9ROXPH HTXDWLRQ :RRG GHQV 6KRUHD DFXPLQDWLVVLPD 'LSWHURFDUSDFHDH 6KRUHD DJDPL 'LSWHURFDUSDFHDH 6KRUHD DOPRQ 'LSWHURFDUSDFHDH 6KRUHD DQGXOHQVLV 'LSWHURFDUSDFHDH 6KRUHD DUJHQWLIROLD 'LSWHURFDUSDFHDH 6KRUHD DWULQHUYRVD 'LSWHURFDUSDFHDH 6KRUHD KHFFDULDQD 'LSWHURFDUSDFHDH 6KRUHD EUDFWHRODWD 'LSWHURFDUSDFHDH 6KRUHD FULVWDWD 'LSWHURFDUSDFHDH 6KRUHD GDV\SK\OOD 'LSWHURFDUSDFHDH 6KRUHD H[HOOLSWLFD 'LSWHURFDUSDFHDH 6KRUHD IDJXHWLDQD 'LSWHURFDUSDFHDH 6KRUHD JLEERVD 'LSWHURFDUSDFHDH 6KRUHD JODXFHVFHQV 'LSWHURFDUSDFHDH 6KRUHD JXLVR 'LSWHURFDUSDFHDH 6KRUHD KRSHLIROLD 'LSWHURFDUSDFHDH 6KRUHD K\SROHXFD 'LSWHURFDUSDFHDH 6KRUHD MRKRUHQVLV 'LSWHURFDUSDFHDH 6KRUHD NXGDWHQVLV 'LSWHURFDUSDFHDH 6KRUHD ODHYLV 'LSWHURFDUSDFHDH 6KRUHD OHSURVXOD 'LSWHURFDUSDFHDH 6KRUHD PDFURSWHUD 'LSWHURFDUSDFHDH 6KRUHD PD[ZHOOLDQD 'LSWHURFDUSDFHDH 6KRUHD PHFLVWRSWHU\[ 'LSWHURFDUSDFHDH 6KRUHD PXOWLIORUD 'LSWHURFDUSDFHDH 6KRUHD REVFXUD 'LSWHURFDUSDFHDH 6KRUHD ROHRVD 'LSWHURFDUSDFHDH 6KRUHD RYDOLV 'LSWHURFDUSDFHDH 6KRUHD RYDWD 'LSWHURFDUSDFHDH 6KRUHD SDUYLIROLD 'LSWHURFDUSDFHDH 6KRUHD SDXFLIORUD 'LSWHURFDUSDFHDH 6KRUHD SODW\FDUSD 'LSWHURFDUSDFHDH 6KRUHD SOD\FODGRV 'LSWHURFDUSDFHDH 6KRUHD VFDEULGD 'LSWHURFDUSDFHDH 6KRUHD VHFWLRQ 6KRUHD 'LSWHURFDUSDFHDH 6KRUHD VHPLQLV 'LSWHURFDUSDFHDH 6KRUHD VPLWKLDQD 'LSWHURFDUSDFHDH 6KRUHD VSS 'LSWHURFDUSDFHDH

PAGE 135

7DEOH % FRQWLQXHGf 7D[D )DPLO\ 9ROXPH HTXDWLRQ :RRG GHQVLW\ 6KRUHD VXSHUED 'LSWHURFDUSDFHDH 6KRUHD V\PLQJWRQLL 'LSWHURFDUSDFHDH 6KRUHD YHQXORVD 'LSWHURFDUSDFHDH 6KRUHD ZDOWRQLL 'LSWHURFDUSDFHDH 6KRUHD [DQWKRSK\OOD 'LSWHURFDUSDFHDH 6LQGRUD VSS /HJXPLQRVDH 6RQQHUDWLD 6RQQHUDWLDFHDH 9DWLFD 'LSWHURFDUSDFHDH

PAGE 136

$33(1',; & &2'( )25 6,08/$7,21 02'(/ 7KH FRGH IRU WKH &5(& PRGHO &KDSWHU f LV SUHVHQWHG EHORZ ,W LV ZULWWHQ LQ 4XLFN %DVLF DQG ZDV EDVHG RQ WKH IRUPDW RI )250,; %RVVHO t .ULHJHU f ',0 GLDf +f VWPf EPFKf ;;f OIf 7RW7f '(&/$5( 68% GDPDJH LQMXUHG 1 $& $7 $5 /$, /f '(&/$5( 68% GHVFULEH &' 1 % %7 75 ) +' $& $7 $5 /$, /f '(&/$5( 68% GLH 0 0% 06 1 %7f '(&/$5( 68% PRYH 0' 71 76 1f '(&/$5( 68% SKRWR 3PD[ 0 36 36 36 36 366 /$, /$, /$, /$, /$,6f '(&/$5( 68% UHVSLUH 35 5 36 $7 % &JDLQ OLWWHUf '(&/$5( 68% VHHGLQJ VXUYLYDO 1 1 6 7%2f '(&/$5( 68% VHWPRUWSHUV VZLWFK$ PO WLPH ] $5 $5 $5,2 $5 $56 PV PV PVO2 PVO PV6f '(&/$5( 68% VHWPRUWSLRQ WLPH $5 $5 $5,2 $5 $56 PVPV PVO2 PVO PV6f 23(1 F?ULO?PRGHO?WHVW )25 287387 $6 5$1'20,=( 7,0(5 &/6 WLPH /$, nWKHVH DUH WKH PD[LPXP YDOXHV IRU HDFK OD\HU /$, /$, /$, /$,6 /$,3 nSLRQHHUV KDYH GHQVH IROLDJH DOO OD\HUV VDPH 3PD[ nSHUVLVWHQW VSHFLHV 0 35 5 3PD[3 nSLRQHHUV 03 353 53 75 nWKLV LV VWHP ZRRG IUDFWLRQ nWKLV LV ZRRG GHQVLW\ *3 nIRU SLRQHHU WUHHV &' nFURZQ GLDPHWHU &'3 nODUJHU IRU SLRQHHUV ) nWKHVH DUH IRUP IDFWRUV ) nDOO IURP %RVVHO t .ULHJHU ) ), )6 +' nWKLV LV KHLJKW WR GLDPHWHU UDWLR

PAGE 137

+' nIURP %RVVHO t .ULHJHU +' +' +'6 +'3 nWKHVH DUH JXHVVHV DW ZKDW WKH\ PLJKW EH +'3 nIRU SLRQHHUV +'3 +'3 +236 nWKHVH DUH WUDQVLWLRQ SUREDELOLWLHV 76 76 76 766 763 763 763 7636 VXUYLYDO nWKLV LV WKH VWDQGDUG VHHGOLQJ VXUYLYDO UDWH PO nWKLV LV WKH HOHYDWHG UDWH RI PRUWDOLW\ WKDW IROORZV ORJJLQJ VDPH IRU DOO OD\HUV VZLWFK$ nWKLV LV WKH GXUDWLRQ RI HOHYDWHG PRUWDOLW\ UDWHV DIWHU ORJJLQJ VZLWFK% nWKLV VZLWFK LV VHW VR WKDW SHUVLVWHQW WUHH VHHGOLQJV WKDW HVWDEOLVK 5(0 XQGHU SLRQHHUV GR QRW H[SHULHQFH WKH HOHYDWHG PRUWDOLW\ UDWHV '0 nPD[LPXP GLDPHWHUV IRU HDFK OD\HU '0 '0 O '06 nDGG WKH QHFURPDVV VWRUHV TF nVWDQGLQJ VWRFN &:' .LUDnV DYHUDJH PLQXV 6:/ TIO nVWDQGLQJ VWRFN ILQH OLWWHU %XUJKRXWV TVZO nJXHVV IRU VPDOO ZRRG\ OLWWHU IOGN nGHFD\ WR DWP %XUJKRXWV VZOGN nWKLV LV D JXHVV OGNWR6 nGHFD\ WR VRLO %XUJKRXWV TFGN n.LUD XVLQJ b PLQXV ZKDW ZDVQnW FRPLQJ RII DV & TFWR6 n.LUD TVRLO n2KWD t (IIHQGL 5(0 UHPRYHG TVRLOVORZ nVWDQGLQJ VWRFN VRLO FDUERQ EDVLFDOO\ SDVVLYH VHIO[ nFR HIIOX[ .LUD DV SHUFHQW RI VRLO RP nUHDG LQ GDWD IRU W\SLFDO KHFWDUH nIRU DERYHJURXQG ELRPDVV XVH ILYH FDQRS\ OD\HUV nWUHHV !FPFP FP FP VHHGOLQJV 23(1 F?ULO?PRGHO?*
PAGE 138

:(1' 23(1 F?ULO?PRGHO?*
PAGE 139

n,QLWLDO 6HHGOLQJ /D\HU %6 n FOLS SORW PLQXV VRPH 16 n JXHVV &$// GHVFULEH&' 16 %6 %76 '6 75 )6 +'6 $&6 $76 $56 /$,6 /6f WEDJ % % % % %6 35,17 +RZ PDQ\ \HDUV ZRXOG \RX OLNH WKH PRGHO WR UXQ" ,1387 GXUDWLRQ nQH[W VHFWLRQ LV IRU ORJJLQJ 35,17 ,I ORJJPJ (17(5 RWKHUZLVH (17(5 ,1387 ] ,)] *272 (/6( 35,17 :KDW YROXPH RI WLPEHU ZDV UHPRYHG FXELF PHWHUV SHU KDf"n ,1387 92/ nVSHFLILF JUDYLW\ FRQYHUWHG IURP FXELF PHWHUV WR NJ 7LPEHU 92/ r ,) 7LPEHU !% 7+(1 EUDNH *272 (1' ,) 7UHH'HEULV r 7LPEHU 7LPEHUnWKLV LV XVLQJ %URZQ HW DOnV %() 1XPEHU)HOOHG 7LPEHU 7UHH'HEULVf %7 % % 7LPEHU 7UHH'HEULV 1 1 1XPEHU)HOOHG &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f TFIDOO 7UHH'HEULV r nWKHVH DUH JXHVVHV DW SURSRUWLRQDO DOORFDWLRQ TVZOIDOO 7UHH'HEULV r TIOIDOO 7UHH'HEULV r 35,17 :KDW SURSRUWLRQ RI WKH DUHD ZDV FRYHUHG ZLWK VRLO GLVWXUEDQFH" ,1387 $67 ,) $67 7+(1 nLQ FDVH HQWHUHG LQFRUUHFWO\ EUDNH *272 (1' ,) n WKLV ZLOO VHW VXUYLYDO XQGHU SLRQHHUV 35,17 ZKDW SURSRUWLRQ RI WKH UHVLGXDO VWDQG ZDV IDWDOO\ GDPDJHG" ,1387 '$0) VZLWFKO nWKLV LV ZKHQ WKH SLRQHHU VHHGOLQJV HVWDEOLVK LQ b DUHD '$0) VZLWFK nWKLV LV ZKHQ SHUVLVWHQW VHHGOLQJV EHJLQ WR HVWDEOLVK XQGHU SLRQHHUV ,) '$0) 7+(1 EUDNH *272 (1' ,) ,) '$0) $67 7+(1 '$0) $67 7UHH'HEULV % r '$0) % % 7UHH'HEULV 1XPEHU.LOOHG 7UHH'HEULV %7 1 1 1XPEHU.LOOHG &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f TFIDOO TFIDOO r 7UHH'HEULV TVZOIDOO TVZOIDOO r 7UHH'HEULV TIOIDOO TIOIDOO r 7UHH'HEULV 7UHH'HEULV % r '$0)

PAGE 140

% % 7UHH'HEULV 1XPEHU.LOOHG 7UHH'HEULV %7 1 1 1XPEHU.LOOHG &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f TFIDOO TFIDOO r 7UHH'HEULV TVZOIDOO TVZOIDOO r 7UHH'HEULV TIOIDOO TIOIDOO r 7UHH'HEULV 7UHH'HEULV %,2 r '$0) % % 7UHH'HEULV 1XPEHU.LOOHG 7UHH'HEULV %7,2 1,2 1,2 1XPEHU.LOOHG &$// GHVFULEH&' 1,2 %,2 %7,2 ',2 75 ) +' $& $7 $5,2 /$ /f TFIDOO TFIDOO r 7UHH'HEULV TVZOIDOO TVZOIDOO r 7UHH'HEULV TIOIDOO TIOIDOO r 7UHH'HEULV 7UHH'HEULV % r '$0) % % 7UHH'HEULV 1XPEHU.LOOHG 7UHH'HEULV %7 1 1 1XPEHU.LOOHG &$// GHVFULEH&' 1, %O %7 ', 75 ), +' $& $7, $5 /$ /,f TVZOIDOO TVZOIDOO r 7UHH'HEULV TIOIDOO TIOIDOO r 7UHH'HEULV 7UHH'HEULV %6 r '$0) %6 %6 7UHH'HEULV 1XPEHU.LOOHG 7UHH'HEULV %76 &$// GHVFULEH&' 16 %6 %76 '6 75 )6 +'6 $&6 $76 $56 /$,6 /6f TIOIDOO TIOIDOO 7UHH'HEULV 35,17 :KDW SURSRUWLRQ RI WKH UHPDLQLQJ WUHHV UHFHLYH GDPDJH" ,1387 LQMXUHG ,) LQMXUHG '$0) 7+(1 EUDNH 35,17 \RXnYH GDPDJHG PRUH WKDQ b RI WKH WUHHV 35,17 WR JR RQ W\SH ,1387 RN ,) RN 7+(1 *272 (/6( *272 (1' ,) (1' ,) nGHFUHDVH FURZQ DUHD RI GDPDJHG WUHHV E\ b &$// GDPDJHLQMXUHG 1 $& $7 $5 /$, /f &$// GDPDJHLQMXUHG 1 $& $7 $5 /$, /f &$// GDPDJHLQMXUHG 1,2 ',2 $& $7 $5,2 /$, /f &$// GDPDJHLQMXUHG 1, ', $& $7, $5 /$, /,f &$// GDPDJHLQMXUHG 16 '6 $&6 $76 $56 /$,6 /6f ,) EUDNH *272

PAGE 141

() EUDNH 7+(1 *272 nKHUH QHHG WR VHW XS WKH SLRQHHU WUHH IRUHVW HYHU\WKLQJ VHW DW ]HUR &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ),2 +'3 $&3 $73 $53,2 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3, 75 *3 ), +' $&3, $73 $53 /$,3 /3f &$// GHVFULEH&'3 136 %36 %736 '36 75 *3 )6 +236 $&36 $736 $536 /$,3 /36f WLPH WLPH nGHWHUPLQH *URVV DQG 1HW SKRWRV\QWKHWLF SURGXFWLRQ &$// SKRWR3PD[ 0 36 36 36 36 366 / / / /, /6f &$// SKRWR3PD[3 03 363 363 363 363 3636 /3 /3 /3 /3 /36f nDQ\ YDULDEOH ZLWK D 3 RQ WKH HQG UHSUHVHQWV SLRQHHUV nDQ\ YDULDEOH ZLWK D 3' UHSUHVHQWV SHUVLVWHQW VSHFLHV FRPLQJ LQ XQGHU SLRQHHUV n WKLV QH[W VHW RI FRPPDQGV DOORZV WKH SHUVLVWHQWV XQGHU SLRQHHUV WR SKRWRV\QWKHVL]H nPHDQW WR SURYLGH VKDGLQJ IURP DERYH SLRQHHU WUHH /HDI $UHDf ,) ] 7+(1 6(/(&7 &$6( WLPH &$6( 72 n GXULQJ WKHVH \HDUV SLRQHHUV LQ OD\HU FP GEK &$// SKRWR3PD[ 0 363' 363' 363' 363' 363'6 /3 /3 /3 /3 /3'6f &$6( 72 nGXULQJ WKHVH \HDUV SLRQHHUV DUH LQ OD\HU FP GEK &$// SKRWR3PD[ 0 363' 363' 363' 363' 363'6 /3 /3 /3 /3' /3'6f &$6( 72 nGXULQJ WKHVH \HDUV SLRQHHUV DUH LQ OD\HU FP GEK &$// SKRWR3PD[ 0 363' 363' 363' 363' 363'6 /3 /3 /3' /3' /3'6f &$6( ,6 &$// SKRWR3PD[ 0 363' 363' 363' 363' 363'6 /3' /3' /3' /3' /3'6f &$6( (/6( (1' 6(/(&7 (1' ,) nUHPRYH VWHP UHVSLUDWLRQ OHDI DQG URRW UHVSLUDWLRQ nVRPH RI WKH HIILFLHQF\ GHVFULEHG LQ 35 YDOXHV UHSUHVHQWV OLWWHUIDOO &$// UHVSLUH35 5 36 $7 % &JDLQ OLWWHUf &$// UHVSLUH35 5 36 $7 % &JDLQ OLWWHUf &$// UHVSLUH35 5 36 $7 % &JDLQO2 OLWWHUO2f &$// UHVSLUH35 5 36 $7, %O &JDLQO OLWWHUOf &$// UHVSLUH35 5 366 $76 %6 &JDLQ6 OLWWHU6f &$// UHVSLUH353 53 363 $73 %3 &JDLQ3 OLWWHU3f &$// UHVSLUH353 53 363 $73 %3 &JDLQ3 OLWWHU3f &$// UHVSLUH353 53 363 $73 %3 &JDP3,2 OLWWHU3,2f &$// UHVSLUH353 53 363 $73 %3 &JDLQ3O KWWHU3Of &$// UHVSLUH353 53 3636 $736 %36 &JDLQ36 OLWWHU36f &$// UHVSLUH35 5 363' $73' %3' &JDLQ3' OLWWHU3'f

PAGE 142

&$// UHVSLUH35 5 363' $73' %3' &JDLQ3' OLWWHU3'f &$// UHVSLUH35 5 363' $73' %3' &JDLQ3'O2 OLWWHU3',2f &$// UHVSLUH35 5 363' $73' %3' &JDLQ3' OLWWHU3' f &$// UHVSLUH35 5 363'6 $73'6 %3'6 &JDLQ3'6 OLWWHU3'6f nDOO RI WKH OLWWHU ZLOO EH VSOLW LQWR IUDFWLRQV DW WKH HQG RI WKH \HDU ,) ] 7+(1 GHEULVIDOO OLWWHU OLWWHU OLWWHUO2 OLWWHUO OLWWHU6 ,) ] 7+(1 GHEULVIDOO '$0)f r OLWWHU OLWWHU OLWWHUO2 OLWWHUO OLWWHU6f GHEULVIDOO GHEULVIDOO '$0) r OLWWHU3 OLWWHU3 OLWWHU3 OLWWHU3O OLWWHU36f GHEULVIDOO GHEULVIDOO '$0) r OLWWHU3' OLWWHU3' OLWWHU3',2 OLWWHU3' OLWWHU3'6f (1' ,) nDGG &JDLQ WR OD\HU WRWDOV DQG UHFDOFXODWH GHVFULSWLYH SDUDPHWHUV % % &JDLQ % % &JDLQ % % &JDLQO % % &JDLQO %6 %6 & JDLQ6 %3 %3 &JDP3 %3 %3 &JDLQ3 %3 %3 &JDLQ3,2 %3 %3 &JDLQ3O %36 %36 &JDLQ36 %3' %3' &JDLQ3' %3' %3' &JDLQ3' %3' %3' &JDLQ3'O2 %3' %3' &JDLQ3' %3'6 %3'6 &JDLQ3'6 &JDLQ &JDLQ &JDLQ &JDLQO2 &JDLQO &JDLQ6 &JDLQ3LR &JDLQ3 &JDLQ3 &JDLQ3,2 &JDLQ3O &JDLQ36 &JDLQ3' &JDLQ3' &JDLQ3' &JDLQ3'O2 &JDLQ3' &JDLQ3'6 5(0 DGG QHZ VHHGOLQJV &$// VHHGLQJVXUYLYDO 1 1 6 7%2f %6 %6 7%2 16 16 6 ,)] 7+(1 6(/(&7 &$6( WLPH &$6( ,6 VZLWFK 136 nSLRQHHUV VHHG RQFH %36 &$6( ,6 VZLWFK nRQO\ D SRUWLRQ RI UHVLGXDOV DUH DOORZHG WR VHHG DV GDPDJH LQFUHDVHV SRUWLRQ VHHGLQJ GHFUHDVHV VHHG 1 r '$0)f $ f VHHG 1 r '$0)f $ f VXUY3' VXUYLYDO r $67f nQRZ D O[ RI VNLG WUDLO DUHD &$// VHHGLQJVXUY3' VHHG VHHG 63' 73'2f 13'6 63' 13'6 %3'6 73'2 %3'6 nDOVR JHW VHHGLQJ EHQHDWK WKHVH SHUVLVWHQW VSS XQGHU SLRQHHUV &$// VHHGLQJVXUY3' 13' 13' 63' 73'2f

PAGE 143

%3'6 %3'6 73'2 13'6 13'6 63' &$6( (/6( (1' 6(/(&7 (1' ,) nWKHVH GHVFULEH WKH UHVLGXDO IRUHVW VSHFLHVXQORJJHG IRUHVW &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f &$// GHVFULEH&' 1 %,2 %7 ',2 75 ),2 +' $& $7,2 $5,2 /$, /f &$// GHVFULEH&' 1O %O %7 ', 75 ), +' $& $7, $5 /$, /,f &$// GHVFULEH&' 16 %6 %76 '6 75 )6 +'6 $&6 $76 $56 /$,6 /6f nWKHVH GHVFULEH WKH SLRQHHUV &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ),2 +'3 $&3 $73 $53,2 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 136 %36 %736 '36 75 *3 )6 +'36 $&36 $736 $536 /$,3 /36f nWKHVH GHVFULEH WKH SHUVLVWHQWV XQGHU WKH SLRQHHUV &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ), +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13'6 %3'6 %73'6 '3'6 75 )6 +'6 $&3'6 $73'6 $53'6 /$,6 /3'6f 5(0 WUDQVLWLRQV nWKHVH PRYH WKH SHUVLVWHQW VSHFLHV LQ WKH UHVLGXDO IRUHVW &$// PRYH'0 71 76 1f &$// PRYH'0 ',2 71 76 1f &$// PRYH'0O ', 71, 76 1Of &$// PRYH'06 '6 716 766 16f nWKHVH PRYH WKH SLRQHHUV &$// PRYH'0 '3 713 763 13f &$// PRYH'0 '3 713 763 13f &$// PRYH'0O '3, 713 763 13f &$// PRYH'06 '36 7136 7636 136f nWKHVH PRYH WKH SHUVLVWHQWV XQGHU WKH SLRQHHUV &$// PRYH'0 '3' 713' 76 13'f &$// PRYH'0 '3' 713' 76 13' f &$// PRYH'0 '3' 713' 76 13' f &$// PRYH'06 '3'6 713'6 766 13'6f 5(0 QRZ WDOO\ QHZ QXPEHUV nWKHVH DUH IRU WKH UHVLGXDO WUHHV 1 1 71 1 1 71 71 1 1 71, 71

PAGE 144

1, 1 71671 16 16 716 % % 71 r %7 % % 71 r %7,2 71 r %7 %,2 %,2 71, r %7 71,2 r %7,2 % % 716 r %76 71, r %7 %6 %6 716 r %76 nWKHVH DUH IRU WKH SLRQHHUV 13 13 713 13 13 713 713 13 13 713 713,2 13 13 7136713 136 136 7136 %3 %3 713 r %73 %3 %3 713,2 r %73,2 713 r %73 %3,2 %3,2 713 r %73 713,2 r %73,2 %3 %3 7136 r %736 713 r%73 %36 %36 7136 r %736 nWKHVH DUH IRU WKH SHUVLVWHQW VSHFLHV XQGHU WKH SLRQHHUV 13' 13' 713' 13' 13' 713' 713' 13',2 13',2 713' 713',2 13' 13' 713'6 713' 13'6 13'6 713'6 %3' %3' 713' r %73' %3' %3' 713',2 r %73',2 713' r %73' %3',2 %3',2 713' r%73' 713',2 r %73',2 %3' %3' 713'6 r %73'6 713' r %73' %3'6 %3'6 713'6 r %73'6 nWKHVH GHVFULEH UHVLGXDO WUHHV &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f &$// GHVFULEH&' 1 % %7 75 ) )' $& $7 $5 /$, /f &$// GHVFULEH&' 1,2 %,2 %7,2 ',2 75 ),2 +',2 $&,2 $7,2 $5,2 /$,,2 /,2f &$// GHVFULEH&' 1, %O %7 ', 75 ), +' $& $7, $5 /$, /,f &$// GHVFULEH&' 16 %6 %76 '6 75 )6 ),'6 $&6 $76 $56 /$,6 /6f nWKHVH GHVFULEH SLRQHHU WUHHV &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFQEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 13 %3,2 %73,2 '3 75 *3 ),2 +'3 $&3 $73 $53,2 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ), +' $&3 $73 $53 /$,3 /3f &$// GHVFQEH&'3 136 %36 %736 '36 75 *3 )6 +'36 $&36 $736 $536 /$,3 /36f nWKHVH GHVFULEH WKH SHUVLVWHQWV XQGHU WKH SLRQHHUV &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$,,2 /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$,

PAGE 145

/3'f &$// GHVFULEH&' 13'6 %3'6 %73'6 '3'6 75 )6 +'6 $&3'6 $73'6 $53'6 /$,6 /3'6f 5(0 GHWHUPLQH PRUWDOLW\ UDWHV DQG NLOO WUHHV &$// VHWPRUWSHUVVZLWFK$ PO WLPH ] $5 $5 $5,2 $5 $56 PV PV PVO2 PV PV6f &$// VHWPRUWSLRQWLPH $53 $53 $53,2 $53 $536 PV3 PV3 PV3,2 PV3O PV36f &$// VHWPRUWSHUVVZLWFK% PO WLPH ] $53' $53' $53',2 $53' $53'6 PV3' PV3' PV3',2 PV3'O PV3'6f &$// GLH0 0% PV 1 %7f &$// GLH0 0% PV 1 %7f &$// GLH0 0%,2 PVO2 1,2 %7,2f &$// GLH0O 0% PVO 1, %7f &$// GLH06 0%6 PV6 16 %76f &$// GLH03 0%3 PV3 13 %73f &$// GLH03 0%3 PV3 13 %73f &$// GLH03 0%3,2 PV3,2 13,2 %73,2f &$// GLH03 0%3 PV3 13 %73f &$// GLH036 0%36 PV36 136 %736f &$// GLH03' 0%3' PV3' 13' %73'f &$// GLH03' 0%3' PV3' 13' %73'f &$// GLH03' 0%3' PV3' 13' %73'f &$// GLH03' 0%3' PV3' 13' %73' f &$// GLH03'6 0%3'6 PV3'6 13'6 %73'6f nQHHG QHZ FRXQWV DQG ELRPDVV WDOOLHV QHHG WR FKHFN IRU ]HURHV ,) 0 1 7+(1 0 1 1 1 0 ,) 0 1 7+(1 0 1 1 1 0 ,) 0,2 1,2 7+(1 0,2 1,2 1,2 1,2 0 ,) 0O !1 7+(1 0O 1 1 1 0O ,) 06 16 7+(1 06 16 16 16 06 ,) 0% % 7+(1 0% % % % 0% ,) 0% % 7+(1 0% % % % 0% ,) 0%,2 %,2 7+(1 0%,2 %,2 %,2 %,2 0%,2 ,) 0% % 7+(1 0% % % % 0% ,) 0%6 %6 7+(1 0%6 %6 %6 %6 0%6 nWKHVH DUH IRU SLRQHHUV ,) 03 13 7+(1 03 13 13 13 03

PAGE 146

,) 03 13 7+(1 03 13 13 13 03 ,) 03 13,2 7+(1 03,2 13,2 13,2 13,2 03,2 ,) 03 13 7+(1 03 13 13 13 03 ,) 036 136 7+(1 036 136 136 136 036 ,) 0%3 %3 7+(1 0%3 %3 %3 %3 0%3 ,) 0%3 %3 7+(1 0%3 %3 %3 %3 0%3 ,) 0%3,2 %3,2 7+(1 0%3,2 %3,2 %3,2 %3,2 0%3,2 ,) 0%3 %3 7+(1 0%3 %3 %3 %3 0%3 ,) 0%36 %36 7+(1 0%36 %36 %36 %36 0%36 nWKHVH DUH IRU WKH SHUVLVWHQW XQGHU SLRQHHUV ,) 03' 13' 7+(1 03' 13' 13' 13' 03' ,) 03' 13' 7+(1 03' 13' 13' 13' 03' ,) 03' 13',2 7+(1 03',2 13',2 13',2 13',2 03',2 ,) 03' 13' 7+(1 03' 13' 13' 13' 03' ,) 03'6 13'6 7+(1 03'6 13'6 13'6 13'6 03'6 ,) 0%3' %3' 7+(1 0%3' %3' %3' %3' 0%3' ,) 0%3' %3' 7+(1 0%3' %3' %3' %3' 0%3' ,) 0%3',2 %3',2 7+(1 0%3',2 %3' %3',2 %3',2 0%3',2 ,) 0%3' %3' 7+(1 0%3' %3' %3' %3' 0%3' ,) 0%3'6 %3'6 7+(1 0%3'6 %3'6 %3'6 %3'6 0%3'6 &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f &$// GHVFULEH&' 1 % %7 75 ) +' $& $7 $5 /$, /f &$// GHVFULEH&' 1,2 %,2 %7,2 ',2 75 ),2 +' $& $7 $5,2 /$, /f &$// GHVFULEH&' 1, %O %7 ', 75 ), +' $& $7, $5 /$, /,f &$// GHVFULEH&' 16 %6 %76 '6 75 )6 +'6 $&6 $76 $56 /$,6 /6f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ) +'3 $&3 $73 $53 /$,3

PAGE 147

/3f &$// GHVFULEH&'3 13 %3 %73 '3 75 *3 ),2 +'3 $&3 $73 $53,2 /$,3 /3f &$// GHVFULEH&'3 13 %3 %73 '3, 75 *3 ), +' $&3, $73 $53 /$,3 /3f &$// GHVFULEH&'3 136 %36 %736 '36 75 *3 )6 +236 $&36 $736 $536 /$,3 /36f nWKHVH GHVFULEH WKH SHUVLVWHQWV XQGHU WKH SLRQHHUV &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$, /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$ /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) ),' $&3' $73' $53' /$ /3'f &$// GHVFULEH&' 13' %3' %73' '3' 75 ) +' $&3' $73' $53' /$ /3'f &$// GHVFULEH&' 13'6 %3'6 %73'6 '3'6 75 )6 +'6 $&3'6 $73'6 $53'6 /$6 /3'6f nGHEULV IURP WKHVH WUHHV JRHV LQWR QHFURPDVV SRROV nXVH DOORFDWLRQ WR VL]HFODVVHV DV ZDV XVHG LQ ORJJLQJ nDOVR DGG LQ GHEULVIDOO IURP ORJJLQJ DFWLYLWLHV ,) ] 7+(1 TI/IDOO TIOIDOO 0%6 r 0% r 0% r0% O r 0% TIOIDOO TIOIDOO r GHEULVIDOO TVZOIDOO TVZOIDOO r 0% r 0% r 0% r 0% TVZOIDOO TVZOIDO r GHEULVIDOO TFIDOO TFIDOO r 0% r 0% r 0% (1' ,) ,) ] 7+(1 TIOIDOO TIOIDOO 0%6 r '$0)ff '$0) r 0%36 0%3'6ff TIOIDOO TIOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TIOIDOO TIOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TIOIDOO TIOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TIOIDOO TIOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TIOIDOO TIOIDOO GHEULVIDOO r TVZOIDOO TVZOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TVZOIDOO TVZOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TVZOIDOO TVZOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TVZOIDOO TVZOIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TVZOIDOO TVZOIDO r GHEULVIDOO TFIDOO TFIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TFIDOO TFIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff TFIDOO TFIDOO r 0% r '$0)fff r '$0) r 0%3 0%3'fff (1' ,) 5HVLGIRU % % %,2 % %6 3LRQIRU %3 %3 %3 %3 %36 SG %3' %3' %3' %3' %3'6 3IRU 3LRQIRU SG WEDJ 5HVLGIRU r '$0)ff 3IRU r '$0)f TF TF TFIDOO TVRLO TVRLO TFWR6 r TF r nIURP .LUD
PAGE 148

TVRLO TVRLO OGNWR6 r TIO r TIO TIO OGNWR6 r TIO IOGN r TIO TVZO TVZO TVZOIDOO TVRLO TVRLO TFWR6 r TVZO r TVZO TVZO VZOGN r TVZO TVZO r TFWR6 TVRLO TVRLO VHIO[ r TVRLO DOOFDUERQ WEDJ r f TVRLO TVZO r TIO r TF r QHFURPDVV TVRLO TF r TIO r TVZO r FXPP& DOOFDUERQ FXPP& FXPP%LR WEDJ FXPP%LR TIOIDOO TVZOIDOO TFIDOO GHEULVIDOO ,) WLPH 7+(1 35,17 3LRQHHU IRUHVW DW \UV LV 3LRQIRU n 35,17 SG LV SG 35,17 PHDQ WRWDO & DW \UV LV FXPP& 35,17 PHDQ WEDJ DW \UV LV FXPP%LR 35,17 HQG WEDJ DW \UV LV WEDJ (1' ,) ,) WLPH 7+(1 35,17 PHDQ WRWDO & DW \UV LV FXPP& n35,17 HQG & DW \UV LV DOOFDUERQ 35,17 PHDQ WEDJ DW \UV FXPP%LR n35,17 QR RI ELJ WUHHV LV 1 13' (1' ,) ,) WLPH GXUDWLRQ *272 ,) WLPH GXUDWLRQ 7+(1 35,17 PHDQ WRWDO & DW LV FXPP& GXUDWLRQ n 35,17 HQG WRWDO & DW LV DOOFDUERQ 35,17 HQG% DW \UV LV % r '$0)f %3' r '$0) f 35,17 HQGLQJ QR % LV 1 r '$0)f 13' r '$0) n 35,17 SG LV SG n 35,17 QR RI ELJ WUHHV LV 1 13' *272 (1' ,) 35,17 QRW HQRXJK ELJ WUHHV RU SUREOHP ZLWK LQSXW IRU GLVWXUEDQFH (1' 68% GDPDJH LQMXUHG 1 $& $7 $5 /$, /f +XUW LQMXUHG r 1 $& r r 'f$ f $&+XUW $& r ;$7 $& r 1 +XUWff $&+XUW r +XUWff $5 ;$7 ,) $5 7+(1 $7 ;$7 (/6( $7

PAGE 149

(1' ,) / $7 r /$, (1' 68% 68% GHVFULEH &' 1 % %7 75 ) +' $& $7 $5 /$, /f ,) % 7+(1 % ,) 1 7+(1 1 ,) 1 7+(1 %7 % 1 (/6( %7 (1' ,) r %7 r 75f r r ) r +'ff r + r +' $& r &' r 'f$ f ;$7 $& r 1 $5 ;$7 ,) $5 7+(1 $7 ;$7 (/6( $7 (1' ,) / $7 r /$, (1' 68% 68% GLH 0 0% 06 1 %7f 0 06 r 1 0% 0 r %7 (1' 68% 68% PRYH 0' 71 76 1f ;7 1 r 76 '' 0' ,) '' 7+(1 71 (/6( 71 ;7 (1' ,) (1' 68% 68% SKRWR 3PD[ 0 36 36 36 36 366 /$, /$, /$, /$, /$,6f 67$7,& nWKLV VXEURXWLQH FDOFXODWHV JURVV SV UDWH E\ OD\HU EDVHG RQ .LUD %RVVHO DQG .ULHJHU L nIURP 9HUWLFDO VWUDWLILFDWLRQ0DUWLQnV UHI nWKLV UHIOHFWV OHDI RULHQWDWLRQ . .6 nXQGHUVWRU\ OHDYHV DUH IODW L r (;3. r /$,f r (;3. r /$,f ,, ,r(;3.r/$,f

PAGE 150

,66 ,, r (;3. r /$,f F 36 F r 3PD[ .f r /* 0 3PD[f r f 0 3PD[f r ff 36 F r 3PD[ .f r /* 0 3PD[f r f 0 3PD[f r ff 36 F r 3PD[ .f r /2*O 0 3PD[f r f 0 3PD[f r ,,ff 36 F r 3PD[ .Of r /2*O 0 3PD[f r ,,f 0 3PD[f r ,66ff 366 F r 3PD[ .6f r /2*O 0 3PD[f r ,66f 0 3PD[f r ,66 r (;3.6 r /$,6fff (1' 68% 68% UHVSLUH 35 5 36 $7 % &JDLQ OLWWHUf 37 36 r $7 nPXOWLSOLHV SV E\ IROLDJH 3% 37 r 35 n PXOWLSOLHV SV JDLQ E\ HIILF OHDItURRW UHVSf OLWWHU 37 r &JDLQ 3% 5 r %f nUHPRYHV VWHP UHVSLUDWLRQ ,) &JDLQ 7+(1 &JDLQ (1' 68% 68% VHHGLQJ VXUYLYDO 1 1 6 7%2f n WKLV VXEURXWLQH LV EDVHG RQ %RVVHO t .ULHJHU IRU DGGLQJ QHZ GLSWHURFDUS UHFUXLWV 5(0 ZRXOG OLNH WR PDNH WKLV UHIOHFW F YV Q DQG \U LQWHUYDOV 63 r VXUYLYDO 6 1 1f r 63 VHHGOLQJELR nHTXLYDOHQW WR JUDPV 7%2 VHHGOLQJELR r 6 (1' 68% 68% VHWPRUWSHUV VZLWFK PO WLPH ] $5 $5 $5,2 $5 $56 PV PV PVO2 PVO PV6f 5(0 WUHH PRUWDOLW\ DOO EDVHG RQ %RVVHO t .ULHJHU PQ PQ PQO2 PQO PQ6 PF PF PFO2 PFO PF6 ,) $5 7+(1 PV PF (/6(,) ] 7+(1 nVHW XS VR WKDW PRUWDOLW\ LV HOHYDWHG DIWHU ORJJLQJ ,) WLPH VZLWFK 7+(1 PV PO (1' ,) ,) WLPH VZLWFK 7+(1 PV PQ (1' ,) (/6( PV PQ (1' ,) ,) $5 7+(1

PAGE 151

PV PF (/6(,) ] 7+(1 ,) WLPH VZLWFK 7+(1 PV PO (1' ,) ,) WLPH VZLWFK 7+(1 PV PQ (1' ,) (/6( PV PQ (1' ,) ,) $5,2 7+(1 PVO2 PFO2 (/6(,) ] 7+(1 ,) WLPH VZLWFK 7+(1 PVO2 PO (1' ,) ,) WLPH VZLWFK 7+(1 PVO2 PQO2 (1' ,) (/6( PVO2 PQO2 (1' ,) ,) $5 7+(1 PVO PFO (/6(,) ] 7+(1 ,) WLPH VZLWFK 7+(1 PVO PO (1' ,) ,) WLPH VZLWFK 7+(1 PVO PQO (1' ,) (/6( PVO PQO (1' ,) ,) $56 7+(1 PV6 PF6 (/6( PV6 PQ6 (1' ,) (1' 68% 68% VHWPRUWSLRQ WLPH $5 $5 $5,2 $5 $56 PV PV PVO2 PVO PV6f PQ PQ PQO2 PQO PQ6 PF

PAGE 152

PF PFO2 PFO PF6 ,) $5 7+(1 PV PF (/6(,) WLPH 7+(1 PV (/6( PV PQ (1' ,) ,) $5 7+(1 PV PF (/6(,) WLPH 7+(1 PV (/6( PV PQ (1' ,) ,) $5,2 7+(1 PVO2 PFO2 (/6(,) WLPH 7+(1 PVO2 (/6( PVO2 PQO2 (1' ,) ,) $5 7+(1 PVO PFO (/6(,) WLPH 7+(1 PVO PFO (/6(,) WLPH 7+(1 PVO PFO (/6( PVO PQO (1' ,) ,) $56 7+(1 PV6 PF6 (/6(,) WLPH 7+(1 PV6 PF6 (/6( PV6 PQ6 (1' ,) (1' 68%

PAGE 153

$33(1',; )/2: &+$57 )25 6,08/$7,21 02'(/ ,Q WKH IROORZLQJ RXWOLQH VXPPDUL]H WKH SURFHGXUHV XVHG LQ WKH &5(& PRGHO &KDSWHU $SSHQGL[ &f ,6HWXS $ 5HDG LQ VXEURXWLQHV % 5HDG LQ VHW YDULDEOHV PD[LPXP /$, SK\VLRORJLFDO DWWULEXWHV VWHPZRRG IUDFWLRQ ZRRG GHQVLWLHV FURZQ GLDPHWHU UDWLR IRUP IDFWRUV KHLJKWGLDPHWHU UHODWLRQVKLSV WUDQVLWLRQ SUREDELOLWLHV VHHGOLQJ VXUYLYDO UDWH PD[LPXP GLDPHWHUV LQLWLDO QHFURPDVV FRQGLWLRQV DQG FRHIILFLHQWV & 5HDG LQ GDWD IRU VWDQG VWUXFWXUH LQ RQH KHFWDUH ILOHV IRU FDQRS\ OD\HUV FP FP FP GEKf D HDFK WUHH KDV >WUHH QR GEK@ E FDOFXODWH ELRPDVV IRU HDFK WUHH F LQLWLDO FRQGLWLRQV DOO WUHHV DUH QRQSLRQHHUV G XVHV HTXDWLRQV WKDW DUH K\EULGV EHWZHHQ .LUDfV DQG %URZQ HW DO IRU ORZHU OD\HUV VHHGOLQJV DQG VDSOLQJV FP GEKf D WUHH QXPEHUV DQG ELRPDVV ILJXUHV EDVHG RQ 8OX 6HJDPD GDWD

PAGE 154

' &DOFXODWH WRWDOV WR GHVFULEH WKH OD\HUV >VXE GHVFULEH@ QXPEHU WRWDO ELRPDVV ELRPDVV SHU WUHH DYJ GLDPHWHU KHLJKW FURZQ SURMHFWLRQ DUHD OHDI DUHD OHDI DUHD LQGH[ ,, ,QSXW KRZ PDQ\ \HDUV ZLOO WKH PRGHO UXQ" '85$7,21 ,,, ,QSXW LV WKHUH ORJJLQJ" LI \HV = $ HQWHU YROXPH RI WLPEHU UHPRYHG 92/ FRQYHUW YROXPH WR ELRPDVV FDOFXODWH WUHHGHEULV SURGXFHG IURP WUHHV IHOOHG SXW GHEULV LQWR QHFURPDVV SRROV b FZG b VZO b IOf UHPRYH ELRPDVV IRU WLPEHU IURP XSSHU OD\HU UHPRYH WKH QXPEHU RI WUHHV IHOOHG IURP WRWDO UHFDOFXODWH WRWDOV WR GHVFULEH WKH OD\HU % HQWHU DUHD FRYHUHG ZLWK VRLO GLVWXUEDQFH >VHWV VHHGOLQJ VXUYLYDO UDWHV LQ GLVWXUEHG IRUHVW DUHD@ & HQWHU SURSRUWLRQ RI WUHHV IDWDOO\ GDPDJHG NLOO WKLV SURSRUWLRQ RI WKH WUHHV DQG ELRPDVV LQ HDFK OD\HU D SURSRUWLRQ RI WRWDO QRZ 7UHH'HEULV 1XPEHUNLOOHG E VXEWUDFW IURP WRWDOV UHFDOFXODWH OD\HUV F DGG WR QHFURPDVV SRROV f IRU WUHHV FP GEK b FZG b VZO b IOf f IRU WUHHV FP GEK b FZG b VZO b IOf f IRU WUHHV FP GEK b FZG b VZO b IOf f IRU WUHHV FP GEK b VZO b IOf f IRU VHHGOLQJV b IOf

PAGE 155

WKLV SURSRUWLRQ RI DUHD ZLOO EH SLRQHHUV VHW VZLWFKHV WLPH ZKHQ SLRQHHUV VHHG LQ SHUVLVWHQW IRUHVW VSHFLHV VHHG LQ XQGHU SLRQHHUV ( HQWHU SURSRUWLRQ RI WUHHV GDPDJHG EXW QRW IDWDOO\ >GHFUHDVH FURZQ DUHD E\ b@ GHWHUPLQH QXPEHU RI WUHHV KXUW FDOFXODWH WKH DUHD RI FURZQ LI RQO\ b RI QRUPDO FDOFXODWH OD\HU WRWDO ZLWK SURSRUWLRQ DW b FURZQDUHD FDOFXODWH OD\HU /$, EDVHG RQ FKDQJH ) VHW XS LQLWLDO FRQGLWLRQV IRU 3LRQHHU WUHH IRUHVW >DOO VHW WR ]HUR@ 5HWXUQ WR 3URJUDP WLPH VHW WR ,9 ,V WKHUH ORJJLQJ" LI QR = $ )RUHVW VWDUWV WR JURZ 5HVLGXDO )RUHVW DQG 3LRQHHU )RUHVW GHWHUPLQH JURVV 3V SHU OD\HU >VXE SKRWRSHUV DQG SKRWRSLRQ@ D XVHV DFWXDO /$, SHU OD\HU OLJKW H[WLQFWLRQ FRHIILFLHQWV 3PD[ 0 E & IURP %RVVHO t .ULHJHU WR JR IURP SKRWRSURGXFWLRQ WR RUJDQLF PDWWHU F 3KRWRSHUV DQG SKRWRSLRQ VDPH VWUXFWXUH EXW GLIIHUHQW 3PD[ 0 YDOXHV GHWHUPLQH ORVVHV WR UHVSLUDWLRQ DQG OLWWHUIDOO >VXE UHVSHUV DQG UHVSLRQ@ DOORFDWH & JDLQ WR OD\HUV % 6HHGLQJ QHZ VHHGOLQJV EDVHG RQ QXPEHU RI WUHHV FP GEK ELRPDVV SHU VHHGOLQJ FRQVWDQW LI ORJJLQJ D SLRQHHUV VHHG LQ RQFH DW \HDU DIWHU ORJJLQJ VZLWFK f E SHUVLVWHQW VSHFLHV VHHG LQ XQGHU SLRQHHUV DW \HDUV DIWHU ORJJLQJ VZLWFKf

PAGE 156

FVHHG UDLQ IURP UHVLGXDOV LQIOXHQFHG E\ GDPDJH f QR RI VHHG WUHHV QR r SURSRUWLRQ VWDQG ZLWK IDWDO GDPDJHf$ G VHHGOLQJ VXUYLYDO LQIOXHQFHG E\ DUHD ZLWK VRLO GLVWXUEDQFH f VXUYLYDO UDWH VWDQGDUG UDWH r DUHD ZLWK VRLO GLVWXUEDQFHf H SHUVLVWHQW VSHFLHV VHHG XQGHU WKHPVHOYHV VZLWFKf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f IRU \UV 5HFDOFXODWH WRWDOV EDVHG RQ SURSRUWLRQDO UHSUHVHQWDWLRQ RI WKHVH DUHDV

PAGE 157

) 1HFURPDVV G\QDPLFV >ORVH VRPH WR GHFD\ WUDQVIHU VRPH WR VRLO@ ,QFUHPHQW WLPH W W + ,I WLPH 'XUDWLRQ JR WR 9 DERYHf ,I WLPH 'XUDWLRQ HQG

PAGE 158

$33(1',; ( 6(16,7,9,7< $1$/<6,6 5(68/76 6HQVLWLYLW\ DQDO\VHV ZHUH UXQ IRU D QR ORJJLQJ VFHQDULR 7DEOH (Of DQG D ORJJLQJ VFHQDULR 7DEOH (f 7KH OLVWHG YDULDEOHV SDUDPHWHUV DQG FRQVWDQWV ZHUH LQFUHDVHG E\ b DQG WKH PRGHO ZDV UXQ IRU \HDUV 7DEOH ( 1R ORJJLQJ VFHQDULR YDULDEOH PHDQ & PHDQ %LR HQG %LR PHDQ & PHDQ %LR PHDQ & HQG% EDVH % % %,2 % %6 TF TVZO TIO IOGN VZOGN OGNWR6 TFGN TFWR6 TVRLO VHIO[

PAGE 159

7DEOH (O FRQWLQXHGf YDULDEOH PHDQ & PHDQ %LR HQG %LR PHDQ PHDQ %LR PHDQ & HQG% FQYUTF FQYUTVZO FQYUTLO /$, /$, /$, /$, /$,6 75 &' ) ) ) ), )6 +' +' +' +' +'6 . . .6 30$; 0 &

PAGE 160

7DEOH (O FRQWLQXHGf YDULDEOH PHDQ & PHDQ %LR HQG %LR PHDQ & PHDQ %LR PHDQ &0 HQG% 35 5 63 VHHGO%LR VXUYLYDO PQ PQ PQO2 PQO PQ6 PF PF PFO2 PFO PF6

PAGE 161

7DEOH ( 6LPXODWLRQV IROORZLQJ H[WUDFWLRQ RI P RI WLPEHU b DUHD ZLWK VRLO GLVWXUEDQFH b VWDQG IDWDOO\ GDPDJHG b VWDQG QRQIDWDOO\ GDPDJHG 9DULDEOH 3LRQHHUV PHDQ & PHDQ %LR HQG %LR PHDQ& PHDQ%LROf PHDQ& HQG % EDVH /$,3 /$, /$, 3PD[3 3PD[ 03 0 353 35 53 5 &' &'3 75 %(3 *3 & L . . PQ PQ PQO2 PQO

PAGE 162

7DEOH ( FRQWLQXHGf 9DULDEOH 3LRQHHU6M' PHDQ & PHDQ %LR HQG %LR PHDQ& PHDQ%LR PHDQ& HQG % PQ6 PF PF PFO2 PFO PF6 f E P PO 63 VHHGOELR VXUYLYDO %36 136 D DSSOLHG RQO\ WR WUHHV KDUYHVWHG E SLRQHHU WUHH PRUWDOLW\ UDWH DW \HDUV

PAGE 163

5()(5(1&(6 $SSDQDK 6 DQG ) ( 3XW] &OLPEHU DEXQGDQFH LQ YLUJLQ GLSWHURFDUS IRUHVW DQG WKH HIIHFW RI SUHIHOOLQJ FOLPEHU FXWWLQJ RQ ORJJLQJ GDPDJH 0DOD\ )RU $SSDQDK 6 DQG :HLQODQG :LOO WKH PDQDJHPHQW V\VWHPV IRU KLOO GLSWHURFDUS IRUHVWV VWDQG XS" 7URS )RU 6FL $VKWRQ 3 6 'LSWHURFDUSDFH )ORUD 0DOHVLDQD 6HULHV $XOHULFK ( 1 -RKQVRQ DQG + )URHKOLFK 7UDFWRUV RU VN\OLQHV :KDWfV EHVW IRU WKLQQLQJ \RXQJJURZWK 'RXJODVILU" )RUHVW ,QGXVWULHV %DLOOLH & DQG 0DPLW 2EVHUYDWLRQV RQ URRWLQJ LQ PL[HG GLSWHURFDUS IRUHVW FHQWUDO 6DUDZDN 0DOD\ )RU %D]]D] ) $ 7KH SK\VLRORJLFDO HFRORJ\ RI SODQW VXFFHVVLRQ $QQ 5HY (FRO 6\VW %HDPDQ 5 6 + %HDPDQ & : 0DUVK DQG 3 9 :RRGV 'URXJKW DQG ILUHV LQ 6DEDK LQ 6DEDK 6RFLHW\ -RXUQDO %ODNHQH\ (QYLURQPHQWDOO\ IULHQGO\ KHOLFRSWHU ORJJLQJ LQ 3DSXD 1HZ *XLQHD 3DSHU SUHVHQWHG WR WKH ,QWHUQDWLRQDO 6\PSRVLXP RQ +DUYHVWLQJ DQG 6LOYLFXOWXUH IRU 6XVWDLQDEOH )RUHVWU\ LQ WKH 7URSLFV .XDOD /XPSXWU 0DOD\VLD 2FWREHU %RUKDQ 0 % -RKDUL DQG ( 6 4XDK 6WXGLHV RQ ORJJLQJ GDPDJH GXH WR GLIIHUHQW PHWKRGV DQG LQWHQVLWLHV RI KDUYHVWLQJ LQ D KLOO GLSWHURFDUS IRUHVW RI 3HQLQVXODU 0DOD\VLD 0DOD\ )RU %RVVHO + DQG + .ULHJHU 6LPXODWLRQ PRGHO RI QDWXUDO WURSLFDO IRUHVW G\QDPLFV (FRO 0RGHOOLQJ %RVVHO + DQG + .ULHJHU 6LPXODWLRQ RI PXOWLVSHFLHV WURSLFDO IRUHVW G\QDPLFV XVLQJ D YHUWLFDOO\ DQG KRUL]RQWDOO\ VWUXFWXUHG PRGHO )RU (FRO 0DQDJH %UDG\ 1 & 7KH 1DWXUH DQG 3URSHUWLHV RI 6RLO 0DFPLOODQ 3XEOLVKLQJ &RPSDQ\ 1HZ
PAGE 164

%URZQ 6 $ *LOOHVSLH DQG $ ( /XJR %LRPDVV HVWLPDWLRQ PHWKRGV IRU WURSLFDO IRUHVWV ZLWK DSSOLFDWLRQV WR IRUHVW LQYHQWRU\ GDWD )RU 6FL %URZQ 6 $ 5 *LOOHVSLH DQG $ ( /XJR %LRPDVV RI WURSLFDO IRUHVWV RI VRXWK DQG VRXWKHDVW $VLD &DQ )RU 5HV %URZQOHH $ 6WDWLVWLFDO 7KHRU\ DQG 0HWKRGRORJ\ LQ 6FLHQFH DQG (QJLQHHULQJ -RKQ :LOH\ DQG 6RQV ,QF 1HZ
PAGE 165

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f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

PAGE 166

'L[RQ 5 . $QGUDVNR ) 6XVVPDQ 0 $ /DYLQVRQ 0 & 7UH[OHU DQG 7 6 9LQ[RQ )RUHVW VHFWRU FDUERQ RIIVHW SURMHFWV QHDUWHUP RSSRUWXQLWLHV WR PLWLJDWH JUHHQKRXVH JDV HPLVVLRQV :DWHU $LU DQG 6RLO 3ROOXWLRQ 'RXJODV 7 *UHHU %LGLQ DQG : 6LQXQ ,PSDFW RI URDGV DQG FRPSDFWHG JURXQG RQ SRVWORJJLQJ VHGLPHQW \LHOG LQ D VPDOO GUDLQDJH EDVLQ 6DEDK 0DOD\VLD 3URFHHGLQJV RI WKH
PAGE 167

)URHKOLFK + $ DQG + 0F1DEE 0LQLPL]LQJ VRLO FRPSDFWLRQ LQ 3DFLILF 1RUWKZHVW )RUHVWV ,Q ( / 6RQH (Gf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
PAGE 168

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f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nV IRUHVWU\ FDUERQ RIIVHW SURMHFW LQ 0DOD\VLD 0DVWHU LQ &LW\ 3ODQQLQJ 7KHVLV 'HSDUWPHQW RI 8UEDQ 6WXGLHV DQG 3ODQQLQJ 0DVVDFKXVHWWV ,QVWLWXWH RI 7HFKQRORJ\ %RVWRQ 0DVVDFKXVHWWV .LQVPDQ DQG 0 & 7UH[OHU 7HUUHVWLDO FDUERQ PDQDJHPHQW DQG HOHFWULF XWLOLWLHV :DWHU $LU DQG 6RLO 3ROOXWLRQ

PAGE 169

.LR 3 5 DQG 6 $ (NZHEHODP 3ODQWDWLRQV YHUVXV QDWXUDO IRUHVWV IRU PHHWLQJ 1LJHULDnV ZRRG QHHGV ,Q ) 0HUJHQ DQG 5 9LQFHQW (GVf 1DWXUDO 0DQDJHPHQW RI 7URSLFDO 0RLVW )RUHVWV SS
PAGE 170

0DLPHU $ DQG + *ULS 6RLO GLVWXUEDQFH DQG ORVV RI LQILOWUDELOLW\ FDXVHG E\ PHFKDQLFDO DQG PDQXDO H[WUDFWLRQ RI WURSLFDO UDLQIRUHVW LQ 6DEDK 0DOD\VLD )RU (FRO 0DQDJH 0DOYDV $ UHSRUW RQ WKH ORJJLQJ GHPRQVWUDWLRQ FXP WUDLQLQJ FRXSH 'HYHORSPHQW RI )RUHVW 6HFWRU 3ODQQLQJ )2)30$/ )LHOG 'RFXPHQW 1R )RUHVWU\ 'HSDUWPHQW 6DQGDNDQ 6DEDK 0DOD\VLD 0DP + 0 ( 9HO DQG +f &KXD 3ODQQLQJ DQG FRVW VWXGLHV LQ KDUYHVWLQJ LQ WKH PL[HG GLSWHURFDUS IRUHVW RI 6DUDZDN 7HFKQLFDO 5HSRUW IRU )$2 )20$/ )RUHVWU\ 'HSDUWPHQW .XFKLQJ 6DUDZDN 0DOD\VLD 0DP + 0 DQG : % -RQNHUV /RJJLQJ GDPDJH LQ WURSLFDO KLJK IRUHVW 81'3)$2 :RUNLQJ 3DSHU 1R )20$/ )RUHVW 'HSDUWPHQW .XFKLQJ 0DOD\VLD 0DP + 0 DQG : % -RQNHUV /RJJLQJ GDPDJH LQ WURSLFDO KLJK IRUHVW ,Q 3 % 6ULYDVWDYD (Gf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f &ULWHULD IRU -RLQW ,PSOHPHQWDWLRQ XQGHU WKH )UDPHZRUN &RQYHQWLRQ IRU &OLPDWH &KDQJH 7KH :RRGV +ROH 5HVHDUFK &HQWHU :RRGV +ROH 0DVVDFKXVHWWV 0LOOHU + DQG / 6LURLV 6RLO GLVWXUEDQFH E\ VN\OLQH \DUGLQJ YV VNLGGLQJ LQ D ORDP\ KLOO IRUHVW 6RLO 6FL 6RF $P 0LOOHU 0 &XWWLQJ LQWR GHVWUXFWLRQ 6DQ 'LHJR &DOLIRUQLDf 8QLRQ 7ULEXQH &XUUHQWV4XHVW 6HFWLRQ )HEUXDU\ 0RXUD&RVWD 3 ,Q UHYLHZ 7URSLFDO IRUHVWU\ SUDFWLFHV IRU FDUERQ VHTXHVWUDWLRQ ,Q $ 6FKXOWH (Gf 'LSWHURFDUS )RUHVW (FRV\VWHP (FRORJ\ 6XVWDLQDEOH 0DQDJHPHQW DQG 3URGXFWV ,QGRQHVLDQ*HUPDQ )RUHVWU\ 3URMHFW 6DPDULQGD ,QGRQHVLD 0XUDZVNL $ $ 8 1 *XQDWLOOHNH DQG 6 %DZD 7KH HIIHFWV RI VHOHFWLYH ORJJLQJ RQ LQEUHHGLQJ LQ 6KRUHD PHJLVWRSK\OOD 'LSWHURFDUSDFHDHf IURP 6UL /DQND &RQV %LRO

PAGE 171

1LFKROVRQ 7KH HIIHFWV RI ORJJLQJ DQG WUHDWPHQW RQ WKH PL[HG GLSWHURFDUS IRUHVWV RI VRXWK HDVW $VLD )2 0,6& )RRG DQG $JULFXOWXUH 2UJDQL]DWLRQ RI WKH 8QLWHG 1DWLRQV 5RPH ,WDO\ 1LN $ 5 DQG +DUGLQJ (IIHFWV RI VHOHFWLYH ORJJLQJ PHWKRGV RQ ZDWHU \LHOG DQG VWUHDPIORZ SDUDPHWHUV LQ 3HQLQVXODU 0DOD\VLD 7URS )RU 6FL 1RUWFOLII 6 6 0 5RVV DQG % 7KRUQHV 6RLO PRLVWXUH UXQRII DQG VHGLPHQW \LHOG IURP GLIIHUHQWLDOO\ FOHDUHG WURSLFDO UDLQIRUHVW SORWV ,Q % 7KRUQHV (G f 9HJHWDWLRQ DQG (URVLRQ SS -RKQ :LOH\ t 6RQV /WG 1HZ
PAGE 172

3ULFH & DQG 5 :LOOLV 7LPH GLVFRXQWLQJ DQG WKH YDOXDWLRQ RI IRUHVWU\nV FDUERQ IOX[HV &RPP )RU 5HY 3XW] ) ( /LDQD ELRPDVV DQG OHDI DUHD RI D WLHUUD ILUPH IRUHVW LQ WKH 5LR 1HJUR %DVLQ 9HQH]XHOD %LRWURSLFD 3XW] ) ( 6LOYLFXOWXUDO HIIHFWV RI OLDQDV ,Q ) ( 3XW] DQG + $ 0RRQH\ (GVf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£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

PAGE 173

6WXDUW : % DQG / &DUU +DUYHVWLQJ LPSDFWV RQ VWHHS VORSHV LQ 9LUJLQLD WK &HQWUDO +DUGZRRG )RUHVW &RQIHUHQFH 0DUFK *HQHUDO 7HFKQLFDO 5HSRUW 1( 86'$ )RUHVW 6HUYLFH 8QLYHUVLW\ 3DUN 3HQQV\OYDQLD 7DQJ + 7 3UREOHPV DQG VWUDWHJLHV IRU UHJHQHUDWLQJ GLSWHURFDUS IRUHVWV LQ 0DOD\VLD ,Q ) 0HUJHQ DQG 5 9LQFHQW (GVf 1DWXUDO 0DQDJHPHQW RI 7URSLFDO 0RLVW )RUHVWV SS
PAGE 174

YDQ GHU 3DV 0 & DQG / $ %UXLMQ]HHO ,PSDFW RI VHOHFWLYH ORJJLQJ RI UDLQIRUHVW RQ WRSVRLO LQILOWUDELOLW\ LQ WKH 8SSHU 6HJDPD $UHD RI 6DEDK 0DOD\VLD 3URFHHGLQJV RI WKH
PAGE 175

:RRG 3 (IIHFWV RI ORJJLQJ GURXJKW DQG ILUH RQ VWUXFWXUH DQG FRPSRVLWLRQ RI WURSLFDO IRUHVWV LQ 6DEDK 0DOD\VLD %LRWURSLFD :RRGZDUG & / 6RLO FRPSDFWLRQ DQG WRSVRLO UHPRYDO GXULQJ PHFKDQL]HG FOHDULQJ RI D WURSLFDO IRUHVW (IIHFWV RQ VRLO SURSHUWLHV DQG VHHGOLQJ JURZWK 0DVWHUfV WKHVLV 8QLYHUVL\ RI )ORULGD *DLQHYLOOH )ORULGD :\DWW6PLWK 3UREOHPV DQG SURVSHFWV IRU QDWXUDO PDQDJHPHQW RI WURSLFDO PRLVW IRUHVWV ,Q ) 0HUJHQ DQG 5 9LQFHQW (GVf 1DWXUDO 0DQDJHPHQW RI 7URSLFDO 0RLVW )RUHVWV SS
PAGE 176

%,2*5$3+,&$/ 6.(7&+ 0LFKHOOH ZDV ERP LQ 0RQWSHOLHU 9HUPRQW LQ WR -RKQ 3DXO DQG )ORUHQFH +HEHUW 3LQDUG 6KH JUDGXDWHG IURP 0RQWSHOLHU +LJK 6FKRRO LQ DQG VWXGLHG ZLOGOLIH DQG ILVKHULHV ELRORJ\ DW WKH 8QLYHUVLW\ RI 9HUPRQW %6 f $IWHU ZRUNLQJ IRU \HDUV DV D ILVKHULHV ELRORJLVW RQ WKH 6QDNH 5LYHU LQ ,GDKR DQG IRU \HDUV DV D KLJK VFKRRO VFLHQFH WHDFKHU LQ 9HUPRQW 0LFKHOOH PRYHG WR FHQWUDO )ORULGD WR VWXG\ WURSLFDO SODQW HFRORJ\ LQ WKH 'HSDUWPHQW RI %RWDQ\ DW WKH 8QLYHUVLW\ RI )ORULGD )RU KHU PDVWHUfV WKHVLV UHVHDUFK 0LFKHOOH VWXGLHG SDOP SRSXODWLRQ ELRORJ\ LQ DQ H[WUDFWLYH UHVHUYH LQ $FUH %UD]LO $IWHU FRPSOHWLQJ WKLV GLVVHUWDWLRQ 0LFKHOOH PRYHG WR 6DQWD &UX] %ROLYLD ZKHUH VKH LV ZRUNLQJ DV D IRUHVW HFRORJLVW IRU WKH 6XVWDLQDEOH )RUHVW 0DQDJHPHQW 3URMHFW %2/)25

PAGE 177

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

PAGE 178

/' 3tW" 81,9(56,7< 2) )/25,'$ KL LQ LQQ r ‘‘‘‘


LD
1780
1990
. P&t?
UNIVERSITY OF FLORIDA
I hi in inn 1*111
3 1262 08555 0787