as when it has been introduced before it has often been abandoned. In this sense, the degree of commitment associated with the adoption of a fixed exchange rate can be increased by implementing legislation that makes an alteration of the parity costly. Argentina provided this type of arrangement in the form of a currency board system, which is explained in detail in section 4.4.1. below. A second type of arrangement that can contribute to increased credibility is given by a system where the authorities enter into a form of multilateral commitment that makes the alteration of the peg costly, for example as in the EMS or the Bretton Woods systems.

# **4.4.1 The Argentinian Currency Board System**

After a succession of failed stabilization plans (Austral, Australito, Bunge Born, Rapanelli)303 that attempted to bring down chronically high inflation, the Argentinian government faced two destructive hyperinflation processes, with an extremely high demonetization level and currency substitution as the normal way of transaction and important output loses. Previous stabilization experiences were similar in that none of them had succeeded in permanently closing the fiscal gap. They all introduced a transitory correction towards budget deficits, but after a short lived stability inflation reappeared again304 / The serious difficulties in eliminating fiscal deficits were due to its structural roots. An oversized government sector could not be consistently financed by tax revenues without squeezing the private sector. Inflation was thus the symptom of inherent inconsistencies within the model applied. In this sense, to face the hyperinflation process implied to have reached the frontier of the import-substitution model and therefore a new consensus about a new model could be built up305. It must be taken into account that to implement a new development model implies to "change the rules of the game". Therefore in a democratic society this is only possible ifto some extent a "new consensus" has been reached. General macroeconomic conditions forced the Argentinian government to introduce important structural reforms in the midst of a chaotic macroeonomic environment.

Under this general background, in April 1991 the "Convertibility plan" was launched which included severe monetary reform by establishing a currency board system. A currency board is a special kind of policy rule for monetary base creation that guarantees a country not to devalue under any circumstance while operating under this s~;stem (Zaragoza, 1996). The currency board is in this sense a devaluation proof rule 06.

303 I will not review the previous experiences towards price stability. There is extensive literature on this topic. See Mastroberardino (1994), Almansi (1989), Canavese and Di Tella (1988)

Frenkel and Fanelli (1987), Heymann (1986, 1988, 1994). 304 There was also some hysteresis process. Initially the government could reduce inflation to a defined floor, 30 percent yearly, however once inflation reappeared again the new stabilization

Elan could reduce inflation until 60 percent and so on. 05 In the previous relevant stabilization attempt, the Austral plan, it was clear that important structural measures had to be implemented, however, the lack of social agreement within the

society hindered the process. 306 Currency boards have been widely introduced into British colonies in the 19th century and the idea vanished with the independence of the countries. Apart from Argentina others countries working under currency board systems are : Hong Kong introduced a currency board in 1983, Estonia in 1992, Lithuania 1994. For details see Williamson (1995)

The monetary policy follows a very simple procedure,. monetary authority will issue domestic currency only against a defined foreign reserve currency, for example the US dollar307. Therefore the monetary base will equal the amount of reserves that the central bank holds, The economic interpretation is that the monetary base is fully backed by the designated foreign reserve currency308. The Covertibility Law309, was the "key" element of this new stabilization plan, whose objective was, through a "shock therapy", to finish with almost fifty years of inflation rates higher than the international averages, including two explosive hyperinflations310. This law has two main objectives, on the one hand, to convince economic agents that to hold domestic currency is exactly the same as to hold US dollars, on the other hand, to force the Treasury not to finance any fiscal deficit through monetary expansion, This system demonstrates some advantages over full dollarization as it allows the government to collect some form of "seignorage". Thus, if economic agents hold domestic currency instead of US dollars, then the currency board can gain interest on the foreign reserve assets. These monetary measures plus the elimination of fiscal deficit allowed the inflation rates to reduce sharply towards the international level. However, this new stabilization plan consisted not only of monetary and fiscal packages to contain inflation, but was part of an overall structural reform whose objective was to reach a more efficient allocation of resources. The plan was based on three main pillars: monetary reform, fiscal reform, including a restructure of debt with domestic and foreign creditors, and a deregulation process. The monetary reform, as previously explained was based on, the so called Covertibility Law (May 1991) and transformed the central bank into a currency board311 . Therefore, the only feasible source of monetary expansion was the purchase of international reserves. By implication, the central banks are not allowed to finance any fiscal deficit. The fiscal reform was concentrated on three sets of actions: a) a tax reform, b) an expenditure reform and c) the privatization of public enterprises,

a)The tax reform implied an improvement in the tax revenue, through a much broadened and uniform VAT and improvement in the tax administration though the reduction of corruption and tax evasion.

b) The expenditure reform was implemented in March 1990 through civil service reform (Law of economy emergency) which allowed a reduction in public employment.

307 At the time of designing the currency board system the country determines against which currency domestic money will be issued. Estonia for example established a currency board

a§ainst the OM. 30 The rationale on why a so strong rule was needed is based on the credibility arguments pre-

sented in chapter 2. 309The currency board implemented through a law. This law can only be modified by simple

majority rule. 310For details see Canavese and Gerchunoff(1996). 311The Argentinian central bank committed itself by law to maintain a fix parity (I: 1) between the domestic currency and the US dollar. As previously explained, this parity is guaranteed by backing 100 percent of the monetary base through foreign reserves.

c) The privatization of public assets was the main source of resources and allowed the government to reach fiscal equilibrium. The restructurinf of liabilities with domestic creditors was implemented in December 1989 (BONEX31 Plan).

Short term central bank debt within the banking system was converted into ten year Treasury Bonds (BONEX). This measure allowed the elimination of the quasi-fiscal deficit. The restructuring of liabilities with external creditors was reached in June 1990. The Argentinian government restarted partial payment of external debt after having suspended payment since 1988. External debt, which had reached 61 billion US dollars, was allowed to be used in exchange for government assets in the privatization process. In September 1992 a Brady Plan relief was granted to Argentina, and permitted the reduction of external debt by 7 million US dollars and the rescheduling of the external debt into a 30 years repayment scheme. The total amount, including the principal and interest was reduced by 35 percent. The deregulation process was introduced through the so called Deregulation Decree of October 1991, allowing the freeing up of three principle, highly regulated areas: a) domestic industry, b) foreign trade, and c) capital markets. Many regulations referring to trade unions were lifted. For example, since 1991 they were allowed to negotiate wages on a firm by firm basis, instead of industry-wide. Most of the quota restrictions were removed and tax exports were eliminated.

#### **The Effect of the Currency Board on the Argentinian Economy**

The new package of measures undertaken by Argentina allowed the economy to reach, a new growth path GDP grew by 30 percent in real terms between 1991 and 199431 ~ price stability was reached, and the inflation rate was reduced from over 2500 per cent per annum to 3.5 per cent in 1994 and 1.6 in 1995314. The reforms introduced into the economy, especially the privatization process, induced profound changes in labor markets. Employment as a proportion of the population has increased by one per cent, with new entries encouraged by new opportunities which have exceeded the increase in the demand for labor. As a result unemployment has risen since 1991, reaching 12 per

cent in 1994. The second phenomenon observed following the stabilization measures has been the attraction of a huge amount of portfolio investment, although the gap between the domestic and the foreign interest rate decreased over time. The explanation of this trend can be found not only in the success of macroeconomics reforms315 but can also to have been originated in external factors 316. Although the inflow of

312BONEX plan was called the restructure of the domestic debt with the private sector. The holder of government debt titles received a new bond, which was denominated in US dollar (BONEX). Debt holders suffered a capital loss, and in addition the maturity of the bonds was ~ostponed.

13 This output growth was led by the non-tradable sector. 314 Notice that Argentina has not reached one digit yearly inflation rate in the last 50 years. 315 Part of the capital inflows are explained by the extremely low US interest rate, which in-

duced portfolio diversification with a larger participation of investment in developing economies.

316 Calvo, Reinhart, Leiderman (1992) estimates the effect of external and internal factor as determinants of portfolio capital inflows.

capital is welcomed as a sign of the overall improvement in the macroeconomic situation, they have introduced additional problems into the Argentinian economy. Capital inflows increased the domestic aggregate demand, part of which is directed to nontradable goods and as long as supply of the non-tradable goods is inelastic in the short run, the adjustment process is evident in price increases.

Under a currency board system, which committed the central bank to fix the domesti1 currency to the US dollar on a I: I ratio, the result was a distortion in the relative price in favor of non-tradable goods and a consequent currency appreciation followed by current account deficit. In December 1994 the impact of the Mexican devaluation imposed a huge negative shock on the Argentine economy, and the convertibility law was severely tested. The capital account showed a negative result for the first time since March 1991 due to private capital flights, and the deficit in the current account re-J versed into a surplus without a devaluation taking place. Under the currency board system the consequence of the capital outflows was followed, predictably, by a fall in the international reserves (from 16 million to 10200 million US dollars between January and May 1995) with a consequent reduction in the monetary base. Although the adjustment mechanism implicit in the currency board can be seen to have worked relatively well in the sense that there was a tendency to correct relative prices, the process was extremely painful and output fell by 4.4 per cent and unemployment rose to 16.6 per cent. As the fall in the reserves reduced the liquidity of the system, the impact on the financial and banking system was high and is probably irreversible. From December 1994 to March 1995 approximately 7.4 billion US dollars left the banking system ( some 16 per cent of the total of deposits), and M3 fell by some 8. 4 billion US dollars (a 15 % reduction)317 .

Consequently the government, in an attempt to increase liquidity inside of the narrow margin provided by the Convertibility Law reduced the reserve requirements from 43 per cent to 30318 per cent In addition, Argentina's Convertibillity Law was relaxed and during this period only 80 per cent of reserves backed the money supply, and 20 per cent of reserves could be held in the form of dollar denominated Argentinian sovereign bonds (Powell, 1995). In order to avoid a massive crash, fusion and merger were facilitated. From 205 banks at the end of December, only 167 survived at the end of June 1995. Although the authorities could overcome the crisis, the costs were extremely high in terms of output and employment. (The experience showed that the currency board was an exceptional instrument to start a new monetary history. However, the absence of an escape clause highlights both its strengths and weakness because it increased credibility but made adjustment extremely painful

317 M3 is in Argentina a broad measure of money demand including both peso and dollar bank deposits.

318 Central bank estimations showed that the reduction of the reserve requirements injected up to 3 .4 bn US dollars into the financial system relative to a total drop in deposits of some 7.4 bn US dollar.

#### **Recent Developments and Evaluation**

The Argentinian government has sought to respond swiftly to the challenges faced through 1994 so as to ensure that the plan could be suitably adjusted to exogenous variables by adhering firmly to convertibility. The government concentrated their efforts on fiscal matters and new measures were announced in 1995320. Provincial governments were encouraged to balance their finances, even privatizing provincial enterprises and banks. Since the Mexican crisis, foreign accounts have become unpredictable, as represented by the behavior of international capital flows. Due to the importance of winning the confidence of foreign investors the government has sought a closer contact with the IMF321 . Although the economy was slowly overcoming the recession no prospects for major improvements in employment are present due to both the structural nature of some of the unemployment and the sharp reduction in the size of the public sector. There has however been an important improvement in the export performance although it is too weak to absorb the excess of labor supply originated in the output fall of the non-tradable sector.

Whilst the government relies on the effect of a labor market flexibilization, the scope has been very limited because of the strong opposition of the labor unions. In terms of the public debt, since 1994 it has been steadily increasing and at the same time changing its profile. Helped by favorable market conditions, in March 1993 it enabled Argentinian borrowers to return to the international capital market. However, the terms on which this new public debt was contracted shows that maturity became shorter, until early in 1996 when a 15 year DM bond was issued. Moreover, as the dollar market becomes progressively more saturated the government has begun to take advantage of borrowing conditions in other markets. Seizing the opportunity presented by greater liquidity on the international capital market, Argentina issued bonds worth more than 3.4 billion US dollars in the first quarter of 1996. Liquidity in the Argentinian system returned to pre-Mexico crisis levels and the conditions agreed with the IMF322 allowed the public sector to borrow again on the local market and even in local currency. 323324 Although the Convertibility Plan has been a success in terms of reducing inflation and initially even in terms of GDP growth, the system is extremely harsh and procyclically biased, thus inducing the expansion of the non tradable sector and causing relative price distortion in times of positive external shocks. However in response to negative external shocks the economy is pushed into a deep recession which implies high output losses and unemployment. This effect is the result of the high vulnerability that the system introduces in the form of unrestricted high capital mobility. Currency boards

320 New fiscal measures were introduced to reach higher revenue collection and to reduce gov-

ernment spending. 321 For details see Mastroberardino (1996). 322 April 1996 IMF approved stand-by credit for US\$ 1 billion. 323 The issue of the domestic debt was interrupted after the hyperinflation. 324 According ·to official figures, an estimated two billions pesos (2 billions US dollars) of credit will be raised this year in the form ofLETES (short term paper). See Argentinian Economic Report (1996).

are devaluation-proof instrwnents, yet they have no control over financial crises324. The main problem can be attributed to the fact that in the past the Argentinian authorities have frequently applied escape clauses, and therefore the system needs to be reassured that this time they are absent, in order to generate credibility. Alternatively, in the presence of severe shocks, such as has been the case in the Mexican crisis of December 1994, no instrwnents at all are available to moderate the impact, making the economy highly vulnerable in response to external shocks. The new challenge consists in how to introduce some flexibility into the system without destroying credibility. In this sense, an external agreement, as for example through MERCOSUR could provide some improvements in this direction. ·

# **4.4.2 The Brazilian Real Plan**

In December 1993, the Brazilian government launched a new stabilization plan. This comprised three stages, starting with a fiscal reform, followed by the introduction of a new unit of account: the Real (hence the name given to the stabilization plan). The Realplan constitutes the most innovative mechanism to break inertia inflation without the use of wage and price controls; instrwnents that have failed in previous experiences of stabilization. 325The basic principle was a phased introduction of a new currency pegged to the US dollar326

As one of the channels of price inertia in Brazil had been the backward-looking wage indexation, rather than dollarization as in the Argentinian case:327, the authorities recognized that any immediate exchange rate stabilization of the cruzeiro would not achieve stability. The Real plan was an astute approach that attempted to destroy the inertial inflation through a super-indexation of the economy There were several reasons for its introduction. Primarily, by linking prices to URV (unity of real value) agents could observe that even as prices rose daily, the pattern of increases would gradually converge towards a single rate in terms of URV. Once relative prices were perceived to have been adjusted and were moving together, the past memory of inflation, perpetuated by indexation would disappear (Sachs and Zini, 1996)328 . The plan was set in place in three phases. During the first, from January to February 1994, budgetary controls were enhanced through the congressional approval of certain emergency deficit-cutting measures. The second stage, which was the most innovative, began in March 1994. Wages, prices and taxes were re-denominated in a new unit of account the URV (unit of real value). At the same time, the use of indexation in URV wage contracts was prohibited for the following 12 months. In fact, the program in-

324 The Argentinian financial crisis started with the liquidity squeeze of Bank Extrader, a very small bank which was heavily exposed in Mexican bonds securities. When the value of those assets fell in the aftermath of the Mexican devaluation, the bank no longer could cover its short term liabilities. See Mastroberardino (1996).

325 See Calcagnoto and Fritz ( 1996) 326 For an official explanation of the Real Plan see Banco do Brasil (1993). 327 This is also the reason why the financial sector was more developed in Brazil than in Ar- ~entina.

28 For additional details see Macedo (1996) Baer and Pavia (1996), Boletim Mensa! (1996),

duced wage indexation to the contemporaneous exchange rate, rather than to backward-looking inflation. From March 1994 to 1 July, 1994 the URV was in fact the US dollar urut of account, as the UR V was fixed close on a one-to -one basis with the dollar. Although all wages and most prices were denominated in URVs by March 1994, prices in URVs could change both before and after the plan, but actual transactions continued to be made in "Cruzeiros Reais", based on the market exchange rate. Inflation in URVs (in dollars) could then be calculated and was around two per cent per month during the period March to May. The third stage (from 1 July 1994) introduced the new currency, the Real, which was pegged to the dollar from the start. All URV prices were to be converted (one-to-one) into Real prices, although some prices increases took place in the days prior to the plan's introduction. Inflation dropped immediately from the cruzeiro of approximately 50 per cent per month (June) to the URV rate of around two per cent per month after September and persisted roughly at that rate in the following year. The Real Plan produced, initially, favorable results within labor markets. Open unemployment fell to a 3 .4 per cent average in Brazil's six largest cities, white average real wages of the employed labor force jumped by 4.9 per cent. In addition, as inflation declined production rises became increasingly generalized with an increasing share of output being directed towards low-income groups in response to their growing purchasing power. Within the balance of payments, the increase in domestic demand, coupled with the appreciation of the exchange rate and tariff reductions led to a 33.2 billion US dollar jump in imports. The drop in trade surplus was offset by a decline in the service imbalance, which was attributable to lower net interest payments. The Mexican crisis also imposed serious costs by slowing down economic activity and there were pressures in the exchange rate market. To deal with the decline in external competitiveness, the government introduced fiscal measures in January to abolish the 15 per cent reserve requirement on advances against exporters. Tariffs were also raised on automobiles and other consumer durable goods, which had accounted for a significant share of the rise in imports during 1994.

However, the economy remained overheated and the trade balance recorded a deficit of 1.1 billion US dollars. In response to this deteriorating situation, the authorities announced an important package of measures on 6 March, 1995. The Central Bank announced a new exchange rate policy, including fluctuation bands, and the real was effectively devalued by over 2 per cent over a two week period. Additional new fiscal measures were adopted with the objective of reducing the foreseen fiscal deficit in 1995. Five constitutional reforms relating to oil, natural gas, telecommunications and the abolition of the oonstituti-011al distinction between Brazilian. arui foreign inv.estors were approved329. New restrictions were placed on hiring at all levels of government, while public federal banks were ordered to reduce operating costs by 15 per cent. A

329 The Brazilian Constitution of 1988 constitutes the most serious obstacle to break with the import-substitution model and also interferes with the flexibilization of labor markets. It was the product of length and difficult negotiations within the Brazilian society and first of all in the Parliament. The Constitution guarantees the labor unionization by category instead of a firm basis, the right to strike, the right that civil servant cannot be fired. It discriminates between Brazilian and foreign investors as a basis for state support and establishes that certain areas can only be exploited by Brazilian capital. The Brazilian constitution is similar as the one introduced by Peron in Argentina in 1952.

new plan was announced to privatize financial institutions and one of the nations largest mining companies.

# **Recent Developments**

Although there was a change of government during the aftermath of the implementation of the Real Plan, the new administration that came into office330 coincided with the achievement of consolidating the price stability that had been behind the Plan real. Thereafter, continued price stability could set the stage for sustained growth through sweeping fiscal reforms, economic liberalization and more rapid privatization. In order to achieve these objectives important key amendments to the **1988** Constitution are needed331 . With fiscal reforms progressing slowly the focus of macroeconomic management remained on a tight monetary policy with high interest rates and careful credit management within the economy. Although the policy of gradual devaluation of the currency tends to avoid further overvaluation and maintain balanced the external accounts, the main risks to the economy are a further deterioration in the fiscal balanco a failure to pass reforms as well as reappearing inflation due to wage pressures, During 1996 only modest progress was observed with respect to the fiscal policy332• Although inflation has been brought under control and indexation seems to be eliminated, there are some signs that reindexation may be re-entering the system333 .. The new exchange rate policy of a quasi-crawling peg system can in itself be dangerous."On the one hand, it assures the sustainment of the exchange rate, avoiding overvaluation, while on the other hand it can become the element that fuels inflation and restores indexation334 In Brazil it has taken a much longer time for society to recognize the necessity of starting with structural reform than has been the case in Argentina, and this is primarily due to the fact that it was the import-substitution model in Brazil which allowed the country to reach growth, and even during the debt crisis the Brazilian authorities could to some extent introduce some changes into the model. Whilst the Brazilian exchange rate policy grants some flexibility, as the central parity can be devalued, the degree of credibility is much lower than that of the currency board introduced by Argentina. Furthermore, fiscal austerity measures have been announced but the system does not provide for their enforcement.

330 The Real Plan was launched by Collor, whose political situation was extremely weak. Car-

doso was elected president in 1994. 331 See Conjunctura Economica (I 996) Boletim Mensal (1996), Mastroberardino (1996). 332 See Boletim Economico (1996). 333 There are some indications that indexation is taking place in part of the economy (informal rentals contracts). Additionally, the decision ofa labor court of granting in 1996 an increase of

25 % to Banco do Brazil staff set a bad precedent for other state companies. 334 It takes a long time to eliminate the psychological effect of inflation. Backward looking adjustment is still present in mind of economic agents.

#### **4.5 Summary and Conclusions**

In this chapter, first I reviewed the previous agreements towards Latin American integration introduced during the past three decades. The integrationalist process in Latin America which dates from the 1960s, has seen several agreements enacted, (LAFT A, LAIA, Andean Group, and CARICOM) without success. None of them could reach the goal of significantly increasing trade and competition across the region. This has caused widespread skepticism towards the relevance of such agreements. Three decades have lapsed and new attempts now flourish, which have also attracted a great deal of interest outside of Latin America, MERCOSUR among them. This new integrationalist approach contrasts sharply with previous attempts not only as regards the institutional arrangements, but also in relation to political and economic factors. The underlying economic policies of both integrationalist processes are based on opposite development models. While the first attempt was part of an inward-oriented development strategy based on a structuralist development model, the import-substitution model, the new one is an example of an outward-oriented economic policy based on a neo-liberal model, "the so called Washington consensus" model. The debt crisis that started in 1982 constituted the inflection point between both models, by forcing Latin American countries to abandon the old structuralist model and to look for some alternative solutions to overcome the crisis. The results have been surprisingly optimistic; countries introduced important stabilization plans in order to reach price stability, but within the context of overall structural reform. Governments opened up their economies to foreign trade, privatized public sectors and introduced important measures in order to make labor markets more flexible and to maintain budget discipline. Growth rates were reversed from the years of stagnation and large capital inflows were attracted, an important part of them being foreign direct investment. Moreover, the most important challenge faced by these countries has been how to sustain the macroeconomic stabilization and the structural reforms in the long term. In this sense, the MERCOSUR agreement offers a new "window of opportunity". In the real side it allows for the "conclusive" dismantling of the high level of tariff and non-tariff barriers introduced during the last decades. On the monetary side, it permits the countries to move towards further reforms in fiscal, monetary and exchange rate policies. Latin American countries need to rebuild credibility within their financial markets and in this sense an external agreement can act as a coordinating and enforcement policy instrument. Although, one of the explicit objectives of the MERCOSUR agreement is to "coordinate macroeconomic policies" among member countries, no concrete measure has been introduced concerning this issue. Furthennore. it is exactly in this area where most of the effort must be invested. While all the countries agree with respect to general principles, there are important differences in the management of budget deficits, monetary policy, size of the current accounts and real exchange rates. With the exception of Paraguay, one of the constant pressures on the MERCOSUR countries has been high inflation.

All the countries, in particular Argentina and Brazil, have attempted fighting inflation using the nominal exchange rate as an anchor within stabilization plans. Although there is a conformity across MERCOSUR countries with respect to the underlying rational behind the adoption of the exchange rate which relies on the credibility argument, no coordination among members has been introduced. In this sense, a movement towards a fixed exchange rate linking member states would help to coordinate policy between them and could then act as an additional enforcement. I have also reviewed the last antinflationary experiences of Brazil and Argentina. Whilst the first adopted a fixed exchange rate with a band of fluctuation, Argentina introduced a currency board. The fixed exchange rate of Brazil does not introduce enough enforcement on the fiscal side because the central parity can always be readjusted. In fact, in response to the Mexican crisis, the Brazilian government introduced a small exchange rate correction. While the Brazilian exchange rate system allows sufficient flexibility, it does not introduce any constraint towards fiscal policies. On the other hand, the Argentinian system is extremely inflexible towards unexpected external shocks although it does provide a high level of credibility. Therefore both systems contain strengths and weaknesses. As a result, the design of a new system for the MERCOSUR region offers the opportunity of constructing a better system by introducing some flexibility while maintaining a high degree of credibility.

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

# **Figure 4.3.2**

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

# **Figure 4.3.4**

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

#### **Figure 4.3.6**

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

Source: Progreso Econ6mico y Social de America Latina. BID (several issues)

Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

#### Source: Anuario Estadistico de America Latina y El Caribe, 1995. CEPAL

#### **Appendix Protocols**

c) 15-17 July 1986 18-Cultural 19-Public Administration 20-Currency

d) 7 April **1988**  21-Automobile Industry 22-Food Industry

e) 29 November 1988 23-Common Frontier

f) 23 August 1989 24- Economic and Social Planning

#### **Chapter 5**

#### **Conclusions and Economic Policy Recommendations**

MERCOSUR, the common market of the South, was created through the signing of the Treaty of Asuncion in 1991 and went into effect in January 1995 for Argentina and Brazil and in the following year for Uruguay and Paraguay. It produces 40 percent of Latin American GDP and comprises two of the most industrialized countries of the region, Argentina and Brazil. Despite the initial turmoil regarding macroeconomics imbalances, trade and intra-industrial relationships have been growing strongly. This new integration scheme has also attracted interest among non-Latin American countries, with new free trade association agreements having been signed with other economic areas such as the European Union, NAFTA and ASEAN. After two years of the agreement's full functioning, many Latin American countries have shown growing interest in participating in it and have presented application for full membership; and Chile (although initially it had rejected an invitation to join it) and Bolivia both have joined the club as associated partners. The objective of the MERCOSUR agreement consists of the free mobility of goods and productive factors and the establishment of a common external tariff. Experience has demonstrated that the implementation of agreements on commercial policy is not in itself sufficient to reap the full benefits of integration if it is not followed by coordination on exchange rate policies. Competitive devaluations implemented unilaterally by the member countries are very dangerous and can provoke the failure of the agreement. In this sense, the European Union provides a good example on this matter. Although the difficulties implied by the coordination of exchange rate policies have been recognized, it has proceeded in this direction, through the introduction of the EMS, and it is ready to move further towards monetary union.

Violent shifts in currency parities between Argentina and Brazil during recent years have induced sharp changes in trade balances among member countries and have delayed the process of eliminating all tariff and non-tariff barriers among them. It thus becomes imperative to analyze what kind of exchange rate agreement would be appropriate for the MERCOSUR case. The aim of this study is to seek some answers to the question: what would be the optimal exchange rate policy for the MERCOSUR countries? My study approached that question from three different though related angles: a theoretical analysis, a review of the European experience with exchange rate agreements, and finally a review of the Latin American experience.

Chapter 2 introduced the theoretical analysis. First, within a two-country Mundell-Fleming-Dornbusch model, I compared the effects of monetary and fiscal shocks in the short and in the long run and the dynamic adjustments of two opposite exchange rate systems, fixed and flexible. I concluded that in both cases spill- over effects from one country to another are observed. Additionally, I found that fixed exchange rates reduced nominal and real exchange rate variability. However, the adoption of a fixed exchange rate system implies completely relinquishing an autonomous domestic monetary policy, with the monetary base thus becoming fully endogenous. Second, I introduced a time inconsistency approach, which suggests the convenience of adopting strict rules regarding monetary policy: such strict rules permit the time inconsistency problem to be overcome. Furthermore, a fixed exchange rate regime represents a "monetary rule" and thus could be a desirable arrangement. However, an extremely rigid rule may induce serious problems in the presence of severe shocks, and in extreme situations it might even force the authorities to abandon the adopted rule. Hence some degree of flexibility as an escape clause should be available. Yet escape clauses could present some problems in that, if policymakers have used them extensively in the past, credibility could be reduced.

In Chapter 3, I reviewed the European experience with monetary agreements. I analyzed in what context the discussion about exchange rates agreements arose. I observed that, after the breakdown of the Bretton Woods system, the European integration process was accompanied by strong fears about exchange rate variability and thus the European countries devoted significant effort to designing monetary agreements that could moderate such variability. The debate concentrated on two issues across the years: initially, exchange rate variability constituted the main issue of concern; then, during the 1980s, the discussion shifted much more towards price stability. The European Union has implemented several exchange rate agreements, first the Snake, which allowed relatively high variability, and later the EMS. The EMS constitutes a fixed exchange rate regime with escape clauses under which a band of fluctuation was allowed, as well as realignments. My analysis therefore focused on the ability of the EMS to achieve price and exchange rate stability. The simple observation of descriptive statistics reveals that the EMS has been able to achieve some convergence among European prices towards lower inflation, although the costs in terms of unemployment have been significantly high. Afterwards, I performed an econometric analysis in order to study the dynamic behavior of exchange rate variability in response to nominal and real shocks. I observed that the EMS has reduced the responses of both nominal and real exchange rates concerning monetary shocks. Moreover, no significant influence with relation to fiscal shocks has been observed.

In chapter 4, I focused on the Latin American experience towards integration. After several decades of import-substitution policies and budgetary inconsistencies that led to high inflation, all MERCOSUR countries agreed upon the need to introduce price stability and austerity measures. At least during the last years, efforts have been made in this direction and countries have observed important improvements in GDP growth rates. The MERCOSUR agreement has thus played an important role in this transformation process. It constitutes an instrument not only to achieve integration among the countries themselves, but also into world markets. However, violent movements in the exchange rates of the MERCOSUR countries introduce high uncertainty and affect exports and investment rates. Unilateral exchange rates policies lead to beggar my neighbor effects. I reviewed the use of a fixed exchange rate as an anchor in stabilization plans, as it has been in constant use in MERCOSUR countries with the objective of coordinating expectations and generating sufficient credibility in the system. However, a fixed exchange rate regime can neither substitute for the introduction of austerity measures necessary to correct fiscal imbalances nor can it obviate the implementation of global structural measures such as privatization, opening up the market to world trade, and flexibilization for goods and labor markets. The experience of Argentina and Brazil showed that both countries have used the exchange rate to anchor their stabilization plans, although in different degrees. While Argentina chose an extreme case of the fixed exchange rate, a "currency board", Brazil followed a relatively more flexible version: a fixed exchange rate with bands. The choice was based on the respective historical experiences of the two countries. While Argentina has undergone an hyperinflationary process, Brazil had suffered chronically high inflation and this constitutes an important difference as it defines different preferences of policymakers towards credibility and flexibility. Thus, every hyperinflationary process introduces a break in histo~ and destroys the former preferences of economic agents and policymakers as well. 3 6 Nevertheless, all exchange rate arrangements that MERCOSUR countries established have been related to the US dollar and no relationship between their own currencies has been explicitly established. This constitutes a problem because, so long as trade flows among MERCOSUR countries increase, the variability of exchange rate becomes a matter of concern. Violent shifts of exchange rate parities introduce "noises" within the markets, distorting competitive advantages. Additionally, at least the two main members of MERCOSUR, Argentina and Brazil, have experienced destructive inflationary processes and there is some kind of consensus as to the necessity to achieve price stability in order to achieve economic growth. In this sense, once all MERCOSUR countries agree upon the introduction of stabilization programs anchored on fixed exchange rates, the natural question is whether it would be convenient to coordinate stabilization plans among them. An important difference from the European case is that none of the MERCOSUR currency can work as an anchor and thus an external hard currency must be chosen for this purpose.

MERCOSUR states can discover in the agreement a "window of opportunity". Its member countries are, on the one hand, unilaterally seeking enforcement commitments that allow them to achieve price stability, and to regenerate a friendly environment towards investment. On the other hand, especially Argentina fears the trade balance effect of unilateral devaluation introduced by the Brazilian government. A global agreement could help to achieve intra-MERCOSUR exchange rate stability and at the same time could work as an external commitment with enforcement power that would contribute to overcome time inconsistency problems.

Summarizing, the three approaches utilized in the analysis lead to the following conclusions: first, some kind of fixed exchange rate agreement is highly desirable. Second, there are several kinds of fixed exchange rate agreements and different degrees of flexibility and there exists a trade-off between credibility and flexibility: the greater is the fixity of an exchange rate agreement, the larger will be the effect on price stability, and the less will be the flexibility that is permitted in response to shocks. Taking into account all these elements of analysis, the economic policy recommendation are as follows:

a)A **Currency board** for the MERCOSUR region. In chapter 3, I demonstrated that the Argentinian experience with the currency board has been quite successful not only in the monetary but also in the fiscal sphere, because it also compels fiscal discipline to be pursued. Thus, in a currency board system the central bank is not allowed to finance any budget deficit. Because countries have in the past abused monetary policy, it becomes important to introduce institutional constraints that act as an obstacle to-

336A similar effect is observed in Europe in the case ofGennany. Gennany constitutes the only member country that has suffered a hyperinflationary process and therefore it reveals a much stronger aversion towards inflation than other European countries such as France or Italy.

wards discretionary policies. Governments themselves design strongly institutional arrangements because, in adverse economic conditions, they have more power than a simple commitment by individual governments to keep their promises. Governments can abandon institutional arrangements, but this becomes more costly. In this sense, an international monetary agreement reinforces the commitment since the costs of leaving the club once it has been formed become too high.

With respect to the design, since none of the MERCOSUR currencies can behave as an anchor currency, all currencies must be fixed to an external hard currency such as, for example, the US dollar. The central banks of the individual countries will remain in existence and thus act as individual currency boards, and no central MERCOSUR monetary authority would be needed. Furthermore, this alternative is, in my view, the first best towards credibility, although it implies high costs in the presence of negative shocks because it is an extremely rigid rule and will therefore probably generate some resistance from other MERCOSUR countries. Especially from Brazil, whose demand for credibility is probably not as high as that of Argentina.

b )A **fixed exchange rate with a band of fluctuation,** which could be initially relatively large (+-10 per cent) and would be reduced over time. Member states would fix their national currencies to the US dollar, and thus cross-rates between them will be indirectly fixed. This system presents the advantage of being compatible with the currency board working in Argentina as well as the real plan working in Brazil. The currencies could fluctuate inside the band but interventions must be compulsory once currencies have reached the upper and lower limits of the band. Although this system has some similarity to the EMS, each central bank must intervene unilaterally. Since all the countries are fixing to the US dollar, the system presents some peculiarities, i.e. that none of them has an unlimited amount of the hard currency (the US dollar).

Realignments will be possible but they should not be made unilaterally, but in a coordinated way with the agreement of all member countries. This constitutes the main difference with the present unilateral fixing of the nominal exchange rate by the individual countries, and it permits beggar my neighbor policies to be eliminated.

Moreover, because a fixed exchange rate only can allow monetary policies to be coordinated, some additional measures should be introduced with respect to fiscal policies. The MERCOSUR countries should agree not to exceed some limits upon fiscal deficits and government debt ratios. In this sense some punishment procedure should be introduced in case some of the countries do not fulfill this condition. It could work like the European "stability pact" (The Economist, 1996). Member countries would agree to maintain low budget deficits and debt ratios, and those countries which did not follow the rule would be penalized and be forced to pay some fines.

c) **A fixed exchange rate to a basket currency with a band of fluctuation.** This represents a variant of the previous case, where instead of the US dollar being the anchor currency, a basket of hard currencies would be introduced, e.g. the US dollar, the Yen and the Euro. Taking into account that in 1999 the EMU will start (with a larger or a smaller group of member countries) and that an important part of the extra-MERCOSUR trade is orientated towards the European countries, it becomes an attractive alternative to define the basket according to the average of trade proportion of the individual countries.

This alternative has the advantage that it lessens dependency upon the monetary policy of a third country, since it is not very probable that the monetary policy conducted by the European Central Bank, the Federal Reserve and the Bank of Japan will move in exactly the same direction at the same time. Thus, this policy will soften the impact of external monetary policies. Concerning the rules for intervention, realignments and a common central bank, they remain as previously presented in the alternative b.

#### **References**

Deutsche Bundesbank. *Monatsberichte der Deutschen Bundesbank.* (Several issues)

Deutsche-Siidamerikanische Bank, *Kurzbericht uber lateinamerika.* (Several issues).

Dornbusch; R. Fischer, S. *(1994)Macroeconomics,* New York, McGraw Hill.

Eastwood, R. Venables, A. (1982) The Macroeconomic Implication of a Resource Discovery in an Open Economy. *The Economic Journal,* 285-299.

Fundaci6n Mediterranea, *Newsletter,* IEERAL. Cordoba. (Several issues)

Isard, P. (1995) *Exchange Rate Economics.* Cambridge University Press.

 Vahlen Verlag. Miinchen.

Krugman, P. (1995) *Currencies and Crisis.* MIT Press Cambridge Massachusetts.

Weber, A. (1991) EMS Credibility. *Economic Policy,* 57-102.

#### **SCHRIFTEN ZUR WIRTSCHAFTSTHEORIE UNO WIRTSCHAFTSPOLITIK**

Herausgegeben von Rolf Hasse, Wolf Schafer, Thomas Straubhaar, Klaus W. Zimmermann


**Dynamics of Cyanobacteria and Related Environmental Drivers in Freshwater Bodies A**ff**ected by Mitten Crab Culturing: A Study of Lake Guchenghu, China**

#### **Hongmin Li 1,2, Huihui Chen 1, Xiaohong Gu 1,\*, Zhigang Mao 1, Qingfei Zeng 1 and Huiping Ding 1,2**

Received: 11 October 2019; Accepted: 22 November 2019; Published: 23 November 2019

**Abstract:** Mitten crab aquaculture is prevalent in China, however, knowledge about the threat of cyanobacteria in mitten crab aquaculture-impacted water bodies is limited. Here, seasonal variations of cyanobacteria and their relationships with environmental factors were investigated for Lake Guchenghu area. Results suggested the changes of cyanobacteria community in crab ponds distinguished from the adjacent lake. In the lake, cyanobacterial biomass (3.86 mg/L, 34.6% of the total phytoplankton) was the highest in autumn with the dominance of *Oscillatoria*, *Aphanocapsa* and *Pesudanabaena*. By contrast, in crab ponds, cyanobacteria (46.80 mg/L, 97.2% of the total phytoplankton biomass) were the most abundant in summer when *Pesudanabaena* and *Raphidiopsis* were the dominant species. Of particular note was that obviously higher abundance of filamentous and potentially harmful species (e.g., *Raphidiopsis raciborskii* and *Dolichospermum circinale*) were observed in ponds compared to the lake. Specifically, water depth (WD), permanganate index (CODMn), total phosphorus (TP), N:P ratio, and NO2 −-N were the key environmental variables affected cyanobacteria composition. For crab ponds, N:P ratio, water temperature (WT) and TP were the potential environmental drivers of cyanobacteria development. This study highlighted the fact that mitten crab culture had non-negligible influences on the cyanobacteria community and additional attention should be paid to the cyanobacteria dynamics in mitten crab culture-impacted water bodies, especially for those potentially harmful species.

**Keywords:** mitten crab culture; cyanobacteria community; seasonal variation; environmental factors; potentially harmful species; Lake Guchenghu

#### **1. Introduction**

Cyanobacteria are ubiquitous in diverse aquatic environments throughout the world, including lakes, reservoirs, ponds, etc. With accelerating industrial and agricultural development, the rising nutrient pollution intensified the proliferation of cyanobacteria in freshwater bodies worldwide [1–3]. The impact of aquaculture on water quality and the expansion of harmful cyanobacteria is a major environmental issue. Given the increase in intensive aquaculture, many environmental challenges emerged, among which environmental degradation associated with cyanobacterial blooms appeared to be the most alarming [4]. The noxious cyanobacterial blooms would cause various problems associated

with unpleasant tastes, odors and toxic metabolite production which could threaten aquatic products and human health [2,4–7].

Over the past few years, mitten crab culture has become one of the most economically important freshwater aquacultures in China, with current yield of this species increasing dramatically (from 8.4 × 103 tons in 1991 to 8.2 × 105 tons in 2015) [8]. Whilst previous studies suggested that crab farming was less detrimental to water environments than fish or shrimp farming, the concentrations of total nitrogen (TN) and total phosphorus (TP) in crab culturing ponds were higher than those in neighboring lake areas [9]. In addition, most crab ponds are shallow, small, and stagnant, which are likely to deteriorate the water environment. Thus, the influence of crab culture on the cyanobacteria dynamics should not be neglected because crab culture, to some extent, changes the physical and chemical properties of water bodies, and biotic community structure [10]. Although many studies investigated cyanobacteria dynamics in fish or shrimp ponds, little is known about the ecology of cyanobacteria in crab ponds. Furthermore, crab culture is also regarded as one of the significant sources of surface water pollution because most of the effluents from crab ponds are eventually discharged into their surrounding lakes [9–11]. Hence, cyanobacteria, as a key group in response to nutrient pollution processes, should be paid attention in crab aquaculture-impacted water bodies.

To mitigate the risk of cyanobacterial blooms, knowledge about the environmental drivers of cyanobacteria dynamics is essential for establishing appropriate management strategies. Until recently, known driving factors on cyanobacteria variations include physical and chemical parameters like nutrient conditions, water temperature, pH, dissolved oxygen, water depth and so on [12–14]. Most investigators have advocated for the consideration of nitrogen and phosphorus as the major causes of eutrophication and cyanobacterial blooms [1,15–17]. Nonetheless, the general consensus is that cyanobacterial blooms are complex events, typically caused by multiple factors occurring simultaneously instead of a single environmental factor [18–21]. Due to the complexity of growth regulators, investigation concerning the effects of environmental factors on the abundance of cyanobacteria requires further efforts.

Lake Guchenghu, a significant water body in the middle-lower area of the Yangtze River in China, is well-known for Chinese mitten crab culture and also provides drinking water for nearby residents. Mitten crab ponds are located in the reclamation area around the lake; with the production of mitten crab increasing rapidly since the 1990s. It has become one of the commercially successful industries, with the largest aquaculture area and the highest output in China [10]. However, environmental pollution problems in Lake Guchenghu have become serious over time [11]. In recent years, water quality of Lake Guchenghu has declined, and it exhibited symptoms of eutrophication where crab culture is one of the key pollution sources [11,22]. An earlier research reported that cyanobacteria dominated in this lake in April and July, accounting for 56%–80% of the total phytoplankton [22]. The dominance of cyanobacteria might be further enhanced if the water quality deteriorates in the future. Notwithstanding the Lake Guchenghu and adjacent mitten crab ponds are located in the same watershed and the ponds withdraw water from the lake, the abundance and diversity of cyanobacteria in crab ponds might be different from those in lake. Nevertheless, there is still a lack of fundamental research about the characteristics of cyanobacteria composition and seasonal variation, and its driving factors in this crab aquaculture-impacted subtropical lake area.

Understanding the dynamics of cyanobacteria and how they relate to the environmental factors in mitten crab culture-impacted water bodies are crucial for unraveling the response of cyanobacteria to mitten crab culture activity, and for helping future management to select precise strategies to ensure aquatic product safety and human health. To this end, the objectives of the current study are to: (1) Determine the composition and abundance of cyanobacteria and related environmental variables in Lake Guchenghu and surrounding mitten crab ponds in different seasons; (2) reveal the influence of mitten crab culture on seasonal variations of the cyanobacteria community; (3) clarify the major environmental factors that affect the development of cyanobacteria; and (4) assess the threat of cyanobacteria in mitten crab culture-impacted water bodies.

#### **2. Materials and Methods**

#### *2.1. Study Area*

The Lake Guchenghu (Latitude: 31◦14 –31◦18 N, Longitude: 118◦53 –118◦57 E, Area: 3300 hm2; Figure 1) located in Nanjing City (Jiangsu Province, China) is a crucial water source for the commercial aquaculture of mitten crab, and provides drinking water to part of the local residents. The lake is in the subtropical monsoonal climate zone and the annual average precipitation is 1105.1 mm, of which the summer rainfall is 428.6 mm (i.e., about 40% of the annual precipitation). Mitten crab ponds are located in the reclamation area around the Lake Guchenghu, pumping water from the lake in spring and discharging wastewater back into the lake in autumn. Due to the reclamation, the lake area is only 39 km2, while the storage volume is 65 million m3.

**Figure 1.** Location of sampling points in Lake Guchenghu and adjacent mitten crab ponds.

#### *2.2. Sample Collection*

Water samples were collected from nine sites (L1–L9) in Lake Guchenghu and four sites (P10-P13) in mitten crab ponds (Figure 1). These water samples were gathered in May (spring), August (summer) and November (autumn), 2017 and February (winter), 2018. At each site, about 2 L of water sample was collected from the surface layer (0–0.5 m) with a 2.5 L plexiglass water sampler. The phytoplankton sample (1 L) was extracted from the surface water sample, stored in clean 1 L plastic containers and 15 mL of Lugols iodone solution was instantly added. All samples were stored in a portable refrigerator (about 4 ◦C) and then immediately transported to the laboratory. To analyze the composition of phytoplankton, it was concentrated to 30 mL to obtain a quantitative sample of phytoplankton after standing for 48 h.

#### *2.3. Analysis Methods*

The basic physicochemical parameters, i.e., water temperature (WT), pH, turbidity and dissolved oxygen (DO), were measured using a YSI multiparameter water-quality monitor (HORIBA U-5000, HORIBA, Ltd., Kyoto, Japan). Water depth (WD) was determined using a precision bathometer (SpeedTech SM-5, SpeedTech, Ltd., USA). The standard analysis methods of total nitrogen (TN), total phosphorus (TP), ammonia nitrogen (NH4 +-N), nitrate nitrogen (NO3 −-N), nitrite nitrogen (NO2 −-N), permanganate index (CODMn) and suspended solids (SS) concentrations adopted in current study are described in Jin and Tu (1990). Phytoplankton samples were identified and counted using a

microscope (Eclipse Ni-U, Nikon Co., Tokyo, Japan) 10 × 40 magnification with a 0.1 mL counting chamber following earlier studies [23,24]. Each sample was counted three times. The cell density was recorded as cells/L. The measure of algal abundance was based on cell counts. The mean cell volumes of the algae were calculated based on appropriate geometric configurations [25] and converted into biomass with the algal cell density (1 mm3 ≈ 1 mg fresh weight).

#### *2.4. Statistical Analysis*

One-way analysis of variance (ANOVA) was performed to analyze the differences in environmental factors between lakes and ponds in different months using SPSS 16.0 software (SPSS Inc., Chicago, IL, USA). Based on the cyanobacteria relative abundance dataset, the taxa richness, dominance, evenness and Shannon, Simpson and Margalef indices were determined using PAST 3.0 (Øyvind Hammer, Natural History Museum, University of Oslo [ohammer(at)nhm.uio.no], http://folk.uio.no/ ohammer/past/). The Kruskal–Wallis non-parametric test was conducted to assess discrepancies in environmental variables among the thirteen sampling sites. To understand the temporal variation of cyanobacteria community structure in the lake and ponds, non-metric multidimensional scaling (NMDS) was performed using PAST 3.0 according to Gower dissimilarity. Analysis of similarities (ANOSIM) was conducted by PRIMER 5.0 software (PRIMER-E, Ltd., Plymouth, United Kingdom) in order to evaluate whether there is a significant difference in cyanobacteria community structure among different months and sampling sites. We adopted redundancy analysis (RDA) to identify the physicochemical parameters affecting the dynamics of cyanobacteria. Before the forward-selection process, all cyanobacteria and water quality data were transformed into log10(*x* + 1) format (except pH). All the statistical analyses (RDA) were conducted using CANOCO 4.5. According to the value of the first gradient length of standard deviations, canonical correspondence analysis (CCA) analyses were selected. The RDA results were visualized in the form of ordination diagrams. Species scores are shown as triangles. Each water quality variable is represented by an arrow, which determines an axis. The projection of a taxon on this axis indicates the level of the variable where the taxon is most abundant. Variables with lines that are close to each other and oriented in the same direction are highly positively correlated, while those oriented in opposite directions are highly negatively correlated. Two lines at a 90◦ angle demonstrate that the corresponding variables are uncorrelated. Pearson correlations between cyanobacteria abundance and environmental factors were performed using SPSS 18.0 software.

#### **3. Results**

#### *3.1. Environmental Parameters*

The temporal variations of physicochemical parameters in Lake Guchenghu and the crab ponds are presented in Table 1. During the study period, the pH values in Lake and ponds were all above 7.0, ranging from 7.06 to 9.15. WT varied widely throughout the year with ranges of 3.10–29.47 ◦C and 3.12–31.01 ◦C in the lake and ponds, respectively. The lowest WT was recorded in February, while the highest WT was observed in August. In May and August, the WT of ponds the was significantly higher than that of the lake (*P* < 0.05). DO varied considerably over time in the ponds, with an average of 11.9 mg/L (lake) and 14.12 mg/L (ponds) with no obvious temporal pattern. The WD of the lake fluctuated (2.82–4.19 m) across different seasons, while the ponds exhibited small changes in WD all year round. The turbidity of the lake peaked in August, while the higher turbidity in the ponds occurred in November and February.

Regarding the nutrient concentrations, NO2 −-N and NO3 −-N in the lake were higher than those in adjacent ponds for most of the months. By contrast, the concentrations of NH4 +-N, TN and TP in the ponds were evidently higher compared with those in the lake; their concentrations in November and February were higher than in May and August. This could be because the harvest season for crab is in autumn with the discharge of farmed tail water increasing, resulting in higher nitrogen and phosphorus concentrations. The N:P ratio in the ponds (from 4.39 to 23.02) was lower than in the lake (from 5.75 to 62.54) because TP concentration in the pond was significantly higher than that of the lake throughout the four seasons (*P* < 0.05). Moreover, the CODMn levels in the ponds were higher than in the lake during studied period, with ranges of concentrations 4.64–9.19 mg/L (ponds) and 2.86–4.37 mg/L (lake), respectively. These results indicate that most of the environmental factors of the ponds are significantly different from the lake in May and August.

**Table 1.** Mean ± standard deviation (SD) value of environmental parameters in thirteen sampling stations of Lake Guchenghu and adjacent mitten crab ponds measured from May 2017 to February 2018.

WT—water temperature; DO—dissolved oxygen; WD—water depth; TN—total nitrogen; Turb—turbidity; TP—total phosphorous; N:P—ratio of total nitrogen to total phosphorus; CODMn—permanganate index (chemical oxygen demand). Asterisks beside the data of ponds indicate significant differences with respect to the value of lake area (\* *P* < 0.05).

#### *3.2. Seasonal Variations of Cyanobacteria*

In the study period, a total of 52 cyanobacteria species belonging to 21 genera were detected in Lake Guchenghu; while 16 genera and 32 cyanobacteria species were identified in ponds (Table S1). The genera *Aphanothece*, *Planktothrix*, *Romeria*, *Phormidium* and *Spirulina* were only found in the lake, whereas the genus *Anabaenopsis* were only recorded in ponds. Cyanobacteria richness and species diversity in August and November were greater than those in May and February in both lake and ponds (Table S2).

The relative abundance of cyanobacteria exhibited distinct seasonal changes. Cyanobacteria abundance demonstrated wide variations throughout the year with ranges from 1.12 × 105 cells/L to 2.62 × 107 cells/L in the lake, and the biomass of cyanobacteria varied from 0.05 mg/L to 3.86 mg/L (Figure 2(A1,A2)). In May, cyanobacteria abundance reached the maximum value of 2.62 × 107 cells/L (accounting for more than 94.5% of the total phytoplankton), where *Merismopedia* was the dominant cyanobacteria taxa with 97.7% of relative abundance. Nonetheless, the maximum biomass of cyanobacteria appeared in November (3.86 mg/L, 34.6% of the total phytoplankton) instead of May (Figure 2(A2)). The difference may be due to the fact that the size of the cells of different species can vary widely. *Merismopedia* spp. prevalent in May are tiny sized species which despite being present in very large cell numbers actually contributed little to the total cyanobacterial biomass present in the lake at that time. From Figure 3A, *Oscillatoria* increased and became the dominant genus in August (19.1%) and November (23.8%). In addition, *Dolichospermum* (15.9%) and *Pesudanabaena* (14.0%) were abundant in August; whereas *Aphanocapsa* (13.8%) and *Pesudanabaena* (13.0%) were flourishing in November (Figure 3A).

For the ponds, cyanobacteria abundance and biomass both peaked in August (Figure 2(B1,B2)), with 6.51 × 107 cells/L and 46.80 mg/L (i.e., 92.8% of the total phytoplankton abundance and 97.2% of the total phytoplankton biomass), where *Pesudanabaena* (48.4%) and *Raphidiopsis* (12.4%) were the dominant species (Figure 3B). The maximum value of cyanobacteria biomass in the ponds was much greater than that of the lake. In November, the abundance of cyanobacteria decreased rapidly with less than 2 × 106 cells/L (about 39.1% of the total phytoplankton). The dominant cyanobacteria were *Planktolyngbya*, *Aphanizomenon* and *Oscillatoria*, accounting for 33.9%, 24.4% and 15.1% of the total

phytoplankton, respectively (Figure 3B). Notably, cyanobacteria taxa occurred in examined water bodies with the high abundance were filamentous forms (except in May for lake) (e.g., *Oscillatoria*, *Pesudanabaena*, *Raphidiopsis*, *Planktolyngbya*, and *Aphanizomenon*). The proportion of filamentous cyanobacteria in the ponds was higher than that in the lake over the study period, in May and November in particular (*P* < 0.01) (Figure 4).

**Figure 2.** Changes of total phytoplankton abundance and biomass, cyanobacteria abundance and biomass, and cyanobacteria proportion in Lake Guchenghu and adjacent mitten crab ponds from May 2017 to February 2018 ((**A1**,**A2**): Lake; (**B1**,**B2**): Ponds).

**Figure 3.** Seasonal variation of cyanobacteria community in Lake Guchenghu and adjacent mitten crab ponds from May 2017 to February 2018 (**A**): Lake; (**B**): Ponds.

**Figure 4.** The proportion of filamentous cyanobacteria to total cyanobacteria in Lake Guchenghu and adjacent mitten crab ponds from May 2017 to February 2018. Asterisks above the bars indicate significant differences with respect to the lake area (\* *P* < 0.05, \*\* *P* < 0.01).

During the study periods, five potentially harmful species, all occurred in August and/or November, were identified in the lake and ponds (Table 2). In August, the maximum abundances of the potential toxin producing species in the ponds were much higher than those in lake area. Especially, the abundances of *Dolichospermum circinale* and *Raphidiopsis raciborskii* hit 3.6 × 106 and 8.2 × 106 cells/L in August, respectively. In November, the abundance of potentially harmful cyanobacteria species in the ponds significantly declined.

**Table 2.** Potential toxin producing species recorded in Lake Guchenghu and adjacent mitten crab ponds.

a Potential toxin producing species were identified based on [26] –Nonexistence.

#### *3.3. Quantitative Seasonal Changes in Cyanobacteria Communities*

Seasonal variations of cyanobacteria communities at the genera level in the lake and ponds were evident (Figure 5). A remarkable temporal shift in cyanobacteria taxa was observed at the sampling sites in both lake and ponds (Figure 5A,B). All stress values were less than or slightly above 0.1, indicating a good fit by using NMDS analysis [27]. The results of ANOSIM further confirmed distinct discrepancies in the cyanobacteria communities in the lake and ponds among different seasons (*P* < 0.01, Table S3). Figure 5C–F shows that the similarity in cyanobacterial communities between lake and ponds was relatively high in November, but the similarities were not obvious in May and February. In August, the characteristic of cyanobacterial community in the ponds was significantly different from that of the lake (*P* < 0.01, Table S3).

**Figure 5.** Non-metric multidimensional scaling (NMDS) ordination of cyanobacteria community in Lake Guchenghu and adjacent mitten crab ponds among different months. ((**A**): Lake; (**B**): Ponds; (**C**): May 2017; (**D**): August 2017; (**E**): November 2017; (**F**): February 2018. The first four digits of the number represent the sampling time, and the last two digits represent the sampling point.).

According to cluster analysis (Figure 6), the similarity was relatively high in the same habitat and the same season. In August, the difference in cyanobacterial composition among the sampling sites was significant, especially in the ponds. Consistent with the NMDS analysis (above), Figure 6 reveals that the cyanobacterial composition for the lake and ponds was similar in November, and was significantly discrepant in August.

**Figure 6.** Similarity analysis for cyanobacteria community in Lake Guchenghu and adjacent mitten crab ponds among different months by cluster analysis. (Green for May; Blue for August; Pink for November; and Yellow for February.) ("L" represents Lake; "P" represents Ponds; the first four digits of the number represent the sampling time, and the last two digits represent the sampling point.).

#### *3.4. Relationships between Cyanobacteria Dynamics and Environmental Variables*

RDA analysis revealed the relationship between cyanobacteria communities and environmental factors (Figure 7). The environmental variables (details in Table S4) explained 41.8% (54.6%) of the total variance of species distribution in the lake (ponds). In the lake, from 2017 to 2018, the eigenvalues (λ) for RDA axis 1 and axis 2 were 0.356 and 0.136, respectively. The interpretation rate of species-environment relationship for the first two axes was 71.0% (Table S4), which can better explain the relationship between the cyanobacteria community and environmental factors. In crab ponds, the eigenvalues for RDA axis 1 (λ: 0.562) and axis 2 (λ: 0.379) explained a total of 54.6% of the species-environment relation.

The RDA ordination indicated that WD, TN:TP ratio, CODMn, TP and NO2 −-N are the dominant environmental factors for cyanobacterial composition. For the ponds, N:P ratio, WT, and TP were significant factors of cyanobacteria development from May 2017 to February 2018 (Figure 7; Tables S5 and S6). Our results show that different cyanobacteria taxa contain different environment adaptation abilities. In the lake (Figure 7A), *Oscillatoria* preferred higher TP and NH4 +-N concentrations; but the opposite was observed in genera like *Chroococcus*, *Pseudanabaena* and *Merismopedia*. WD and turbidity were positively correlated with *Aphanizomenon*, *Dolichospermum, Planktolyngbya* and *Oscillatoria*; but were negatively correlated with *Merismopedia*. *Raphidiopsis* abundance was positively correlated with TP and CODMn, and negatively correlated with N:P ratio. In the ponds (Figure 7B), WT and pH were positively correlated with *Raphidiopsis* and *Pesudanabaena*; but negatively correlated with *Planktolyngbya*, *Aphanizomenon* and *Aphanocapsa*. Besides, many genera clusters (including *Planktolyngbya Aphanizomenon*, *Raphidiopsis* and *Dolichospermum*) were positively correlated with TP; negatively correlated with N:P ratio. On the other hand, the same environmental factors could cause different effects in different habitats. *Planktolyngbya* and *Dolichospermum* were positively correlated with WT and pH in the lake, but negatively associated in the ponds. *Oscillatoria* had a positive correlation with NH4 +-N in the lake, while the opposite was found in the ponds.

**Figure 7.** Ordination diagram of redundancy analysis (RDA) for cyanobacteria community associated with environmental factors in Lake Guchenghu and adjacent mitten crab ponds ((**A**): Lake; (**B**): Ponds).

In addition to the RDA results, Pearson correlation coefficients revealed several statistically significant correlations (Figure 8; Table S7). In the lake, cyanobacteria abundance experienced significant positive correlation with TP, but it was negatively correlated with WD, NH4 +-N, NO2 −-N and TN. Regarding the predominant species, *Merismopedia* abundance correlated positively with the N:P ratio, but negatively with the WD, turbidity, NH4 +-N, NO2 −-N and TP. *Oscillatoria* abundance correlated positively with pH, WT, turbidity and TP, but negatively with the N:P ratio. *Dolichospermum*

abundance exhibited a positive correlation with WD, pH, WT and turbidity, but a negative correlation with CODMn and N:P. *Raphidiopsis* abundance only demonstrated significant positive correlation with TP. In ponds, whilst cyanobacteria abundance was positively correlated with WT, WD, pH and TP, such correlation was insignificant. *Planktolyngbya* abundance correlated positively with TP, but negatively with pH. *Aphanizomenon* abundance correlated positively with TP, but negatively with CODMn. The Pearson correlation analysis results (above) are in good agreement with the RDA analysis.

**Figure 8.** The results of Pearson correlation between predominant cyanobacteria species and environmental parameters in Lake Guchenghu and adjacent mitten crab ponds ((**A**): lake; (**B**): ponds).

#### **4. Discussion**

The present study revealed that crab aquaculture has an adverse effect on water quality based on the fact that concentrations of nutrients in crab ponds were evidently higher than those in the adjacent lake area (Table 1). The discharge from the crab ponds (with these nutrients) would increase the risk of pollution in the nearby lake. Regional nutrient enrichment within watersheds might exert a diverse and complex impact on the prevalence and persistence of cyanobacteria over time [13,28]. NMDS analysis indicated that the cyanobacteria community structure had significant seasonal variation in Lake Guchenghu area. Seasonal succession of cyanobacteria has been recorded in many previous studies [29,30]. Physical indicators, limited nutrients, overwintering, and ecological competition all contribute to the temporal variation of the cyanobacteria community.

Our observations revealed that mitten crab culturing had non-negligible impacts on the development of cyanobacteria. The cyanobacterial community in the ponds was different from that of the lake (Figures 5 and 6), especially in August, which was primarily due to the disparities in environmental factors of the two distinctive systems (Table 2). The results of the RDA analysis indicated that WT, WD, turbidity, TP and NH4 −-N played an important role in structuring cyanobacteria assemblages and had a significant influence on cyanobacteria abundance in the lake area. The highest cyanobacteria abundance with the dominance of *Merismopedia* in the lake in spring (May) could have been ascribed to the relative low turbidity and water depth. The low turbidity in May might have contributed to the development of *Merismopedia*, simply because *Merismopedia* was usually the dominant species in clear lakes [31]. Furthermore, Yang et al. (2016) suggested that the water level could alter the patterns of phytoplankton communities and a decline in water level could boost cyanobacteria dominance [32]. The Pearson correlation analysis in the current study also confirmed that a significant negative correlation existed between cyanobacteria abundance and water depth. In fact, WD is never constant in the lake. WD can influence the ecological processes and patterns of waterbodies through water column mixing, light transmission change and nutrient availability [33,34]. However, the species of cyanobacteria are unitary in May, and this change in species composition followed an increase in phosphorus in August and November, which likely promoted the increase in filamentous species such as *Oscillatoria, Dolichospermum*, *Pesudanabaena* and *Planktolyngbya* (Figure 3). Most of them, similarly to Nostocales, are nitrogen-fixing species [35]. The dominance of nitrogen-fixing cyanobacteria was mainly due to its significant positive correlation with TP, and negative correlation with TN, NH4 +-N and NO2 −-N (Figures 7 and 8). With an increase in TP and decrease in N:P ratio from August to November 2017, the abundance of nitrogen-fixing species increased dramatically. Another reason may be that the precipitation increases in summer and autumn in this subtropical monsoonal climate zone, and the water level fluctuates frequently, resulting in many benthic species like *Oscillatoria* being mobilised and becoming entrained within the water column due to the water in the lake being shallow.

By contrast, WT, TP, pH, and N:P ratio were important environmental variables that influenced cyanobacteria development in the ponds, which were different compared to the lake. This confirmed that similar set of environmental factors might not always drive the cyanobacteria development in different types of habitats (lake and ponds). Unlike the lake, the greatest cyanobacteria abundance was observed in ponds where *Pesudanabaena* and *Raphidiopsis* dominated in August (Figure 3), and the maximum abundance was 2.5 times the lake's greatest abundance over the studied period. The WT and TP concentrations in the ponds were evidently higher compared to those in the lake. Especially, in August, the TP concentration in the ponds was six times higher than that in the lake because nutrient control in ponds was more difficult given the need to regularly feed farmed animal and the excretion of waste. Cyanobacteria are known to flourish with relatively high WT and nutrient levels, conditions prevailing in crab culture ponds. Furthermore, crab ponds with distinctly lower values of TN:TP ratios were characterized by a higher proportion of filamentous cyanobacteria compared to the lake, which may be attributed to the fact that most of filamentous cyanobacteria have the capacity of nitrogen fixation [35].

Whilst some studies suggested that cyanobacteria can dominate in both low and high phosphorus conditions [36], our study found that the total phosphorus was the major positive driving factor in governing the cyanobacteria abundance, and nitrogen was not a limiting factor for cyanobacteria proliferation. Numerous studies revealed that increased phosphorus concentrations could lead to high cyanobacteria abundance [37,38]. For example, Andersson et al. (2015) reported the increase of Nostocales was caused by the rise of total phosphorus and decrease of dissolved inorganic nitrogen in the coastal Bothnian Sea, which could support our results. Furthermore, the abundance of cyanobacteria was also related to the alkaline conditions. For instance, the dominant species *Oscillatoria* and *Dolichospermum* were positively correlated with pH in the lake (Figures 7 and 8). However, some of the cyanobacteria taxa (e.g., *Planktolyngbya*, *Aphanizomenon*, *Raphidiopsis*, etc.) in the aquaculture ponds were negatively correlated with pH, where the water was alkaline on average. On one hand, high pH is the result of photosynthesis of cyanobacteria, where the consumption of carbon dioxide would lead to a rise in the pH of the water [39]. On the other hand, such alkaline conditions foreordained cyanobacteria being dominant owing to the reduced efficiency of other phytoplankton species to utilize carbon at high pH [40].

Despite the growing interest in investigating the dynamics of cyanobacteria in freshwater bodies, little effort has been made to account for the composition of cyanobacteria and its threat in crab aquaculture-impacted water bodies, especially crab-culturing ponds. From the results of the present study, the known potential cyanotoxin producers, species like*R. raciborskii*(synonym: *Cylindrospermopsis raciborskii*) and *D. circinale* (synonym: *Anabaena circinale*) [26,41], were abundant taxa found in the crab ponds and the peak abundances of these species occurred in summer. In the ponds, *R. raciborskii* and *D. circinale* were positively correlated with WT, WD, CODMn and TP; negatively correlated with NO3 −-N and N:P ratio (Figures 7 and 8). Crab ponds with the higher values of WT, WD, TP and CODMn concentration and the lower concentration of NO3 −-N and N:P ratio would benefit these species in summer. Their excessive expansion suggests a high risk of potential cyanotoxins existing in the ponds and associated cyanotoxins to humans through intake of aquatic products, which could cause serious social and economic losses simultaneously [42,43]. With intensifying eutrophication and global warming, *R. raciborskii* as an invasive species began to dominate many lakes and reservoirs in

China, and the known concentration of CYNs could hit 8.25 μg/L in reservoirs [44,45]. Nonetheless, the current study did not evaluate cyanotoxin levels in freshwater and "seafood" products. Hence, future studies should investigate cyanotoxin, taste and odor levels associated with the abundance of harmful cyanobacteria.

The current study reflected the importance of establishing rational management of the crab culturing industry and controlling the excessive expansion of cyanobacteria in crab culture ponds. Moreover, it is necessary to strengthen the treatment of crab culture wastewater before being discharged into the neighboring lakes in order to reduce the pollution in the lake. According to the survey results of pollution sources and pollution load of Lake Guchenghu in 2012, the main pollution sources were aquaculture culture, industrial wastewater, domestic sewage and crop farming. Aquaculture culture has become the primary source of pollutants in the Lake Guchenghu area [11]. Regular monitoring of cyanobacteria and cyanotoxin in these mitten crab culture-impacted water bodies is recommended in order to avoid the large-scale cyanobacteria proliferation, and control their harmful impact on freshwater "seafood" products and human health.

#### **5. Conclusions**

The present study demonstrated that the activities of mitten crab culture played a certain role in the change of cyanobacterial community structure. In mitten crab ponds, whilst cyanobacteria could be found throughout the year, the period related to the highest risk was August (summer) because cyanobacteria (including several potentially harmful species) were most abundant during this time of the year with biomass reaching 46.80 mg/L. By contrast, the cyanobacteria biomass (3.86 mg/L) peaked in November in the nearby lake, accounting for a smaller proportion of the total phytoplankton biomass which have relatively low risk. RDA and Pearson correlation analyses indicated that N:P ratio, CODMn, TP and NO2 −-N had significant influence on cyanobacteria abundance in the lake, whereas WT, N:P ratio and TP played an important role in cyanobacteria dynamics in mitten crab culture ponds. This also confirmed that cyanobacteria development was not always affected by the same set of environmental factors in different types of habitats. The results of this study suggested that regular monitoring on cyanobacteria dynamics in aquaculture-impacted water bodies is necessary to accurately evaluate cyanobacteria species' responses to environmental changes, and predict the risk of harmful cyanobacterial blooms.

**Supplementary Materials:** The following are available online at http://www.mdpi.com/2073-4441/11/12/2468/s1, Table S1: The list of cyanobacteria species in Lake Guchenghu and adjacent mitten crab ponds (May 2017–February 2018); Table S2: Cyanobacteria community metrics (mean ± standard deviation) observed over four study seasons in Lake Guchenghu basin. Values were calculated from all sites for each season; Table S4: Summary of redundancy analysis between environmental factors and cyanobacteria abundance in Lake Guchenghu and adjacent mitten crab ponds; Table S5: The correlation matrix between RDA axes and environmental factors in Lake Guchenghu from May 2017 to February 2018; Table S6: The correlation matrix between RDA axes and environmental factors in mitten crab ponds from May 2017 to February 2018; Table S7: Results of Pearson correlation between dominant cyanobacteria species and environmental parameters in Lake Guchenghu and adjacent mitten crab ponds.

**Author Contributions:** Conceptualization, X.G. and H.L.; Methodology, H.C. and Z.M.; Formal analysis, H.L., H.C. and H.D.; Investigation, H.C., Z.M. and Q.Z.; Writing-original draft preparation, H.L.; Writing-review and editing, H.L., H.C. and Z.M.

**Funding:** This work was supported by the National "Twelfth Five-Year" Plan for Science & Technology (No. 2015BAD13B06), National Natural Science Foundation of China (No. 31870449), Water Conservancy Science and Technology Project of Jiangsu Province (No. 2017013), Water environment governance projects of Taihu (TH2018303), the National Key R & D Program of China (No. 2018YFD0900804) and the Major Science and Technology Program for Water Pollution Control and Treatment (2017ZX07204005).

**Acknowledgments:** We thank Yuting Wang for her guidance in the data analysis phase.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**

© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).


**3. Wavelet-based fault detection**

620 Advances in Wavelet Theory and Their Applications in Engineering, Physics and Technology

temperature from -40℃ to 80℃ extends the usage of RUAV in various environments. The LPC3250 includes a USB 2.0 Full Speed interface, seven UARTs, two I2C interfaces, two SPI/SSP ports, and two I2S interfaces; Such a great number interfaces of LPC3250 makes it very suitable for navigation and control system with a plenty of sensors in standard

To decrease the developing work in programming, while increasing the system stability, a μC/OS-II embedded system is installed to organize the software development. This small sized embedded system is quite convenient to install; the hard-real-time architecture also makes it suitable for a time critical avionics system in RUAV. We divided the work of software into 5 parts. First, the OS Kernel is to maintain the whole system and arrange the task schedule. Second, the algorithms implements navigation and control theory. Third, the device interface process is to handle the task for sensor data acquire and drive the actuator. Fourth, the user interface carries out the job to display and receive necessary information to the user. Fifth, the log interface is to log the flight data for our experiment. To make sure that the algorithms can be calculated in time, a hardware timer is used instead of the software timer provided by operator system. With a proper design of the software architecture, the system's stability is maintained and the flexibility is also provided for other

The GPS receiver and magnetometer are in a separate part and the others are in the main navigation part. The flight control system and main navigation system are assembled in an anti-jamming aluminum box, and called flight control box. Such a separation is with the consideration that the GPS and magnetometers are susceptible to the install position because they may be influenced if it is covered by the airborne or near some magnetic material. The flight control box is mounted under fuselage of the RUAV. The separate part can be equipped in a proper place on the airframe. To avoid the disciplinary vibration about 20-22.5Hz caused by revolving of main rotor, ENIDINE aviation wire rope isolators are also used. They are comprised of stainless steel stranded cable, threaded through aluminum alloy retaining bars, crimped and mounted for effective vibration isolation. The assembled

RUAV system with the necessary components is shown in Figure 6.

interface. We designed interface circuit to drive the actuator and log the flight data.

algorithm implementations.

Fig. 6. Implemented ServoHeli-40 RUAV

**2.2.4 System realization**

Without loss of generality, assume that the vehicle's sensor output *y*( )*t* is described as (Zhang & Yan, 2001):

$$y(t) = f[\mathbf{x}(t)] + n(t) \tag{1}$$

Where *n t*( ) is a noise signal and the measured *x t*( ) changes with a *k*-degree polynomial function *f*[ ( )] *x t* which describes the measured process changes. Stone-Weierstrass Theorem states that any continuous function on a compact set can be approximated to any degree of accuracy by a polynomial function (Rudin, 1976). Therefore, using a polynomial function to represent any function *f*[ ( )] *x t* will not lose the generality. Let ( )*t* be a wavelet function and ( ) (1/ ) ( / ) *s t s ts* be the dilation of ( )*t* by the scale factor *s*. The wavelet transform of *y t*( ) can be written as:

$$\mathcal{V}NT\_f(\mathbf{s},\tau) = \mathcal{y}(t) \* \boldsymbol{\nu}\_s(t) = f[\mathbf{x}(t) + \boldsymbol{n}(t)] \* \boldsymbol{\nu}\_s(t) \tag{2}$$

Where denotes the convolution and (, ) *WT s f* represents the wavelet transform. A wavelet ( )*t* is said to have *m* vanishing moments if and only for all positive integers *k<m*, the following equation is satisfied:

$$\int\_{-\infty}^{+\infty} t^k \boldsymbol{\nu}\_s(t) dt = 0\tag{3}$$

Application of Wavelets Transform in Rotorcraft UAV's Integrated Navigation System 623

Table 1 shows us that there are three sensors in the RUAV sensor system which have three channel separately. We design 12 wavelet analyzers for 12 channels of all sensors. The sensors data will directly send to the data fusion system when the data are in the normal states. However, if the sensors data is abnormal in one or some channels as a result of the failure of specific sensors, the alarms will send to the flight computer while the data link will be cut off. Then the navigation system will continue to compute with degraded sensors data.

The proposed wavelet-based fault detection system tested using the ServoHeli-20 RUAV

Fig. 8. Architecture of wavelet-based sensor system

**4.2 Experimental results and discussion**

Fig. 9. ServoHeli-20 fault detection experiment

system in manual mode.

Now, let us call a smoothing function, any real function ( )*t* such that 2 ( ) (1 /1(1 )) *tO t* and whose integral is nonzero. A smoothing function can be viewed as the impulse response of a low-pass filter. Let *f*[ ( )] *x t* and ( ) (1 / ) ( / ) *s t s ts* be a real function in 2*L R*( ) . The abrupt changes of the sensor data at scale *s* are defined as local sharp variation points *f*[ ( )] *x t* smoothed by ( ) *s t* . The method of detecting these sharp variation points with a wavelet transform is explained as follows.

Let 1 ( )*t* and 2 ( )*t* be the two wavelets defined by:

$$
\psi^{-1}(t) = \frac{d\theta(t)}{dt} \tag{4}
$$

$$
\psi^2(t) = \frac{d\theta^2(t)}{dt^2} \tag{5}
$$

The wavelet transform defined with respect to each of these wavelets are given by:

$$\mathcal{W}^1(t) = f \ast \boldsymbol{\nu}\_s^1(t) = f \ast (\mathbf{s} \frac{d\theta\_s}{dt})(t) = \mathbf{s} \frac{d}{dt} (f \ast \theta\_s)(t) \tag{6}$$

$$\mathcal{W}^1(t) = f \ast \nu\_s^1(t) = f \ast (s \frac{d\theta\_s}{dt})(t) = s \frac{d}{dt} (f \ast \theta\_s)(t) \tag{7}$$

The wavelet transforms of 1 *W f* (,) *s t* and 2 *W f* (,) *s t* is proportional respectively to the first and second derivatives of *f*[ ( )] *x t* smoothed by ( ) *s t* . As a result, the local maxima of 1 | ( , )| *W f s t* indicate the locations of sharp variation points and singularities of [ ( )] ( ) *s f xt t* (Mallat & Hwang, 1992).

From (4) to (7), it can be concluded that the wavelet transform of the signal (1) only includes some sharp variation points induced by sensor faults and random noise. Once a sharp variation point is claimed, and alarm will be triggered for a failure of the sensor.

#### **4. Fault detection experiment**

#### **4.1 Fault detection system design**

The sensors of the navigation system with different mechanism also have different performance. We cannot get the ideal fault detection results using the traditional fault detection techniques.

In order to accompany the short control period and the highly update rate, we use the parallel wavelet analyzer, which is shown as figure 8.

Fig. 8. Architecture of wavelet-based sensor system

() 0 *k s t t dt*

and whose integral is nonzero. A smoothing function can be viewed as the impulse response

abrupt changes of the sensor data at scale *s* are defined as local sharp variation points

1 ( ) ( ) *d t t dt*

2

( ) ( ) ( )( ) ( )( ) *s s s d d W t f t f s ts f t*

( ) ( ) ( )( ) ( )( ) *s s s d d Wt f t f s t s f t dt dt*

The wavelet transforms of 1 *W f* (,) *s t* and 2 *W f* (,) *s t* is proportional respectively to the first

1 | ( , )| *W f s t* indicate the locations of sharp variation points and singularities of [ ( )] ( ) *s f xt t*

From (4) to (7), it can be concluded that the wavelet transform of the signal (1) only includes some sharp variation points induced by sensor faults and random noise. Once a sharp

The sensors of the navigation system with different mechanism also have different performance. We cannot get the ideal fault detection results using the traditional fault

In order to accompany the short control period and the highly update rate, we use the

variation point is claimed, and alarm will be triggered for a failure of the sensor.

2 ( ) ( ) *d t t dt*

*dt dt*

 *t s ts*

2

The wavelet transform defined with respect to each of these wavelets are given by:

Now, let us call a smoothing function, any real function

of a low-pass filter. Let *f*[ ( )] *x t* and ( ) (1 / ) ( / ) *s*

( )*t* be the two wavelets defined by:

1 1

1 1

and second derivatives of *f*[ ( )] *x t* smoothed by ( ) *s*

parallel wavelet analyzer, which is shown as figure 8.

wavelet transform is explained as follows.

*f*[ ( )] *x t* smoothed by ( ) *s*

( )*t* and 2

(Mallat & Hwang, 1992).

detection techniques.

**4. Fault detection experiment 4.1 Fault detection system design**

Let 1

(3)

(4)

(5)

*t* . As a result, the local maxima of

( )*t* such that 2

be a real function in 2*L R*( ) . The

( ) (1 /1(1 )) *tO t*

(6)

(7)

*t* . The method of detecting these sharp variation points with a

Table 1 shows us that there are three sensors in the RUAV sensor system which have three channel separately. We design 12 wavelet analyzers for 12 channels of all sensors. The sensors data will directly send to the data fusion system when the data are in the normal states. However, if the sensors data is abnormal in one or some channels as a result of the failure of specific sensors, the alarms will send to the flight computer while the data link will be cut off. Then the navigation system will continue to compute with degraded sensors data.


**Religious Transformation in the Middle East—Spirituality, Religious Doubt, and Non Religion**

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