Arbeitspapier
Quasi option value and irreversible choices
In this paper we are concerned with optimal investment decisions when dealing with land allocation problems. We aim to emphasise the importance of flexible modelling in order to capture irreversibility. In particular, we stretch a discrete model, firstly developed in Coggins and Ramezani (Coggins & Ramezzani , 1998), in order to cover a more realistic and complex scenario. Both environmental and economic uncertainty are included in the model and treated using an integrated approach, in which decision analysis techniques and option pricing theory are jointly applied to evaluate development versus conservation opportunities. Moreover, we take explicit account of how uncertainty interacts with two types of irreversibility: sunk costs associated with investment in developing decisions, including environmental and social costs due to environmental degradation, as well as sunk costs associated to environmental regulation and conservation. Finally, we use the Quasi Option Value, to derive decision rules that account for different levels of flexibility of land allocation possibilities.
- Language
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Englisch
- Bibliographic citation
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Series: Nota di Lavoro ; No. 14.2001
Nonrenewable Resources and Conservation: General
Renewable Resources and Conservation: General
Criteria for Decision-Making under Risk and Uncertainty
irreversibility
environment
land allocation
Naturschutz
Bodennutzung
Optionspreistheorie
Bewertung
Theorie
Entscheidung bei Unsicherheit
Messina, E.
- Handle
- Last update
-
20.09.2024, 8:22 AM CEST
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Bosetti, Valentina
- Messina, E.
- Fondazione Eni Enrico Mattei (FEEM)
Time of origin
- 2001