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| DOI | 10.1007/s10584-019-02529-z |
| Real options analysis of climate-change adaptation: investment flexibility and extreme weather events | |
| Guthrie G. | |
| 发表日期 | 2019 |
| ISSN | 0165-0009 |
| 起始页码 | 231 |
| 结束页码 | 253 |
| 卷号 | 156期号:2020-01-02 |
| 英文摘要 | Investments in climate-change adaptation will have to be made while the extent of climate change is uncertain. However, some important sources of uncertainty will fall over time as more climate data become available. This paper investigates the effect on optimal investment decision-making of learning that reduces uncertainty. It develops a simple real options method to value options that are found in many climate-change adaptation contexts. This method modifies a binomial tree model frequently applied to climate-change adaptation problems, incorporating gradual learning using a Bayesian updating process driven by new observations of extreme events. It is used to investigate the timing, scale, or upgradable design of an adaptation project. Recognition that we might have more or different information in the future makes flexibility valuable. The amount of value added by flexibility and the ways in which flexibility should be exploited depend on how fast we learn about climate change. When learning will occur quickly, the value of the option to delay investment is high. When learning will occur slowly, the value of the option to build a small low-risk project instead of a large high-risk one is high. For intermediate cases, the option to build a small project that can be expanded in the future is high. The approach in this paper can support efficient decision-making on adaptation projects by anticipating that we gradually learn about climate change by the recurrence of extreme events. © 2019, Springer Nature B.V. |
| 英文关键词 | Adaptation; Climate change; Cost–benefit analysis; Learning; Real options |
| 语种 | 英语 |
| scopus关键词 | Climate models; Cost benefit analysis; Decision making; Investments; Adaptation; Benefit analysis; Climate change adaptation; Extreme weather events; Learning; Optimal investment decision; Real Options; Sources of uncertainty; Climate change; adaptive management; climate change; cost-benefit analysis; extreme event; investment incentive; learning; weather forecasting |
| 来源期刊 | Climatic Change
 |
| 文献类型 | 期刊论文 |
| 条目标识符 | http://gcip.llas.ac.cn/handle/2XKMVOVA/147409 |
| 作者单位 | School of Economics and Finance, Victoria University of Wellington, PO Box 600, Wellington, 6140, New Zealand |
| 推荐引用方式 GB/T 7714 | Guthrie G.. Real options analysis of climate-change adaptation: investment flexibility and extreme weather events[J],2019,156(2020-01-02). |
| APA | Guthrie G..(2019).Real options analysis of climate-change adaptation: investment flexibility and extreme weather events.Climatic Change,156(2020-01-02). |
| MLA | Guthrie G.."Real options analysis of climate-change adaptation: investment flexibility and extreme weather events".Climatic Change 156.2020-01-02(2019). |
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