Uncertainty and Option Value in Land Allocation Problems

Uncertainty and Option Value in Land Allocation Problems

In this paper we are concerned with modelling techniques for evaluating development and conservation opportunities when dealing with investment decisions involving environmental resources management. In this context, highly characterized by both environmental and economic uncertainty, we emphasize the importance of capturing the flexibility of different investment strategies. In particular, we ...

Disclosure, Uncertainty, and the Option Value of Equity

This study examines the link between disclosure, cash flow uncertainty, and the option value of equity. Building upon Merton (1974), I model the equity of a levered firm as a call option whose equilibrium value is increasing in the variance of future cash flows. Modeling levered equity as an option allows for calculation of the firm’s vega, where vega measures the sensitivity of equity value to...

Option Value, Policy Uncertainty, and the Foreign Direct Investment Decision

In this paper we analyse the impact of policy uncertainty on foreign direct investment strategies. The paper follows the real options approach, which allows to investigate the value to a firm of waiting to invest and/or disinvest, when payoffs are stochastic due to political uncertainty and investments are partially reversible. Across the board we find that political uncertainty can be very det...

Resource allocation problems under uncertainty in humanitarian supply chains

Fuzzy Goal Programming for Agricultural Land Allocation Problems

This paper presents a fuzzy goal programming (FGP) approach for optimal allocation of land under cultivation and proposes an annual agricultural plan for different crops. In the model formulation, goals such as crop production, net profit, water and labor requirements, and machine utilization are modeled as fuzzy. A tolerance based FGP technique is used to quantify fuzziness of different goals ...