research product . Model . 2017 . Embargo end date: 01 Jan 2017

A real-option farm-level model on investment in perennial energy crops under risk considerations

Spiegel, Alisa; Britz, Wolfgang; Finger, Robert;
English
  • Published: 01 Jan 2017
  • Publisher: ETH Zurich
Abstract
The stochastic dynamic optimization model documented in here simulates decisions of an arable farm with respect to long-term investment based on a compound American option. The implemented application is an investment in short-rotation coppice (SRC). SRC uses fast-growing trees that, once they are set-up, are coppiced several times and finally cleared-up. Time and scale of SRC introduction, intermediate harvest quantities, and final reconversion are flexible and constitute decision variables along with cropping shares for competing crops. A farmer distributes limited resources, i.e. land and labor, to SRC and competing annual crops. This decision is based on the...
Persistent Identifiers
Subjects
free text keywords: Real option, Stochastic programming, INVESTMENT ANALYSIS, risk analysis, policy analysis, Short-rotation coppice, agriculture, AGRICULTURAL ECONOMICS, scenario tree reduction, Monte-Carlo simulation
Communities
Agricultural and Food Sciences
Rural Digital Europe
Any information missing or wrong?Report an Issue