In this book, we study the problem of investing in sustainable transport to relieve air pollution. In such a case, the growth of the city population is the major source of uncertainty, as a high population density increases pollution and, on the other hand, makes a big transportation project necessary. Using the real options method, we show how to maximize inter-generational utility when the population grows stochastically. In a second step, we study the same problem of investing in sustainable transport under both population-growth and investment cost uncertainties. In such a case, the growth of the city population increases the demand for a sustainable transport by increasing pollution, and, in the same time, the investment cost is decreasing stochastically with time. This corresponds to a hydrogen fuel infrastructure construction, whose cost is stochastically decreasing due to the worldwide R&D effort. Using the real options method, we show how to maximize inter-generational utility by choosing the optimal time to invest.
| Title: | Real Options and Sustainable Transport | Publisher: | Editions Universitaires Europeennes |
| Author: | Linda Salahaldin |
| Edition: | Paperback |
| Language: | English |
| ISBN: | 6131553610 |
| EAN: | 9786131553615 |
| No. of Pages: | 252 |
| Publish Date: | 2010-12-24 |
| Binding: | Paperback |
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