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Title:
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Buying real options - Valuing uncertainty in infrastructure planning
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Author(s):
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Herder, P.M.; Joode, J. de; Ligtvoet, A.; Schenk, S.; Taneja, P.
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Published by:
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Publication date:
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ECN
Policy Studies
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17-6-2011
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ECN report number:
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Document type:
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ECN-V--11-010
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Article
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Number of pages:
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Full text:
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10
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Download PDF
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Published in: Futures (Elsevier), , 2011, Vol.Volume 43, issue 9, p.961-969.
Abstract:
For the last two decades real options thinking has been heralded as a new approach for
handling uncertainty in investment decisions. However, application of the approach in
infrastructure investment decision-making is negligible thus far. In this contribution we
address the question: what are the barriers for the implementation of the real option
approach (ROA) in practice? We focus on the experiences in several infrastructure-bound
sectors: spatial planning and transport, ports, and energy.
We conclude that the ROA maturity levels of these different sectors are quite different,
and we ascribe these differences to the political setting, the institutional setting and the
organisational flexibility of the sectors and their stakeholders. We suggest that the same
issues apply to other advanced, quantitative methods.
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