Optimal timing of multiple investment decisions in a wood value chain: A real options approach

Tschulkow, Maxim; Compernolle, Tine; Passel, Steven Van

doi:10.1016/j.jenvman.2021.112590

Cited by 4 publications

(3 citation statements)

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“…The European Union is one of the leading organizations in this transition and aims to achieve a sustainable economy, products and markets [141]. Several national-level policies and strategies have been announced that aim shift away from the utilization of fossil fuels and towards sustainable resources [142]. Studies focused on the economic assessment of policy support [143], electricity market demand [144], the application of hybrid systems and energy storage investment [145] are reviewed, with the aim of evaluating their effects on economic predictions [146].…”

Section: Economic Assessment Of Sustainable Energymentioning

confidence: 99%

Recent Advances in Low-Carbon and Sustainable, Efficient Technology: Strategies and Applications

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The COVID-19 pandemic has had a significant impact on the supply chains of traditional fossil fuels. According to a report by the International Energy Agency (IEA) from 2020, oil-refining activity fell by more than the IEA had anticipated. It was also assumed that the demand in 2021 would likely be 2.6 million bpd below the 2019 levels. However, renewable markets have shown strong resilience during the crisis. It was determined that renewables are on track to meet 80% of the growth in electricity demand over the next 10 years and that sustainable energy will act as the primary source of electricity production instead of coal. On the other hand, the report also emphasized that measures for reducing environmental pollution and CO2 emissions are still insufficient and that significant current investments should be further expanded. The Sustainable Development of Energy, Water and Environment Systems (SDEWES) conference series is dedicated to the advancement and dissemination of knowledge on methods, policies and technologies for improving the sustainability of development by decoupling growth from the use of natural resources. The 15th SDEWES conference was held online from 1–5 September 2020; more than 300 reports with 7 special sections were organized on the virtual conference platform. This paper presents the major achievements of the recommended papers in the Special Issue of Energies. Additionally, related studies connected to the above papers published in the SDEWES series are also introduced, including the four main research fields of energy saving and emission reduction, renewable energy applications, the development of district heating systems, and the economic assessment of sustainable energy.

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Section: Economic Assessment Of Sustainable Energymentioning

confidence: 99%

Recent Advances in Low-Carbon and Sustainable, Efficient Technology: Strategies and Applications

et al. 2022

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“…A reductive catalytic fractionation biorefinery process (RCF) is currently under development that transforms wood into high-quality end products. Tschulkow et al (2021) presented a real options approach for the optimal timing of multiple investment decisions in a wood value chain. The authors considered two options within the value chain: to invest in harvesting equipment and the RCF.…”

Section: Short Overview Of the Papers From Other Journals' Sismentioning

confidence: 99%

Introductory remarks on the special issue of Optimization and Engineering dedicated to SDEWES 2021 conference

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The background of this Special Issue (SI) of the Optimization and Engineering (OPTE) journal is the 2021 Sustainable Development of Energy, Water and Environment Systems (SDEWES) Conference. This broad field was discussed by the participants of the 16th SDEWES Conference held in Dubrovnik, Croatia. This SI aims to bring together articles that discuss recent advances in optimization methods and algorithms that integrate various life-supporting systems. A decision-making problem often appears as a parameter estimation problem; it can be formulated as an optimization model and solved using different optimization algorithms and techniques. All papers included in this OPTE journal SI consider aspects of numerical analysis, mathematical modelling, and computational methods involved in investigating, planning and implementing sustainable development. In this context, the guest editors have confidence that the selected papers and addressed issues will substantially contribute to the increase of the knowledge body published in the OPTE journal, and the SI will be a powerful platform for researchers to discuss, share, and disseminate new ideas.

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“…Despite the positive characteristics, studies involving analysis of real options in forestry investment projects are incipient, specifically those related to Pinus spp. (Tschulkow et al, 2021;Sauter et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

Real options analysis applied to investment projects in planted forests of Pinus

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Planted forests are long-term projects involving a large monetary contribution, and generally require the incorporation of managerial flexibility. As the traditional methodology for economic evaluation does not allow for the incorporation of these flexibilities, our study aimed to analyze whether investment projects in planted forests of Pinus elliottii Engelm. are economically feasible, by applying a real options analysis. We used empirical data from one hectare of a planted forest of P. elliottii with a 14-year planning horizon. Managerial flexibilities were incorporated in combinations and also separately, as options to defer, expand or abandon the investment project. Through Monte Carlo simulation, the present value of USD 1.016 was conditioned to anticipated return values from the second to the fourteenth year, with a volatility return of 14.5%. With real options analysis, the value of the combined options was USD 29, which, in terms of traditional net present value, showed an expanded net present value of USD 468. The real options analysis thus shows that investment projects in planted forests of P. elliottii are economically feasible. Given that real options analysis is a methodology not widely used in the forestry sector for economic analysis of investment projects, this study can be used to assist forest managers in analysing investment risks and decisions, specifically those related to market fluctuations of planted forests of Pinus spp., assuming that the real options of deferral, expansion and abandonment of an investment project are used.

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Optimal timing of multiple investment decisions in a wood value chain: A real options approach

Cited by 4 publications

References 41 publications

Recent Advances in Low-Carbon and Sustainable, Efficient Technology: Strategies and Applications

Recent Advances in Low-Carbon and Sustainable, Efficient Technology: Strategies and Applications

Introductory remarks on the special issue of Optimization and Engineering dedicated to SDEWES 2021 conference

Real options analysis applied to investment projects in planted forests of Pinus

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