The added value of real options analysis for climate change adaptation

AbstractUncertain future payoffs and irreversible costs characterize investment in climate change adaptation and mitigation. Under these conditions, it is relevant to analyze investment decisions in a real options framework, as this approach takes into account the economic value associated with investment time flexibility. In this paper, we provide an overview of the literature adopting a real option approach to analyze investment in climate change adaptation and mitigation, and examine how the uncertain impacts of climate change on the condition of the human environment, risk preferences, and strategic interactions among decisions-makers have been modeled. We found that the complex nature of uncertainties associated with climate change is typically only partially taken into account and that the analysis is usually limited to decisions taken by individual risk neutral profit maximizers. Our findings call for further research to fill the identified gaps.

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Using real options analysis to evaluate the impacts of climate change on water security

Chan, F., Marinova, D. and Anderssen, R.S. (eds) MODSIM2011, 19th International Congress on Modelling and Simulation. ◽

10.36334/modsim.2011.f1.davidson ◽

2011 ◽

Keyword(s):

Climate Change ◽

Real Options ◽

Water Security ◽

Real Options Analysis ◽

Impacts Of Climate Change

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Smart Farming Techniques for Climate Change Adaptation in Cyprus

Atmosphere ◽

10.3390/atmos11060557 ◽

2020 ◽

Vol 11 (6) ◽

pp. 557 ◽

Cited By ~ 5

Author(s):

George Adamides ◽

Nikos Kalatzis ◽

Andreas Stylianou ◽

Nikolaos Marianos ◽

Fotis Chatzipapadopoulos ◽

...

Keyword(s):

Climate Change ◽

Real Time ◽

Climate Change Adaptation ◽

Time Series Data ◽

Plant Protection ◽

Added Value ◽

Series Data ◽

Small Scale ◽

Production Volume ◽

Smart Farming

Smart farming based on Internet of Things (IoT) technologies enables crop farmers to collect real-time data related to irrigation and plant protection processes, aiming to increase production volume, improve product quality, and predict diseases, while optimizing resources and farming processes. IoT devices can collect vast amounts of environmental, soil, and crop performance data, thus building time series data that can be analyzed to forecast and compute recommendations and deliver critical information to farmers in real time. In this sense, the added-value from the farmers’ perspective is that such smart farming techniques have the potential to deliver a more sustainable agricultural production, based on a more precise and resource-efficient approach in the complex and versatile agricultural environment. The aim of this study is to investigate possible advantages of applying the Smart Farming as a Service (SFaaS) paradigm, aiming to support small-scale farmers, by taking over the technological investment burden and offering next generation farming advice through the combined utilization of heterogeneous information sources. The overall results of the pilot application demonstrate a potential reduction of up to 22% on total irrigation needs and important optimization opportunities on pesticides use efficiency. The current work offers opportunities for innovation targeting and climate change adaptation options (new agricultural technologies), and could help farmers to reduce their ecological footprint.

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