Artikel
Adapting long-lived investments under climate change uncertainty
Does climate change adaptation require that investments are designed to be more robust? What about when climate change is more uncertain? What if the climate changes faster? This decision problem is difficult if the design of the investments is irreversible for their lifetime, for instance, in the construction industry. We study an irreversible design decision when the investment starts, combined with an irreversible option to abandon. The design determines the investment's robustness to sustain detrimental conditions. We find that for short-lived investments, optimal robustness decreases if the climate changes faster, and increases if uncertainty is higher. For long-lived investments, these effects reverse. This has implications for decision makers who plan infrastructure adaptation, for instance, that adverse climate change does not require more robust investments under the identified circumstances.
- Sprache
-
Englisch
- Erschienen in
-
Journal: Journal of Environmental Economics and Management ; ISSN: 1096-0449 ; Volume: 116 ; Year: 2022 ; Amsterdam: Elsevier
- Klassifikation
-
Wirtschaft
Optimization Techniques; Programming Models; Dynamic Analysis
Intertemporal Firm Choice: Investment, Capacity, and Financing
Criteria for Decision-Making under Risk and Uncertainty
Climate; Natural Disasters and Their Management; Global Warming
- Thema
-
Irreversibility
Lifetime
Optimal stopping
Robustness
Stochastic dynamic control
- Ereignis
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Geistige Schöpfung
- (wer)
-
Eisenack, Klaus
Paschen, Marius
- Ereignis
-
Veröffentlichung
- (wer)
-
Elsevier
- (wo)
-
Amsterdam
- (wann)
-
2022
- DOI
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doi:10.1016/j.jeem.2022.102743
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Eisenack, Klaus
- Paschen, Marius
- Elsevier
Entstanden
- 2022
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