期刊
AMBIO
卷 50, 期 1, 页码 229-241出版社
SPRINGER
DOI: 10.1007/s13280-020-01342-8
关键词
Climate change adaptation; Climate change mitigation; Real-options; Uncertainty
资金
- Swedish University of Agricultural Sciences
This paper discusses the importance of uncertainty and time flexibility in investment in climate change adaptation and mitigation, highlighting the limitations in current modeling and research on the uncertainty associated with climate change, as well as the focus on decisions made by risk neutral profit maximizers. Further research is needed to address the identified gaps.
Uncertain 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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