Real Options in Resource Economics

Esther W. Mezey and Jon M. Conrad ()
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Jon M. Conrad: Department of Applied Economics and Management, Cornell University, Ithaca, New York 14853

Annual Review of Resource Economics, 2010, vol. 2, issue 1, 33-52

Abstract: In the real options approach to capital budgeting, plans that allow for flexibility in the design or timing of an investment or economic action are valuable. Real options naturally arise in decisions to develop, extract, or harvest natural resources. We (a) review the existing literature in the economics of forestry, fishery, water, and nonrenewable resources; (b) illustrate the real options approach in resource economics through a series of simple models; and (c) suggest open questions and new areas of application when taking a real options approach to the development and management of natural resources.

Keywords: natural resources; conservation (search for similar items in EconPapers)
JEL-codes: G31 Q20 Q30 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (21)

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