Reversibility and switching options values in the geological disposal of radioactive waste

Oana Ionescu () and Sandrine Spaeter ()
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Oana Ionescu: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, ANDRA - Agence Nationale pour la Gestion des Déchets Radioactifs
Sandrine Spaeter: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: This article offers some economic insights for the debate on the reversible geological disposal of radioactive waste. Irreversibility due to large sunk costs, an important degree of fiexibility and several sources of uncertainty are taken into account in the decision process relative to the radioactive waste disposal. We draw up a stochastic model in a continuous time framework to study the decision problem of a reversible repository project for the radioactive waste, with multiple disposal stages. We consider that the value of reversibility, related to the radioactive waste packages, is jointly affected by economic and technological uncertainty. These uncertainties are modeled, first, by a 2-Dimensional Geometric Brownian Motion, and, second, by a Geometric Brownian Motion with a Poisson jump process. A numerical analysis and a sensitivity study of various parameters are also proposed.

Keywords: Radioactive waste; Reversibility; Switching; Real option theory (search for similar items in EconPapers)
Date: 2011-07-14
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00942316v1
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