THE APPLICATION OF THE METHOD ENVIRONMENTAL VALUE AT RISK (EVaR) IN ENVIRONMENTAL ECONOMY

Gabriela Piciu

SEA - Practical Application of Science, 2014, issue 3, 428-433

Abstract: Taking into account the fact that the methodology Value at Risk or the method VaR, which is omnipresent in investment banking and which has lately become a standard in the procedure of evaluating risks for any category of economic activities, we shall use a technique that is compatible with the VaR-market, called Environmental Value at Risk or EvaR. While the VaR- market uses a level of trust of 95%, the EvaR uses a set of levels up to 99,999%. Thus, we shall try to analyze the variables of the method EVaR, and the way in which this model can be applied as a risk of the lack (rarity) of petroleum. This risk is not only analyzed as a unique risk of growing the prices, but also as an uncertainty risk on volatile markets, in which the price and the volatility are the main variables used by the function EVaR.

Keywords: Enviromental Value at Risk; Volatility; Portofolio (search for similar items in EconPapers)
JEL-codes: Q51 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:cmj:seapas:y:2014:i:3:p:428-433

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