Investigating the value of keeping options open for water infrastructure in the Lower Hunter, New South Wales
Emma Turner and
Utilities Policy, 2020, vol. 62, issue C
Policy discussions around the world have increasingly focused on the need for resilient water and wastewater systems. The use of small-scale, ‘incremental’, measures that maintain substitutability in investment choices can improve a system's adaptability. Using past shifts/shocks, we estimate an option value for unforeseen events that can change the yield-demand balance for potable supply. For a hypothetical dam, we find avoided costs ranging from $11.1 m to $78.1 m for amounts of extra time ranging from one to ten years; and for a permanent desalination plant, the avoided costs ranged from $33.6 m up to $234.7 m for the same amounts of extra time.
Keywords: Water resilience; Option value; Hunter water corporation (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:62:y:2020:i:c:s0957178719303339
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