Stochastic Evaluation of the Investment Risk by the Scale of Water Infrastructures—Case Study: The Municipality of West Mani (Greece)

David Markantonis, G.-Fivos Sargentis (), Panayiotis Dimitriadis, Theano Iliopoulou, Aimilia Siganou, Konstantina Moraiti, Maria Nikolinakou, Ilias Taygetos Meletopoulos, Nikos Mamassis and Demetris Koutsoyiannis
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David Markantonis: School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
G.-Fivos Sargentis: Laboratory of Hydrology and Water Resources Development, School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Panayiotis Dimitriadis: Laboratory of Hydrology and Water Resources Development, School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Theano Iliopoulou: Laboratory of Hydrology and Water Resources Development, School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Aimilia Siganou: School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Konstantina Moraiti: School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Maria Nikolinakou: School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Ilias Taygetos Meletopoulos: School of Architecture, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Nikos Mamassis: Laboratory of Hydrology and Water Resources Development, School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece
Demetris Koutsoyiannis: Laboratory of Hydrology and Water Resources Development, School of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 9, 157 80 Zographou, Greece

World, 2023, vol. 4, issue 1, 1-20

Abstract: Social structure is based on the availability of the Water-Energy-Food Nexus. To cover these needs of society, several solutions of different scales of infrastructures coexist. The construction of infrastructure is capital-intensive; therefore, investment risk is always a consideration. In this paper, we try to evaluate the investment risk by interest rates (IR). We show that IR is a key indicator, which includes multiple parameters of prosperity expressing the political and economic status quo of the society. The selection of a particular scale influences the required capital and is thus one of the most critical decisions. Water supply infrastructure is one of the foundations of society, and the selection of the optimal scale of such infrastructure is often a great challenge in civil engineering. As a case study, we analyse three different scales of water supply infrastructures for the area of West Mani (Greece), i.e., dam, water ponds, and seawater desalination. We evaluate each case by the capital intensity by performing stochastic simulations of interest rates and identify the optimal solution as the one with the smallest median unit cost, in this case, the water ponds. In order to assess the impact of the development level of a country on the resulting unit cost stochastic properties we apply the optimal solution to various countries with different development levels and IR. We show that IR in the least developed countries, being generally higher and more variable, increases the unit cost, including its variability, which ultimately indicates higher investment risk.

Keywords: stochastic simulation; investment risk; optimization; interest rate; water cost; scale of infrastructure (search for similar items in EconPapers)
JEL-codes: G15 G17 G18 L21 L22 L25 L26 Q42 Q43 Q47 Q48 R51 R52 R58 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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