EconPapers    
Economics at your fingertips  
 

Irreversibility and Restoration in Natural Resource Development

Jinhua Zhao () and David Zilberman ()

Oxford Economic Papers, 1999, vol. 51, issue 3, 559-73

Abstract: The authors extend real option theory to evaluate natural resource development projects that may bring negative net benefits and require costly restoration. Based on a new concept, irreversibility cost, they show that the degree of irreversibility becomes an endogenous choice, rather than an exogenously given economic constraint. Fixed costs of restoration have continuous impacts, over and above the widely recognized fixed effects, on development and restoration levels (and the marginal q). The project's value may not necessarily be convex in the underlying random variable and discounting may, in fact, encourage the pattern of developing now and restoring later. Copyright 1999 by Royal Economic Society.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Irreversibility and Restoration in Natural Resource Development (1999) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:51:y:1999:i:3:p:559-73

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by A. Banerjee

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2019-12-04
Handle: RePEc:oup:oxecpp:v:51:y:1999:i:3:p:559-73