The Space Value of Money

Armen V. Papazian ()
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Armen V. Papazian: University of Cambridge

Chapter Chapter 4 in Hardwiring Sustainability into Financial Mathematics, 2023, pp 69-113 from Springer

Abstract: Abstract This chapter presents the space value of money framework. It necessarily begins by introducing the analytical dimension of space, our physical context, into our heretofore risk and time focused analytical framework in finance. By doing so, it also introduces planet and humanity as two key stakeholders that must be formally accounted for in our mathematics of value and return alongside the mortal risk-averse return-maximising investor. The space value of money principle, which defines our relationship with space, establishes our spatial responsibility for impact. It offers a new space-adjusted mathematics of value and return with equations that quantify and integrate the space impact of cash flows into our models. The space value framework takes us beyond conventional risk and time based financial analysis and transforms the popular discounting methodology—the present value of future expected cash flows must now account for the space impact it would take to achieve or expect them, which must be compounded into the future when relevant.

Keywords: Sustainability; Financial mathematics; Money; Value; Risk; Time; Space; Impact (search for similar items in EconPapers)
JEL-codes: E00 E58 G00 G30 Q51 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-45689-3_4

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DOI: 10.1007/978-3-031-45689-3_4

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