Land-use Change and Solar Energy Production: A Real Option Approach

Ardjan Gazheli () and Luca Di Corato ()

No 2011.90, Working Papers from Fondazione Eni Enrico Mattei

Abstract: In this paper a real option model is developed to examine the critical factors affecting the decision to lease agricultural land to a company installing a PV power plant. The leasing payment is certain while the net revenues from agriculture are uncertain. We identify the profit values at which the farmer decides to lease his plot vs. continue farming it. By applying the model to the province of Bologna (Italy), we illustrate the possible land-use change scenarios in this area. We conclude by discussing the importance of PV energy production as a source of income for farmers and its implications from a social perspective.

Keywords: Land Allocation; Real Options; Renewable Energy; Solar farm; Uncertainty (search for similar items in EconPapers)
JEL-codes: C61 D81 Q24 Q42 (search for similar items in EconPapers)
Date: 2011-12
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Land-use change and solar energy production: a real option approach (2013)
Working Paper: Land-use Change and Solar Energy Production: A Real Option Approach (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2011.90

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