A new real option value due to "demographic risk" in the market for developable land

Jean Cavailhès, Mohamed Hilal () and Pierre Wavresky ()
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Jean Cavailhès: CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement
Mohamed Hilal: CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement
Pierre Wavresky: CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement

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Abstract: We study two option values in the developable land market in a French department (Nord): the classical option value relating to the short-run volatility of the land price and a long-run option value resulting from uncertainty about demographic change. The findings show that both are significant. First, the land price increases by 7.4-15.3% when the standard deviation (STD) of the land price rises by a STD. Second, an increase of one STD in the STD of the variation in population between 1982 and 1999 entails a 6% increase in the developable land price.

Keywords: Land market; Option values; Urban economics (search for similar items in EconPapers)
Date: 2013
Note: View the original document on HAL open archive server: https://hal.science/hal-00939785v1
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Published in Open Urban Studies Journal, 2013, 6, pp.1-8. ⟨10.2174/1874942901306010001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00939785

DOI: 10.2174/1874942901306010001

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