TY - JOUR
T1 - The application of DNPV to unlock foreign direct investment in waste-to-energy in developing countries
AU - Shimbar, Ali
AU - Ebrahimi, Seyed Babak
PY - 2017/8/1
Y1 - 2017/8/1
N2 - Commercial potential in developing countries has always received a great attention from international investors, but this is not the case in Waste-to-Energy sector. Waste-to-Energy is bound up with various uncertainties rooted in its long-term nature therefore incorporating risks regarding political matters in developing countries makes it more complex. The present study substantiates the incompatibility of classic valuation methods in risky projects. Consequently, to deal with the riskiness of Waste-to-Energy investment in less developed countries, the combination of binomial tree analysis and Decoupled NPV is proposed. The hybrid approach is deployed to value a Waste-to-Energy project in Iran, and all evidence attest to the robustness of the method. The contribution of this paper can open up new vistas for investing in Waste-to-Energy industry, thus abating the catastrophic effects of landfill gas emissions.
AB - Commercial potential in developing countries has always received a great attention from international investors, but this is not the case in Waste-to-Energy sector. Waste-to-Energy is bound up with various uncertainties rooted in its long-term nature therefore incorporating risks regarding political matters in developing countries makes it more complex. The present study substantiates the incompatibility of classic valuation methods in risky projects. Consequently, to deal with the riskiness of Waste-to-Energy investment in less developed countries, the combination of binomial tree analysis and Decoupled NPV is proposed. The hybrid approach is deployed to value a Waste-to-Energy project in Iran, and all evidence attest to the robustness of the method. The contribution of this paper can open up new vistas for investing in Waste-to-Energy industry, thus abating the catastrophic effects of landfill gas emissions.
KW - DNPV
KW - Foreign direct investment
KW - Renewable energy investment
KW - Waste-to-Energy
UR - http://www.scopus.com/inward/record.url?scp=85019841627&partnerID=8YFLogxK
U2 - 10.1016/j.energy.2017.05.098
DO - 10.1016/j.energy.2017.05.098
M3 - Article
AN - SCOPUS:85019841627
SN - 0360-5442
VL - 132
SP - 186
EP - 193
JO - Energy
JF - Energy
ER -