Staff Publications

Staff Publications

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    'Staff publications' is the digital repository of Wageningen University & Research

    'Staff publications' contains references to publications authored by Wageningen University staff from 1976 onward.

    Publications authored by the staff of the Research Institutes are available from 1995 onwards.

    Full text documents are added when available. The database is updated daily and currently holds about 240,000 items, of which 72,000 in open access.

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Record number 554729
Title Real Options and Environmental Policies: The Good, the Bad, and the Ugly
Author(s) Wesseler, J.H.H.; Zhao, Jinhua
Source Annual Review of Resource Economics 11 (2019). - ISSN 1941-1340 - p. 43 - 58.
DOI https://doi.org/10.1146/annurev-resource-100518-094140
Department(s) WASS
Agricultural Economics and Rural Policy
Publication type Refereed Article in a scientific journal
Publication year 2019
Keyword(s) real options - environmental policy - irreversibility - precautionary principle - sustainability - technological change
Abstract The literature on real options shows that irreversibilities, uncertainties aboutfuture benefits and costs, and the flexibility in decision making generate benefitsand costs of delaying immediate action. When applied to government policy making, real option models can lead to efficient policies that take full account of these trade-offs, but they can also cause strategic behavior that tries to delay policies through influencing important elements such as downside risks. This contribution reviews the latest developments in real option–based policy research by looking at what we know about the benefits from waiting (the good), the costs from waiting (the bad), and how strategic behavior can influence policies (the ugly). Much has been said in the literature about the good and the bad, but more work is needed to study the ugly aspects of real option–driven policies.
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