Employing real options methodology in agricultural investments: the case of greenhouse construction

The latest developments in investment analysis offer a number of valuable insights into how to evaluate investment opportunities encountering the weaknesses of net present value criterion. More specifically, irreversibility, uncertainty and the choice of timing are conditions that net present value does not include but they alter the investment decision in a determinant way. By employing contingent claims analysis in tangible investments better assessment results can be derived. In this work, an attempt is made to modify the NPV criterion by incorporating the real options approach, and its application is demonstrated in a greenhouse construction investment plan. A discounted cash flow approach indicates that the adoption of a new technology project under uncertainty is feasible while the real options approach differentiates the results. The corollary is that the real options approach can be proved useful when assessing projects with uncertainty and irreversibility and it can provide a new way of examining agricultural investment decisions.

Assessing the efficiency of small-scale and bottom trawler vessels in Greece

This study explores the technical and scale efficiency of two types of Greek fishing vessels, small-scale vessels and bottom trawlers, using a bias-corrected input-oriented Data Envelopment Analysis model. Moreover, the associations between efficiency scores and vessel's and skipper's characteristics are also explored. The results indicate that small-scale vessels achieve a very low average technical efficiency score (0.42) but a much higher scale efficiency score (0.81). Conversely, bottom trawlers achieve lower scale but higher technical efficiency scores (0.68 and 0.73, respectively). One important finding of this study is that the technical efficiency of small-scale vessels, in contrast to trawlers, is positively associated with the experience of the skipper. In a looser context, it can be said that small-scale fisheries mainly rely on skill, whereas bottom trawlers rely more on technology. This study concludes that there is space for improvement in efficiency, mainly for small-scale vessels, which could allow the achievement of the same level of output by using reduced inputs. © 2016 by the authors

The role of sheep and goat breed’s value chain in the rural development in the Mediterranean region

National audienc

The role of sheep and goat breed’s value chain in the rural development in the Mediterranean region

National audienc

Is investment time irreversible? Some empirical evidence for disaggregated UK manufacturing data

It has long been suggested that investment may be time irreversible, and consideration of the option value of waiting to invest has aroused renewed interest in this issue. This study tests for time irreversibility in UK investment according to disaggregation by type of investment expenditure and across manufacturing sector groupings. The test results reported indicate that the irreversibility of investment patterns varies not only from industry to industry but also according to the type of capital being purchased, with significant time irreversibility detected in gross fixed capital formation and aggregate vehicles expenditure, and industrial sector groupings comprising fuels and oil refining, engineering and vehicles, and textiles and leather. However, only in the first and last of these series is time irreversibility attributable to non-linearities in the underlying data generating process, and consistent with threshold effects which may be associated with (S,s) type models of investment dynamics.