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On Risk Deductions In Public Project Appraisal

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  • Jock R. Anderson

Abstract

Project appraisal under uncertainty should, in general, be worked in terms of carefully computed expected or mean values of uncertain elements. The major exceptions are when: (a) project returns are large relative to national income; or (b) project returns are highly correlated with other national income. Approximate procedures have been developed for computing risk adjustments in each of these special cases singly, but here, a more comprehensive procedure is described that encompasses both cases separately and jointly.
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  • Jock R. Anderson, 1983. "On Risk Deductions In Public Project Appraisal," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 27(3), pages 231-239, December.
    • Handle: RePEc:bla:ajarec:v:27:y:1983:i:3:p:231-239
    DOI: j.1467-8489.1983.tb00428.x
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    1. Anderson, Jock R., 1979. "Impacts of Climatic Variability in Australian Agriculture: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 47(03), pages 1-31, December.
    2. Foldes, L P & Rees, R, 1977. "A Note on the Arrow-Lind Theorem," American Economic Review, American Economic Association, vol. 67(2), pages 188-193, March.
    3. Mayshar, Joram, 1977. "Should Government Subsidize Risky Private Projects?," American Economic Review, American Economic Association, vol. 67(2), pages 20-28, March.
    4. Agnar Sandmo, 1974. "Discount Rates for Public Investment Under Uncertainty," International Economic Association Series, in: Jacques H. Drèze (ed.), Allocation under Uncertainty: Equilibrium and Optimality, chapter 11, pages 192-210, Palgrave Macmillan.
    5. Breeden, Douglas T., 1979. "An intertemporal asset pricing model with stochastic consumption and investment opportunities," Journal of Financial Economics, Elsevier, vol. 7(3), pages 265-296, September.
    6. K.B. Hamal & Jock R. Anderson, 1982. "A Note On Decreasing Absolute Risk Aversion Among Farmers In Nepal," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 26(3), pages 220-225, December.
    7. Bird, Peter J W N, 1982. "The Arrow-Lind Theorem in a Continuum Economy: Note," American Economic Review, American Economic Association, vol. 72(3), pages 513-513, June.
    8. Nichols, Alan, 1972. "Uncertainty and the Evaluation of Public Investment Decisions: Comment," American Economic Review, American Economic Association, vol. 62(1), pages 168-169, March.
    9. Gardner, Roy, 1979. "The Arrow-Lind Theorem in a Continuum Economy," American Economic Review, American Economic Association, vol. 69(3), pages 420-422, June.
    10. Wellington, Donald, 1972. "Uncertainty and the Evaluation of Public Investment Decisions: Comment," American Economic Review, American Economic Association, vol. 62(1), pages 170-170, March.
    11. Grossman, Sanford J. & Shiller, Robert J., 1982. "Consumption correlatedness and risk measurement in economies with non-traded assets and heterogeneous information," Journal of Financial Economics, Elsevier, vol. 10(2), pages 195-210, July.
    12. Stewart, Marion B, 1979. "Should Government Subsidize Risky Private Projects? Comment," American Economic Review, American Economic Association, vol. 69(3), pages 459-461, June.
    13. Mishan, E J, 1972. "Uncertainty and the Evaluation of Public Investment Decisions: Comment," American Economic Review, American Economic Association, vol. 62(1), pages 161-164, March.
    14. Mayshar, Joram, 1979. "Should Government Subsidize Risky Private Projects? Reply," American Economic Review, American Economic Association, vol. 69(3), pages 462-464, June.
    15. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, November.
    16. Anderson, Jock R., 1974. "Simulation: Methodology and Application in Agricultural Economics," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 42(01), pages 1-53, March.
    17. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    18. McKean, Roland N & Moore, John H, 1972. "Uncertainty and the Evaluation of Public Investment Decisions: Comment," American Economic Review, American Economic Association, vol. 62(1), pages 165-167, March.
    19. Fisher, Anthony C., 1973. "A paradox in the theory of public investment," Journal of Public Economics, Elsevier, vol. 2(4), pages 405-407.
    20. James, Estelle, 1975. "A Note on Uncertainty and the Evaluation of Public Investment Decisions," American Economic Review, American Economic Association, vol. 65(1), pages 200-205, March.
    21. Louis Makowski, 1983. "Competitive Stock Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(2), pages 305-330.
    22. Pauly, Mark V, 1970. "Risk and the Social Rate of Discount," American Economic Review, American Economic Association, vol. 60(1), pages 195-198, March.
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    Cited by:

    1. Anderson, Jock R., 1990. "Thoughts On Risk Accounting In Public Project Appraisal," 1990 Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk Meeting, January 28-31, 1990, Sanibel Island, Florida 271534, Regional Research Projects > S-232: Quantifying Long Run Agricultural Risks and Evaluating Farmer Responses to Risk.

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