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The Space Value of Money

In: Hardwiring Sustainability into Financial Mathematics

Author

Listed:
  • Armen V. Papazian

    (University of Cambridge)

Abstract

This chapter presents the space value of money framework. It necessarily begins by introducing the analytical dimension of space, our physical context, into our heretofore risk and time focused analytical framework in finance. By doing so, it also introduces planet and humanity as two key stakeholders that must be formally accounted for in our mathematics of value and return alongside the mortal risk-averse return-maximising investor. The space value of money principle, which defines our relationship with space, establishes our spatial responsibility for impact. It offers a new space-adjusted mathematics of value and return with equations that quantify and integrate the space impact of cash flows into our models. The space value framework takes us beyond conventional risk and time based financial analysis and transforms the popular discounting methodology—the present value of future expected cash flows must now account for the space impact it would take to achieve or expect them, which must be compounded into the future when relevant.

Suggested Citation

  • Armen V. Papazian, 2023. "The Space Value of Money," Springer Books, in: Hardwiring Sustainability into Financial Mathematics, chapter 0, pages 69-113, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-45689-3_4
    DOI: 10.1007/978-3-031-45689-3_4
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    More about this item

    Keywords

    Sustainability; Financial mathematics; Money; Value; Risk; Time; Space; Impact;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G00 - Financial Economics - - General - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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