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Information Gains of the Policy Maker Option Value of Major Public Infrastructure Projects
[Gains d'information du décideur public et valeur d'option des grands projets d'infrastructure]

Author

Listed:
  • Laurent Denant-Boèmont

    (LET - Laboratoire d'économie des transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Sabrina Hammiche

    (UBO - Université de Brest, LET - Laboratoire d'économie des transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyses the risk of dynamic irreversibility for major public infrastructure projects using the theory of quasi-option value (Henry, 1974; Arrow, Fisher, 1974) in cost-benefit analysis. The case study compares two competing public infrastructure projects: an irreversible motorway project and a flexible rail project. The latter allows the motorway investment decision to be deferred. Quasi-option value is then applied for a risk environment in which information increases over time, changing the balance between the two projects. The monetised value of the environmental externalities, upon which today's transport policy tends to focus, might then be viewed as secondary to projects' irreversibility costs.

Suggested Citation

  • Laurent Denant-Boèmont & Sabrina Hammiche, 2000. "Information Gains of the Policy Maker Option Value of Major Public Infrastructure Projects [Gains d'information du décideur public et valeur d'option des grands projets d'infrastructure]," Post-Print halshs-01356848, HAL.
    • Handle: RePEc:hal:journl:halshs-01356848
    DOI: 10.3406/ecop.2000.6097
    as

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