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Long-Term Risk Management of Nuclear Waste: A Real Options Approach

Author

Listed:
  • Henri Loubergé

    (Department of Economics - UNIGE - Université de Genève = University of Geneva)

  • Stéphane Villeneuve

    (Département de Mathématiques (Evry) - UFR SFA - UFR Sciences Fondamentales et Appliquées (Evry) - UEVE - Université d'Évry-Val-d'Essonne)

  • Marc Chesney

    (HEC Paris - Recherche - Hors Laboratoire - HEC Paris - Ecole des Hautes Etudes Commerciales)

Abstract

In this paper, we investigate the optimal timing for deep geological disposal of nuclear waste. Our model is based on the real options approach to investment under uncertainty. In this context, the problem is similar to the optimal exercise policy for a perpetual American spread option. The potential usefulness of such a model for actual decision-making on a sensitive issue is illustrated by some numerical simulations.

Suggested Citation

  • Henri Loubergé & Stéphane Villeneuve & Marc Chesney, 2002. "Long-Term Risk Management of Nuclear Waste: A Real Options Approach," Working Papers hal-00594373, HAL.
    • Handle: RePEc:hal:wpaper:hal-00594373
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    References listed on IDEAS

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    Cited by:

    1. Abdullah Almansour & Margaret Insley, 2016. "The Impact of Stochastic Extraction Cost on the Value of an Exhaustible Resource: An Application to the Alberta Oil Sands," The Energy Journal, , vol. 37(2), pages 61-88, April.
    2. Iyer, Sriya & Velu, Chander, 2006. "Real options and demographic decisions," Journal of Development Economics, Elsevier, vol. 80(1), pages 39-58, June.
    3. Michel-Alexandre Cardin & Steven J. Steer & William J. Nuttall & Geoffrey T. Parks & Leonardo V.N. Gonçalves, 2010. "Minimizing the Cost of Innovative Nuclear Technology Through Flexibility: The Case of a Demonstration Accelerator-Driven Subcritical Reactor Park," Working Papers EPRG 1018, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    4. Christian Gollier & Jean-Guy Devezeaux de Lavergne, 2001. "Analyse quantitative de la réversibilité du stockage des déchets nucléaires : valorisation des déchets," Economie & Prévision, La Documentation Française, vol. 149(3), pages 1-13.
    5. Lappi, Pauli & Lintunen, Jussi, 2021. "From cradle to grave? On optimal nuclear waste disposal," Energy Economics, Elsevier, vol. 103(C).
    6. Richard Benjamin & Jeffrey Wagner, 2006. "Reconsidering the law and economics of low-level radioactive waste management," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 8(1), pages 33-53, December.
    7. Marreco, Juliana de Moraes & Carpio, Lucio Guido Tapia, 2006. "Flexibility valuation in the Brazilian power system: A real options approach," Energy Policy, Elsevier, vol. 34(18), pages 3749-3756, December.
    8. Cardin, Michel-Alexandre & Zhang, Sizhe & Nuttall, William J., 2017. "Strategic real option and flexibility analysis for nuclear power plants considering uncertainty in electricity demand and public acceptance," Energy Economics, Elsevier, vol. 64(C), pages 226-237.
    9. Ugo Bardi, 2016. "What Future for the Anthropocene? A Biophysical Interpretation," Biophysical Economics and Resource Quality, Springer, vol. 1(1), pages 1-7, August.
    10. Anastasios Michailidis & Konstadinos Mattas & Irene Tzouramani & Diamantis Karamouzis, 2009. "A Socioeconomic Valuation of an Irrigation System Project Based on Real Option Analysis Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(10), pages 1989-2001, August.
    11. Bobtcheff, Catherine & Villeneuve, Stéphane, 2010. "Technology choice under several uncertainty sources," European Journal of Operational Research, Elsevier, vol. 206(3), pages 586-600, November.
    12. Rothwell, Geoffrey & Wood, Thomas W. & Daly, Don & Weimar, Mark R., 2014. "Sustainability of light water reactor fuel cycles," Energy Policy, Elsevier, vol. 74(S1), pages 16-23.
    13. Richard Benjamin & Jeffrey Wagner, 2006. "Reconsidering the law and economics of low-level radioactive waste management," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 8(1), pages 33-53, December.

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    More about this item

    Keywords

    Risk management; optimal stopping; real and American options;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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