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Modeling the impact of climate change in hydropower projects’ feasibility valuation

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  • Suarez, Ronny

Abstract

In this paper a case study is presented to propose an alternative mechanism to include the impact of climate change into the hydropower projects’ feasibility valuation. We started from an independent engineer historical energy generation simulations; therefore, applying mixing unconditional disturbance and extreme value theory, a new path that satisfies a return level’ specification is created. The new path is used to analyze the effect of extreme events on the internal rate of return of the project. This mechanism could also be used to execute an educated guess as simple sensitivity test.

Suggested Citation

  • Suarez, Ronny, 2012. "Modeling the impact of climate change in hydropower projects’ feasibility valuation," MPRA Paper 41279, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41279
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    File URL: https://mpra.ub.uni-muenchen.de/41279/1/MPRA_paper_41279.pdf
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    References listed on IDEAS

    as
    1. Tompkins, Robert G. & D'Ecclesia, Rita L., 2006. "Unconditional return disturbances: A non-parametric simulation approach," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 287-314, January.
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    More about this item

    Keywords

    Extreme Value Theory; Generalized Pareto Distribution; Return Level; Mixing Unconditional Disturbances; Climate Change; Stress Testing;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • G00 - Financial Economics - - General - - - General

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