Designing an Agricultural Vegetative Waste-Management System Under Uncertain Prices of Treatment-Technology Output Products
Broitman, D., Raviv, O., Ayalon, O., & Kan, I. (2018). Designing an agricultural vegetative waste-management system under uncertain prices of treatment-technology output products. Waste management, 75, 37-43.
20 Pages Posted: 28 Jun 2021
Date Written: 2018
Abstract
Setting up a sustainable agricultural vegetative waste-management system is a challenging investment task, particularly when markets for output products of waste-treatment technologies are not well established. We conducted a unique economic analysis of possible investments in treatment technologies of agricultural vegetative waste, while accounting for uncertain output prices. Under a risk-neutral approach, we found the range of output-product prices within which each considered technology becomes most profitable, using average final prices as the exclusive standard. Under a risk-averse perspective, we ranked the treatment technologies based on their computed certainty-equivalent profits as functions of the coefficient of variation of the technologies’ output prices. We found the ranking of treatment technologies based on average prices to be robust to output-price fluctuations provided that the coefficient of variation of the output prices is below about 0.4, that is, approximately twice as high as that of well-established recycled-material markets such as glass, paper and plastic.
Keywords: agricultural waste; economic model; optimization; risk neutral; risk averse
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