• Environmental and Resource Economics Review
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• v.27 no.4
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• pp.639-666
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• 2018

This paper analyses the investment options of groundwater development project under water price uncertainty. The optimal investment threshold price which trigger the investment are calibrated base on monopolistic real options model. Stochastic dynamic model is set to reflect the uncertainty of water price which follows the GBM (Geometric Brownian Motion) process. Our finding from non-cooperative investment decision model is that uncertainty of water price could deter the groundwater investment by considering the existence of option values. For policy markers, it is easy to manage 'charges for utilization of groundwater' rather than 'performance guarantee ratio' when managing groundwater investment with pricing policy. And it is necessary to make comprehensive and well-designed policies considering the characteristics of regional groundwater reservoir and groundwater developers.

• Korean Management Science Review
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• v.31 no.3
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• pp.95-111
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• 2014

It is essential to carry out an economic analysis on public water supply projects so that policy makers and water enterprises are aware of the actual value of the project. However, many popular approaches based on discounted cash flow analysis do not capture the uncertainties inherent in cash flow. In order to analyze the economic values of the water supply project of local governments, we utilize real option model, which considers uncertainty in future water price behavior and captures the value of real life flexibility. The real option model is designed to incorporate the option to expand and abandon, and it is applied to a local government case. Furthermore, we assess the project by exploring Luehrman's option space to accommodate the more efficient decision making. The results show that substantial amount of potential value is included in the public water supply service, and the overall value is greater than the value obtained from the discounted cash flow model.

• Proceedings of the Korea Water Resources Association Conference
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• 2012.05a
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• pp.688-688
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• 2012

불확도의 요인은 유속-면적법에 적용되는 방정식의 일반화된 형태를 고려하여 나타낼 수 있다. 하천에 대한 불확도, 수심에 대한 불확도, 점 유속의 결정에 대한 불확도, 평균유속의 예측과 유량에 대한 불확도가 불확도산정에 많은 영향을 미치는 요소라 할 수 있다. 유량측정을 실시할 때 불확도를 개선하기 위해서는 유속에 비례하여 측선수를 조절함이 좋은 등급을 확보하기에 성과의 품질 향상에 크게 기여하는 결과를 얻을 수 있다. 본 연구에서는 자연하천의 현장지점에서 실시간 수위를 확인하며 유속을 측정하였고, 측정 성과를 이용하여 유량과 불확도를 산정, 비교 분석하였다. 유량측정에 있어 측정 기기로는 국내에서 일반적으로 사용되는 회전식 유속계(PriceAA)를 사용하여 측정을 실시하였으며, 측정방법으로는 도섭법을 기준으로 1점법, 2점법, 3점법에 이르게 다양한 성과를 실측하여 측정한 결과에 적용된 측선수에 따른 불확도를 분석하였다. 그 결과 0.5 m/s 이하의 유속과 $1.5m^3/s$ 의 유량에서는 그림 2에서 제시하였듯 30개 이상의 측선수를 확보하므로 5 % 미만의 2등급을 확보할 수 있었다. 그림 3은 9개의 지점 28회의 측정 결과를 측선수별 평균 불확도를 산정하여 유속 0.5m/s ~ 0.7m/s의 범위에서는 30개 미만의 측선수를 확보하여도 2등급의 품질을 확보할 수 있었으며, 이는 유속과 측선수의 관계를 나타내는 결과이다. 따라서 측정 자료의 신뢰성을 확보할 수 있는 2등급 이상을 얻기 위해서는 국제기준(ISO 748)에 따른 측선수를 적용하되 현장지점의 특성에 따라 유속을 고려한 측선수를 적용하는 것이 필요할 것으로 판단된다.

• Journal of Korea Water Resources Association
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• v.46 no.10
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• pp.997-1004
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• 2013

There is imminent need to find a way to measure the recreational benefits of water so that appropriate actions can be taken to make a multi-purpose reservoir. Therefore, this study attempts to apply a choice experiment to quantifying the recreational benefits of a multi-purpose reservoir, using a specific case study of Sangkwan multi-purpose reservoir. We consider the trade-offs between price and attributes of recreational attributes for selecting a preferred alternative and derive the marginal willingness to pay (MWTP) estimate for each attribute. The results show that the MWTP for providing additional 10,000 ton of water is estimated to be 3 won per household per year. The MWTP for improving 1 level of water quality is computed to be 645.5 won per household per year. Moreover, the MWTP for providing recreation facilities is calculated to be 1,518.6 won per household per year. This study allows us to provide policy-makers with useful quantitative information that can reduce uncertainty in the decision-making process related to a multi-purpose reservoir construction projects.

• Journal of Ecology and Environment
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• v.43 no.1
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• pp.61-72
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• 2019

Background: Organic carbon stored in coastal wetlands, which comprises the major part of oceanic "blue carbon," is a subject of growing interest and concern. In this study, organic carbon storage in coastal wetlands and its economic value were estimated using the raw data of 25 studies related to soil carbon storage. Data were collected from three tidal flats (one protected and two developed areas) and two estuarine salt marshes (one protected and one restored area). Bulk density, soil organic matter content, and standing biomass of vegetation were all considered, with Monte Carlo simulation applied to estimate the uncertainty. Results: Mean carbon storage in two salt marshes ranged between 14.6 and $25.5kg\;C\;m^{-2}$. Mean carbon storage in tidal flats ranged from 18.2 to $28.6kg\;C\;m^{-2}$, with variability possibly related to soil texture. The economic value of stored carbon was estimated by comparison with the price of carbon in the emission trading market. The value of US $ $6600\;ha^{-1}$ is ~ 45% of previously estimated ecosystem services from fishery production and water purification functions in coastal areas. Conclusions: Although our study sites do not cover all types of large marine ecosystem, this study highlights the substantial contribution of coastal wetlands as carbon sinks and the importance of conserving these habitats to maximize their ecosystem services.

• Economic and Environmental Geology
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• v.41 no.5
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• pp.551-562
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• 2008

Option pricing model in finance has been applied to price non-financial options, called real options. The real option valuation method is ideally suited to irreversible decision making under uncertainty, including the need to determine the optimal time to act and even change between alternative courses of action as information is collected. Therefore, the real option valuation method is expected to provide a superior and less subjective approach to determining optimal strategies for water resources supply projects, which have been reported to have huge risks due to uncertainties, and investors and policy makers need to build an optimal strategy - when and if to invest - with uncertainties and managerial flexibilities considered.

• Proceedings of the Korea Water Resources Association Conference
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• 2011.05a
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• pp.20-20
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• 2011

The purpose of this research aims to evaluate the emergence of new business mode in the Chinese water market since the mid-2000s - Transfer-Operate-Transfer(TOT) Projects. The study pays special attention to the case of the Hefei Wangxiaoying Wastewater Treatment TOT Project, which was awarded to the consortium of Berlin Water International and its Chinese partner in late 2004. The consortium secured an exclusive operating right for 23 years on the basis of a TOT scheme and would take responsibility of all the profits and losses in the operation of the plant. The total investment for the transfer amounted to RMB 491 million(US$70 million). The price was more than 288% of the original value, RMB 170 million (US$24 million). The project can be regarded as a successful case because of the following three causes. First, the Hefei government followed a series of standardized procedures in the international bidding, which ignited best-performed international players' competition for the project. Second, the project will bring in cutting-edge operation skills and management know-how. Third, the government succeeded in raising public asset values, and thanks to this, the government is able to consider other similar projects not only in the water sector but also other sectors in public utility services. Nevertheless, Berlin Water's point of view, there are several challenges. First, the company took a risk to pay such a large amount of cash to the Hefei government. Although such premium can be recouped in the operation period of 23 years, whether or not the company would be able to recover the initial investment and realize profits is in question due to an uncertainty of socio-political circumstances in China. Second, Berlin Water should expect a steep rise of water tariffs over the contract period in order to get the investment back. Water pricing is still a sensible matter to Chinese authorities, and therefore, it is uncertain if such rise of water tariffs would be possible. Third, the TOT mode leads to creation of a large amount of cash to government officials, which might have caused corruption between those who are involved in TOT deals. Then, the final contract fee would soar, which often results in the burden of normal customers. As discussed, the TOT mode has drawn much attention of foreign investors as a new alternative to enter into the Chinese water market. But it is important to note that foreign investors should be aware of possible risks in water TOT projects, which reflects some features of the Chinese political economy landscape and social norms. The Hefei case indicates that benefits can overshadow risks in TOT projects, which will continue to attract foreign investors that are dedicated to establishing their strongholds in the Chinese water market.

• Journal of Environmental Policy
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• v.6 no.1
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• pp.61-81
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• 2007

Types of agricultural policy can be catagorized into two general cases: price and income supports. Income supports are any government program designed to provide farmers with higher incomes than they would receive otherwise. These direct cash payments to farmers are known as "deficiency payment" or "direct payment" because they compensate the farmer for the failure of the market to provide farmers with adequate prices. The direct payment to environment-friendly agriculture is a form of income supports for the agriculture production using less pesticides and chemical fertilizers. Because no significant regulation exists on the use of fertilizers substituting chemical fertilizers for crop, the role of the payment on reducing environmental impacts of agriculture is not entirely clear. This uncertainty is likely to be particularly severe in the case that farmers with low-quality land showing greater demand for fertiliser have an incentive to transition to environment-friendly agriculture. The paper shows the case of the current payment system in Korea.

• Journal of Korea Port Economic Association
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• v.25 no.1
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• pp.63-86
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• 2009

With increasing uncertainty of energy market in the world, the policies for the energy resource security have become crucial Several countries with poor energy resource like Netherlands and Singapore have pursued the policy for becoming an oil hub in the region. Singapore has been an oil hub in East Asia for a long time not only because it is well located with a large number of countries exporting and importing oil but it has also pursued strong policies to become an oil hub while establishing favourable institutional, regulatory and business environment for accommodating major refineries and petro-chemical companies. However with growing trading volume of petroleum products in Northeast Asia and a record high price of oil in these days, the necessities of another oil hub in the region are considered in order to reap benefits of the security of economical and stable oil. South Korea is situated astride the main North Pacific shipping route, with deep water ports and proximity to Chinese and Japanese industrial centres that make tank terminal operators Ideal choices for the oil hub in Northeast Asia although it has several disadvantages such as lack of independent storage facilities, underdeveloped oil trading market and unfavourable business friendly climates etc. This study is focused on examining the globalization strategies of tank terminal operators such as Vopak, Oiltanking and Odfjell in order to suggest the policy implications for becoming an oil tub in Northeast Asia.