What is it about?
We introduce intuitive and easy-to-use fuzzy real options (RO) into the decision-making process of assessing maritime greening technologies. The considered RO valuation techniques take into account both benefits and risks associated with a greening technology. Furthermore, the results can be expressed visually, which makes the models even more intuitive. In the numerical example section, we compare the ‘plain vanilla’ purchase of a technology against a newly developed shared savings financing scheme. The results highlight the applicability of fuzzy RO models for shipping purposes and the relevance of alternative financing schemes for the greening of maritime operations.
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Why is it important?
1. Enhances the decision-making on the selection of maritime greening technologies 2. It is an intuitive and easy-to-use technique 3. Benefits and risks can be visualized and graphically compared 4. Highlights the benefits of shared savings financing schemes 5. The model is generic and, therefore, can be applied for any technology and any vessel type
Read the Original
This page is a summary of: Fuzzy real options and shared savings: Investment appraisal for green shipping technologies, Transportation Research Part D Transport and Environment, December 2019, Elsevier, DOI: 10.1016/j.trd.2019.09.016.
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Fuzzy real options and shared savings: Investment appraisal for green shipping technologies
Shipping finds itself at the beginning of a greening process that leads to the International Maritime Organization’s (IMO) objective of a 50% cut on the 2008 levels of greenhouse gas (GHG) emissions until 2050. Thus, the implementation of different emission abatement measures such as greening technologies is indispensable. Most research is focused on those abatement measures including policies, while partially neglecting financing issues. This article addresses this research gap by assessing the impact of financing concepts on the overall net present value (NPV) of a greening technology. Therefore, the latest green shipping research is reviewed, and the Fuzzy Pay-Off Method (FPOM) and the Center of Gravity-FPOM (CoG-FPOM) are applied. Numerical examples illustrate the relevance of financing concepts such as shared savings for the selection of abatement options. Further, they show the suitability and practical relevance of fuzzy real option methods for shipping purposes.
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