Conrad, Jon M.; Lopez, Andres - Charles H. Dyson School of Applied Economics and … - 2000
An option-pricing model is developed to rank investments that might improve water quality. The model presumes that two … option-pricing model provides a criterion for determining when it is optimal to adopt the investment with the highest option … value. Option value, in this model, measures the expected present value in reduced damage, relative to doing nothing. If the …