In this paper, authors explore the effects of uncertainty on pricing of pollution permits, through the use of a dynamic model of pollution markets. Authors consider two major sources of uncertainty - that arising from the volatility of demand for the underlying resource and that coming from the...

In this paper authors present a preliminary approach to the evaluation of policies and projects based on current thinking on cost benefit analysis and real option methodology and the authors' recent work on the same subject. Authors start from the assumption that economic agents undertake...