A real options analysis of Australian wheat production under climate change

dc.contributor.authorSanderson, Todd
dc.contributor.authorHertzler, Greg
dc.contributor.authorCapon, Tim
dc.contributor.authorHayman, Peter
dc.date.accessioned2016-03-15T08:25:54Z
dc.date.issued2016-01
dc.description.abstractA significant portion of the world's agricultural systems currently operate at the extreme end of the climate conditions that are considered to be suitable for crop and livestock production. Under these conditions, even moderate climate changes are anticipated to drive substantial transformational changes to agricultural systems. Transformations require new investments and infrastructure and can leave some assets stranded. These transformations can be partially or wholly irreversible and hysteresis effects can make switching difficult and mistakes costly to reverse. This paper demonstrates how a real options decision framework, Real Options for Adaptive Decisions (ROADs), can be used to investigate how uncertainties about the climate affect the adaptation and transformation of agricultural systems. By building upon recent developments in the mathematics of stochastic optimization, we extend traditional economic analyses of agricultural investment decisions based on net present values to better represent incomplete knowledge and uncertainty. We report results from a case study in South Australia that describes the transition pathways farmers might follow as their industries are transformed in response to climate change.en_ZA
dc.description.embargo2018-01-31
dc.description.librarianhb2015en_ZA
dc.description.urihttp://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-8489en_ZA
dc.identifier.citationSanderson, T, Hertzler, G, Capon, T & Hayman, P 2016, 'A real options analysis of Australian wheat production under climate change', Australian Journal of Agricultural and Resource Economics, vol. 60, no. 1, pp. 79-96.en_ZA
dc.identifier.issn1364-985X (print)
dc.identifier.issn1467-8489 (online)
dc.identifier.other10.1111/1467-8489.12104
dc.identifier.urihttp://hdl.handle.net/2263/51847
dc.language.isoenen_ZA
dc.publisherWileyen_ZA
dc.rights© Australian Agricultural and Resource Economics Society Inc. This is the pre-peer reviewed version of the following article : A real options analysis of Australian wheat production under climate change, Australian Journal of Agricultural and Resource Economics, vol. 60, no.1, pp.79-96, 2016. doi : 10.1111/1467-8489.12104. The definite version is available at : http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-8489.en_ZA
dc.subjectReal optionsen_ZA
dc.subjectClimate changeen_ZA
dc.subjectAdaptationen_ZA
dc.subjectWheat productionen_ZA
dc.titleA real options analysis of Australian wheat production under climate changeen_ZA
dc.typePostprint Articleen_ZA

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