Purpose – In this paper, a real option model is developed to examine the critical factors affecting the decision to lease agricultural land to a company installing a PV power plant. Subsidies introduced by governments for the production of renewable energies have increased the investments in this sector. Since ground-based solar cells need land for energy production, then potential trade-off with agriculture in terms of land exists. The paper aims to discuss these issues. Design/methodology/approach – The paper uses the real option approach in order to take into account for uncertainty and irreversibility of the farmer’s decision. Findings – By applying the model to the province of Bologna (Italy), the paper illustrates the possible land-use change scenarios in this area. The paper concludes by discussing the importance of PV energy production as a source of income for farmers and its implications from a social perspective. Originality/value – The research is applied to the province of Bologna (Italy) where investments in ground-based solar cells are becoming quite common. The originality lies in the fact of considering the investment as irreversible, since it is a 20-year commitment from the farmers. The paper also takes into account the uncertainty in agricultural commodities’ prices.
Autori: | |
Data di pubblicazione: | 2013 |
Titolo: | Land-use change and solar energy production: A real option approach |
Rivista: | AGRICULTURAL FINANCE REVIEW |
Digital Object Identifier (DOI): | http://dx.doi.org/10.1108/AFR-05-2012-0024 |
Volume: | 73 |
Appare nelle tipologie: | 2.1 Articolo su rivista |