The paper considers the use of a non-edible plant, Jatropha curcas (JC), for the production of biofuel as a substitute for traditional fossil fuel. The whole production chain is analyzed; energy and environmental balances are reported. The investment value in biofuel from JC is also studied, and both its intrinsic and option values are calculated. A reference case is evaluated, namely, the cultivation of JC as substitution for conventional fuel in a specific less developed country, Kenya, that lies in the tropical region where JC grows. The investment is modelled as a perpetual investment call option. It is shown that the Net Present Value is positive for a vast range of discount factors and investment costs, while the option value depends crucially on the parameters of the model. Finally, the case of a relinquishment requirement for the specific land-use is also evaluated by modeling the corresponding American call option value; it is shown that a land-use release requirement does not change the optimal investment strategy.
Biofuel from Jatrofa Curcas: environmental sustainability and option value
FONTINI, FULVIO
2009-01-01
Abstract
The paper considers the use of a non-edible plant, Jatropha curcas (JC), for the production of biofuel as a substitute for traditional fossil fuel. The whole production chain is analyzed; energy and environmental balances are reported. The investment value in biofuel from JC is also studied, and both its intrinsic and option values are calculated. A reference case is evaluated, namely, the cultivation of JC as substitution for conventional fuel in a specific less developed country, Kenya, that lies in the tropical region where JC grows. The investment is modelled as a perpetual investment call option. It is shown that the Net Present Value is positive for a vast range of discount factors and investment costs, while the option value depends crucially on the parameters of the model. Finally, the case of a relinquishment requirement for the specific land-use is also evaluated by modeling the corresponding American call option value; it is shown that a land-use release requirement does not change the optimal investment strategy.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
