Abstract

GARCIA-RAMOS, Rebeca; DIAZ-DIAZ, Belén  and  LUNA-SOTORRIO, Ladislao. The usefulness of real options to assess fisheries investments: application to the fishery of hake (Merluccius spp.). Agrociencia [online]. 2016, vol.50, n.4, pp.533-549. ISSN 2521-9766.

The high degree of uncertainty inherent to the price of the fishing resources and the investment to initiate the activity in the sector show that fisheries need an instrument of valuation of the viability of each project that helps them make adequate investment decisions. The Real Options Valuation helps valuate the flexibility in decisions and include the possibility of the temporary abandonment of the fishing activity if the price conditions are not favorable. This study applied the Real Options Valuation on the economic valuation of an investment for the purchase of ships for hake fishing (Merluccius spp.) in the port of Santander (Spain).The value through real options turned out to be higher than the value through the traditional method, therefore accepting the decision to invest, which would have been rejected using the second method. This result was maintained after the sensitivity analyses developed, which considered variations in the volatility of the price of the resource, in the risk-free interest rate and in the convenience fee. Also, the value of the investment, including the option of the temporary abandonment of the activity was adjusted to a greater degree to the real value observed later on. In particular, the value of the option of abandoning the activity temporarily implied an additional value of 42.4 % of the cash flows generated by its use. This study showed the need to apply real options for the adequate valuation of investment projects related to this sector.

Keywords : Renewable natural resources; fishing; Merluccius spp.; investment; net present value; real options.

        · abstract in Spanish     · text in English | Spanish     · English ( pdf ) | Spanish ( pdf )