RISK ASSESSMENT IN OPEN-OCEAN AQUACULTURE: A FIRM-LEVEL INVESTMENT-PRODUCTION MODEL |
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| Authors: | Di Jin Hauke Kite-Powell Porter Hoagland |
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| Institution: | 1. Marine Policy Center, Woods Hole Oceanographic Institution , Woods Hole, USA djin@whoi.edu;3. Marine Policy Center, Woods Hole Oceanographic Institution , Woods Hole, USA |
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| Abstract: | ABSTRACT We develop a framework for risk assessment in open-ocean aquaculture. The framework consists of three components: a firm-level investment-production model simulates a specific grow-out project and estimates the project's benefit-cost values, a second model calculates the risk premium for a risk-averse investor, and a third model quantifies the option value for a risk-neutral investor. We show that under uncertainty, the traditional NPV rule for making an investment should be modified. We illustrate our models using a case study of open-ocean aquaculture of Atlantic cod (Gadus morhua) in New England. |
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| Keywords: | risk assessment open-ocean aquaculture simulation model atlantic cod |
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