Designing an agricultural vegetative waste-management system under uncertain prices of treatment-technology output products

D. Broitman*, O. Raviv, O. Ayalon, I. Kan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

Setting up a sustainable agricultural vegetative waste-management system is a challenging investment task, particularly when markets for output products of waste-treatment technologies are not well established. We conduct an economic analysis of possible investments in treatment technologies of agricultural vegetative waste, while accounting for fluctuating output prices. Under a risk-neutral approach, we find the range of output-product prices within which each considered technology becomes most profitable, using average final prices as the exclusive factor. Under a risk-averse perspective, we rank the treatment technologies based on their computed certainty-equivalent profits as functions of the coefficient of variation of the technologies’ output prices. We find the ranking of treatment technologies based on average prices to be robust to output-price fluctuations provided that the coefficient of variation of the output prices is below about 0.4, that is, approximately twice as high as that of well-established recycled-material markets such as glass, paper and plastic. We discuss some policy implications that arise from our analysis regarding vegetative waste management and its associated risks.

Original languageAmerican English
Pages (from-to)37-43
Number of pages7
JournalWaste Management
Volume75
DOIs
StatePublished - May 2018

Bibliographical note

Publisher Copyright:
© 2018 Elsevier Ltd

Keywords

  • Agricultural waste
  • Economic model
  • Optimization
  • Risk averse
  • Risk neutral

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