MODELING IMPACT OF CLIMATE CHANGE IN HYDROPOWER PROJECTS’ FEASIBILITY VALUATION
Abstract
In this paper a case study is presented to propose an alternative mechanism to include the impact of climate change into the hydropower projects’ feasibility valuation. We start from independent engineer historical energy generation simulations, therefore applying mixing unconditional disturbance and extreme value theory, a new path that satisfy a return level specification is created. New path is used to analyze the effect of extreme events on the internal rate of return of the project. This mechanism could be used also to execute a simple sensitivity test that it’s done with an educated guess.References
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[3] Harrison, G., Whittington, B., and Wallace, R. 2003. Climate change impacts on financial risk in hydropower projects. Institute of Electrical and Electronics Engineers - Power Systems, 18 (4): 1324-1330.
[4] Parry, M.L., Canziani, O.F., Palutikof, J.P., van der Linden P.J., and Hanson C.E., Eds. 2007. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge, UK, 976 pp
[5] McNeil, A.J. 1999. Extreme Value Theory for Risk Managers. Internal Modelling and CAD II. RISK Books, 93-113.
[6] Schachter, B. 1998. The Value of Stress Testing in Market Risk Management. Derivatives Risk Management Service.
[7] Tompkins, R.G., and D'Ecclesia, R.L. 2006. Unconditional Return Disturbances: A Non-parametric Simulation Approach. Journal of Banking & Finance: 30(1): 287-314.
Published
2016-11-11
How to Cite
SUAREZ, Ronny Araya.
MODELING IMPACT OF CLIMATE CHANGE IN HYDROPOWER PROJECTS’ FEASIBILITY VALUATION.
Journal of Environmental Management and Tourism, [S.l.], v. 3, n. 2, p. 70-75, nov. 2016.
ISSN 2068-7729.
Available at: <https://journals.aserspublishing.eu/jemt/article/view/383>. Date accessed: 28 apr. 2024.
Section
Journal of Environmental Management and Tourism
Keywords
extreme value theory; generalized Pareto distribution; return level; mixing unconditional disturbances; climate change; and stress testing
Copyright© 2023 The Author(s). Published by ASERS Publishing 2023. This is an open access article distributed under the terms of CC-BY 4.0 license.