Flexible waste management under uncertainty
(2014) In European Journal of Operational Research 234(1). p.174-185- Abstract
- In this paper, we use stochastic dynamic programming to model the choice of a municipality which has to design an optimal waste management program under uncertainty about the price of recyclables in the secondary market. The municipality can, by undertaking an irreversible investment, adopt a flexible program which integrates the existing landfill strategy with recycling, keeping the option to switch back to landfilling, if profitable. We determine the optimal share of waste to be recycled and the optimal timing for the investment in such a flexible program. We find that adopting a flexible program rather than a non-flexible one, the municipality: (i) invests in recycling capacity under circumstances where it would not do so otherwise;... (More)
- In this paper, we use stochastic dynamic programming to model the choice of a municipality which has to design an optimal waste management program under uncertainty about the price of recyclables in the secondary market. The municipality can, by undertaking an irreversible investment, adopt a flexible program which integrates the existing landfill strategy with recycling, keeping the option to switch back to landfilling, if profitable. We determine the optimal share of waste to be recycled and the optimal timing for the investment in such a flexible program. We find that adopting a flexible program rather than a non-flexible one, the municipality: (i) invests in recycling capacity under circumstances where it would not do so otherwise; (ii) invests earlier; and (iii) benefits from a higher expected net present value. (C) 2013 Elsevier B.V. All rights reserved. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/4318486
- author
- Di Corato, Luca and Montinari, Natalia LU
- organization
- publishing date
- 2014
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Real options, Flexibility, Municipal waste, Recycling
- in
- European Journal of Operational Research
- volume
- 234
- issue
- 1
- pages
- 174 - 185
- publisher
- Elsevier
- external identifiers
-
- wos:000330148600016
- scopus:84890442584
- ISSN
- 0377-2217
- DOI
- 10.1016/j.ejor.2013.09.026
- language
- English
- LU publication?
- yes
- id
- 2e1e08c2-8d65-41da-8292-53eb8f91793b (old id 4318486)
- date added to LUP
- 2016-04-01 10:09:22
- date last changed
- 2022-03-27 05:24:28
@article{2e1e08c2-8d65-41da-8292-53eb8f91793b,
abstract = {{In this paper, we use stochastic dynamic programming to model the choice of a municipality which has to design an optimal waste management program under uncertainty about the price of recyclables in the secondary market. The municipality can, by undertaking an irreversible investment, adopt a flexible program which integrates the existing landfill strategy with recycling, keeping the option to switch back to landfilling, if profitable. We determine the optimal share of waste to be recycled and the optimal timing for the investment in such a flexible program. We find that adopting a flexible program rather than a non-flexible one, the municipality: (i) invests in recycling capacity under circumstances where it would not do so otherwise; (ii) invests earlier; and (iii) benefits from a higher expected net present value. (C) 2013 Elsevier B.V. All rights reserved.}},
author = {{Di Corato, Luca and Montinari, Natalia}},
issn = {{0377-2217}},
keywords = {{Real options; Flexibility; Municipal waste; Recycling}},
language = {{eng}},
number = {{1}},
pages = {{174--185}},
publisher = {{Elsevier}},
series = {{European Journal of Operational Research}},
title = {{Flexible waste management under uncertainty}},
url = {{http://dx.doi.org/10.1016/j.ejor.2013.09.026}},
doi = {{10.1016/j.ejor.2013.09.026}},
volume = {{234}},
year = {{2014}},
}