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Valuation when disaster risks increase at an increasing rate

Author

Listed:
  • Joshi, Ravi
  • Narayanan, Rajesh P.
  • Pace, R. Kelley

Abstract

Atmospheric CO2 been growing at an increasing rate for many years and this suggests that investments may face an increasing rate of future disaster risk. We provide a simple variation of the Gordon Growth model that accounts for potential increasing disaster risks and provides a closed-form bound to the reduction in value.

Suggested Citation

  • Joshi, Ravi & Narayanan, Rajesh P. & Pace, R. Kelley, 2023. "Valuation when disaster risks increase at an increasing rate," Economics Letters, Elsevier, vol. 224(C).
    • Handle: RePEc:eee:ecolet:v:224:y:2023:i:c:s0165176523000381
    DOI: 10.1016/j.econlet.2023.111013
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    References listed on IDEAS

    as
    1. Mark Kamstra, 2003. "Pricing firms on the basis of fundamentals," Economic Review, Federal Reserve Bank of Atlanta, vol. 88(Q1), pages 49-70.
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    More about this item

    Keywords

    Climate change; Increasing risks; Gordon growth model; Real estate; Valuation;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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