Suchergebnisse

ABSTRACT Nongovernmental organizations frequently receive donations of land that have unknown characteristics. This paper presents an analytical model of the option to preserve such land. The nongovernmental organizations' option value arises from the option to preserve or sell the land to generate funds for other preservation projects. We show that die preservation option is equivalent to an option that allows the nongovernmental organization to choose between he maximum of the market value of the land and the preservation value of the land. From the resulting closed from solution of the option to preserve, we perform comparative statics showing how the relevant factors (preservation value of the land, the development value of the land, the length of the that the option is available, and the uncertainty surrounding the relative values of preservation and development) influence the value of the preservation option. In addition, to the basic model, we present three model modifications. The first examines the effects of costly preservation and costly nonpreservation. In the second extension, we examine the effects of freeriding modeled by a continuous variable. In the final modification, we relax the assumption of the fixed survey period and show the optimal development date.