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Technology selection —the impact of economic risk on decision making

Research output: Contribution to journalArticlepeer-review

Author(s)

Andrew S. King, Nicholas G. Elliott, Mark A. James, Catriona K. Macleod, Trond Bjorndal

School/Research organisations

Abstract

Developing an understanding of economic variance (risk) is critical when evaluating alternative aquaculture production technologies. This article assesses the efficacy of employing a quantitative stochastic analysis technique to support technology selection decision making by undertaking a case study investment assessment of three alternative production expansion strategies (offshore sea-pens, land-based RAS growout and larger post-smolt) for the Tasmanian salmon industry. Results demonstrate that salmon aquaculture is undertaken with considerable underlying levels of economic risk, expansion offshore probably represents the lowest initial capital investment and greatest economic return, and that levels of financial uncertainty increase with land-based RAS production. The study highlights stochastic modeling provides significant “added-value” over single-point deterministic analysis and that developing an appreciation of the input variability is a key component in critically evaluating alternative production technologies.
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Details

Original languageEnglish
Number of pages27
JournalAquaculture Economics & Management
VolumeLatest Articles
Early online date21 Dec 2016
DOIs
Publication statusE-pub ahead of print - 21 Dec 2016

    Research areas

  • Aquaculture, Decision making, Monte Carlo simulation, Production technology, Risk, Stochastic modeling

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