Real option model for valuing public-private infrastructure projects with minimum income guarantees
Public-private agreements for the development of infrastructure projects constitute a strategic alliance between the public sector, developers, and private financiers. Contracts contain clauses for early termination, deadline extensions, and revenue guarantees, granting strategic flexibility. This m...
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| Formato: | Artículo revista |
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Facultad de Ciencias Económicas de la Universidad Nacional del Nordeste - UNNE
2025
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| Acceso en línea: | https://revistas.unne.edu.ar/index.php/rfce/article/view/8338 |
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I48-R154-article-83382025-07-04T15:58:06Z Real option model for valuing public-private infrastructure projects with minimum income guarantees Modelo de opciones reales para valorar proyectos de infraestructura vial público-privado: garantías de ingresos mínimos y pasivos contingentes Milanesi, Gastón Silverio Ferreira, Carlos Alberto public-private agreements real options minimum income guarantee contingent liabilities equilibrium tariffs acuerdos público-privado opciones reales garantía ingresos mínimos pasivos contingentes tarifas equilibrio Public-private agreements for the development of infrastructure projects constitute a strategic alliance between the public sector, developers, and private financiers. Contracts contain clauses for early termination, deadline extensions, and revenue guarantees, granting strategic flexibility. This makes traditional valuation methods ineffective for estimating resources committed by governments and the value of the concession for the private sector. Numerical alternatives based on real options theory are needed to incorporate the value of flexibility and its economic and financial impact. This paper proposes a binomial numerical model to quantify the contingent value of minimum revenue guarantees, impact on future budgets, economic value of the investment, and break-even rates. To this end, a case study in administration is applied to a road infrastructure development and toll concession. The anatomy of project risk is analyzed through simulation of the stochastic revenue process and VAR estimation. The binomial model is then applied to estimate: contingent value of the minimum revenue guarantee, present value of the government's contingent liabilities, value of the project with strategic flexibility from the private sector's perspective, and equilibrium rates for zero strategic present value. Los acuerdos públicos-privados para el desarrollo de proyectos de infraestructura constituyen una alianza estratégica entre sector público, desarrolladores y privados financieros. Los contratos contienen cláusulas de finalización anticipada, extensión de plazos, garantías de ingresos otorgándole flexibilidad estratégica. Esto hace que los métodos de valoración tradicionales sean ineficaces para estimar recursos comprometidos por los gobiernos y valor de la concesión para el privado. Es necesario plantear alternativas numéricas basadas en la teoría de opciones reales para incorpora el valor de la flexibilidad y su impacto económico financiero. El trabajo propone un modelo numérico binomial para cuantificar el valor contingente de garantías de ingreso mínimo, afectación a futuros presupuestos, valor económico de la inversión y tarifas de equilibrio. Para ello, se utiliza el estudio de casos en administración, aplicado a un desarrollo de infraestructura vial y concesión de peaje. La anatomía del riesgo del proyecto es analizada con simulación sobre el proceso estocástico de ingresos y estimación del VAR. Seguidamente se aplica el modelo binomial para estimar: valor contingente de la garantía mínima de ingresos, valor actual de los pasivos contingentes del gobierno, valor del proyecto con flexibilidad estratégica desde la perspectiva del privado y tarifas de equilibrio para valor actual estratégico cero. Facultad de Ciencias Económicas de la Universidad Nacional del Nordeste - UNNE 2025-07-04 info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion application/pdf https://revistas.unne.edu.ar/index.php/rfce/article/view/8338 10.30972/rfce.3418338 Revista de la Facultad de Ciencias Económicas; Vol. 34 Núm. 1 (2025); 25-54 1668-6365 1668-6357 spa https://revistas.unne.edu.ar/index.php/rfce/article/view/8338/7953 http://creativecommons.org/licenses/by-nc-sa/4.0 |
| institution |
Universidad Nacional del Nordeste |
| institution_str |
I-48 |
| repository_str |
R-154 |
| container_title_str |
Revistas UNNE - Universidad Nacional del Noroeste (UNNE) |
| language |
Español |
| format |
Artículo revista |
| topic |
public-private agreements real options minimum income guarantee contingent liabilities equilibrium tariffs acuerdos público-privado opciones reales garantía ingresos mínimos pasivos contingentes tarifas equilibrio |
| spellingShingle |
public-private agreements real options minimum income guarantee contingent liabilities equilibrium tariffs acuerdos público-privado opciones reales garantía ingresos mínimos pasivos contingentes tarifas equilibrio Milanesi, Gastón Silverio Ferreira, Carlos Alberto Real option model for valuing public-private infrastructure projects with minimum income guarantees |
| topic_facet |
public-private agreements real options minimum income guarantee contingent liabilities equilibrium tariffs acuerdos público-privado opciones reales garantía ingresos mínimos pasivos contingentes tarifas equilibrio |
| author |
Milanesi, Gastón Silverio Ferreira, Carlos Alberto |
| author_facet |
Milanesi, Gastón Silverio Ferreira, Carlos Alberto |
| author_sort |
Milanesi, Gastón Silverio |
| title |
Real option model for valuing public-private infrastructure projects with minimum income guarantees |
| title_short |
Real option model for valuing public-private infrastructure projects with minimum income guarantees |
| title_full |
Real option model for valuing public-private infrastructure projects with minimum income guarantees |
| title_fullStr |
Real option model for valuing public-private infrastructure projects with minimum income guarantees |
| title_full_unstemmed |
Real option model for valuing public-private infrastructure projects with minimum income guarantees |
| title_sort |
real option model for valuing public-private infrastructure projects with minimum income guarantees |
| description |
Public-private agreements for the development of infrastructure projects constitute a strategic alliance between the public sector, developers, and private financiers. Contracts contain clauses for early termination, deadline extensions, and revenue guarantees, granting strategic flexibility. This makes traditional valuation methods ineffective for estimating resources committed by governments and the value of the concession for the private sector. Numerical alternatives based on real options theory are needed to incorporate the value of flexibility and its economic and financial impact. This paper proposes a binomial numerical model to quantify the contingent value of minimum revenue guarantees, impact on future budgets, economic value of the investment, and break-even rates. To this end, a case study in administration is applied to a road infrastructure development and toll concession. The anatomy of project risk is analyzed through simulation of the stochastic revenue process and VAR estimation. The binomial model is then applied to estimate: contingent value of the minimum revenue guarantee, present value of the government's contingent liabilities, value of the project with strategic flexibility from the private sector's perspective, and equilibrium rates for zero strategic present value. |
| publisher |
Facultad de Ciencias Económicas de la Universidad Nacional del Nordeste - UNNE |
| publishDate |
2025 |
| url |
https://revistas.unne.edu.ar/index.php/rfce/article/view/8338 |
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2025-08-17T05:01:50Z |
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2025-08-17T05:01:50Z |
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