An Investment Decision Model for Underground Urban Utility Tunnel Based on MIVES and Real Option Theory from a Sustainable Perspective

Abstract

Although the importance of urbanization, urban renewal and sustainable development have been increasingly recognized, with the accelerating process of urbanization, the urban above-ground space is no longer sufficient for the process of urbanization, and downward development of the city has become inevitable. Underground Urban Utility Tunnel (UUUT) is an effective measure to promote the sustainable development of urban underground space (UUS). However, decision makers still cannot fully consider the economic, social, environmental and technological factors, as well as the future risks of the project and the value of flexibility in management. In this paper, an investment decision model for UUUT is proposed that combines the Integrated Value Model for Sustainable Assessment (MIVES) and the real option theory, which comprehensively considers the social, economic, environmental and technological impacts, and assists the government in carrying out the investment decision analysis of UUUT from a sustainability perspective by applying the real option theory to the economic evaluation process. The primary process of this study can be divided into four steps. (1) establishment of the investment decision index system for UUUT; (2) determination of the quantitative criteria for each indicator; (3) calculation of the feasibility of UUUT; and (4) a case study to demonstrate the feasibility of the proposed model, as well as the achieved results. The proposed investment decision model can be used as an auxiliary tool in the early planning stage of UUUT, and also for the comparison and selection of different options for UUUT.