Valuation Methodology Research Articles

An overview of economic valuation of ecosystem services in protected areas and its roles in achieving Sustainable Development Goals (SDGs)

Protected areas (PAs) provide a variety of benefits and services related to human welfare, poverty alleviation, and sustainable development. However, economic valuations of PAs are poorly measured to date. The majority of PAs management policy frameworks are based on biodiversity conservation. The purpose of this overview is to highlight the importance of PAs in achieving Sustainable Development Goals (SDGs) by reviewing current and past studies related to the economic value of ecosystem services and the valuation methodologies of PAs at local, regional, and national levels. In addition, the role of PAs in enhancing the sustainability of ecosystem services has been discussed. Furthermore, two case studies related to the ecosystem-economic perspective of PAs; Australia’s Great Barrier Reef and India’s Nagarhole Park, were highlighted. In general, the economic value of PAs is based on the components of ecosystem services, such as provisioning, regulating, supporting, and culture. The management of PAs is critical for valuation of species conservation as one of the standards derived from the ecosystem services. Additionally, it improved the level of financial income of the communities, their educational and health levels, revitalizing local businesses and providing job opportunities through the success of PA’s management strategies as local, national, and international tourist destinations. This review provides a snapshot of the roles of PAs in achieving Sustainable Development Goals (SDGs), useful for future researchers, planners, park managers, and policymakers to develop policies for sustainable investment and improvement of PAs.

Research and Application of Company Valuation Methods

The idea of company valuation originated from Irving Fisher's financial budget theory. The MM theory of American scholars F.Modigliani and Merton H.Miller marks the emergence of valuation theory in the modern sense. This paper mainly studies the theory and application of two company valuation methods—relative valuation method and absolute valuation method. It can be concluded from the research that the essence of valuation methods is the discounted valuation of future cash flows. In the case of stable performance, the price-earnings ratio P/E relative valuation method is the most intuitive. At various stages of development, the same company uses various valuation methodologies. The valuation approach should be modified in accordance with the company's current position. In addition, there is some subjectivity involved in valuing something because there is no universally accepted method. The significance of this research lies in valuation methods have their own advantages and limitations, and they have different emphases. Multiple valuation methods can be used for a comprehensive comparison.

Organization of effective management of the stock market on the basis of researching the processes of formation of the value of shares of the issuer companies

The global economic crisis and the socio-economic consequences of the COVID-19 pandemic have a significant impact on the increase in volatility and risks of manipulation of stock asset quotes. The subject of the study is the organization of management of the investment fund process, taking into account non-market mechanisms for manipulating the value of shares of issuing companies. The purpose of the article is to improve the efficiency of managing the stock process based on the stock market model and procedures for fuzzy valuation of the value of shares of issuing companies within this model. The research methodology is based on the application of methods for analyzing economic phenomena and processes, a systematic approach to studying the development of issuing companies and stock markets. Modeling of fund processes is based on fuzzy logic theory and efficiency theory. The principles of stock market idealization and the principles of stock market management in a manipulated information environment are formulated. A model of the stock market is presented, which includes: an ideal model of the stock market, a model of fundamental disturbing factors and a model of stock market manipulation. Within the framework of the stock market model, an economic and mathematical model for estimating the value of shares of issuing companies has been developed, in which the uncertainty of parameters is described by fuzzy numbers. The novelty of the research lies in the formulated concept of factor psychodynamics (including a list of factors, functions of factors, the strength of factors and inertia of factors), which serves as the basis for the stock market model; as well as in the developed methodology for fuzzy valuation of shares of issuing companies. Participants of the stock market, potential investors, owners and acquirers of companies on the basis of the presented model of the stock market have the opportunity to obtain additional information about ongoing stock processes. Fuzzy procedures for estimating the value of shares of issuer companies make it possible to calculate the value of their shares in accordance with various forecast scenarios for the development of companies.

An Analysis of Industrial Policy Mechanisms to Support Commercial Deployment of Bitumen Partial Upgrading in Alberta

Partial upgrading of bitumen (PUB) improves the quality (increases the value) of crude oil from bituminous sands to the level where pipeline specifications are met without—or with reduced use of—costly diluent. By reducing the cost of transportation to downstream refineries, PUB can serve as a solution to market access challenges and takeaway capacity constraints for oil sand producers. However, despite significant government and private investments, proponents in the Canadian province of Alberta still face challenges in commercializing the technology. We used a capacity investment model to explore the expected effects of different policy support types on a firm’s decision to invest in a partial upgrading facility integrated with an existing oil sands extraction facility. We evaluated 10 potential policy interventions and their expected effects on investments in partial upgrading. We focused our analysis of these policy interventions on the revenues and costs of firms, risk sharing, and overall public benefits and costs. We find that the majority of interventions are transferred from government to private interests, with little public benefits. Defensible policy actions include capital investment at the demonstration phase, providing incentives for industry collaboration, equity investment at the commercial stage, and reforming the government’s bitumen valuation methodology.

A valuation of a corn ethanol plant through a compound options model under skew-Brownian motions

In the last decades, the production of fuel ethanol from corn has spread as a valid renewable alternative to pursue sustainability goals. However the uncertain nature of both input (corn) and output (gasoline) prices, together with price dependent operational decisions, combine to make this difficult plant valuation require a real options approach. Moreover, this project is characterized by various sequential stages that contribute to increase its valuation difficulties. The purpose of this paper is to provide a reliable valuation methodology of a corn ethanol plant project able to consider the characteristics of the project. We apply the compound Real Options Approach to price a corn ethanol plant project considering that the corn and gasoline prices both follow a skew-geometric Brownian motion. We also propose a case study to show a real implementation of our theoretical model. The results show that the corn ethanol plant is financially attractive as renewable investment since the uncertainties inherent in the project add value, via managerial flexibility, to the real option valuation.

Внутрішній контроль процедури оцінки вартості мобілізованих колісних транспортних засобів підприємства

The article identifies the issues related to compliance with the legislative requirements during the mobilization of wheeled vehicles for the benefit of the Armed Forces of Ukraine. The authors emphasize the need for ongoing monitoring of compliance with the mobilization procedure, and identifies its key areas and features, including the issues of documentation. The authors propose forms of working documents, that will allow documenting the procedures for controlling the mobilization of wheeled vehicles. The issue of conducting a proper assessment of the value of mobilized wheeled vehicles is separately highlighted. The article proves that the valuation of wheeled vehicles as of the date of its mobilization should be carried out at the liquidation value. This type of value, according to the legislation on valuation, should be interpreted as the cost of forced sale. The calculation of this valuation base should be based on the guidelines contained in clause 7.15 of the Order of the Ministry of Justice of Ukraine and the State Property Fund of Ukraine dated 24.11.2003 № 142/5/2092 «About Approval of the Methodology for Commodity Expertise and Valuation of Wheeled Vehicles» as amended, dated 24.05.2022 No. 2060/5/496.

The impact of polarity score on real option valuation for multistage projects

In most cases, the valuation of the investments characterized by various stages with a high level of uncertainty is done through the compound real option valuation (ROV). This decision making support can consider various types of uncertainty that can affects these investment phases, such as that linked to technology. Specifically, within the category of uncertain investments there are the broadband opportunities that can be valued as real options in order to quantify the risks associated with the investment. However, since ROV theory has no definitive way to determine model parameters based on market information, we propose one that can adjust them dynamically. In this paper, to include this aspect in the project valuation, we have unified the ROV with the sentiment analysis, a natural language processing technique that allows us to quantify the polarity of expressions in natural language numerically. In particular, the inherent risks related to the different phases of the project can be extracted from the information present in the surrounding environment and published in newspapers. From there, we obtain a sentiment score which, through appropriate manipulations, manages to modify the evaluation of the success probabilities of each stage. Then, we embed these success probabilities in the ROV in order to provide a valuation methodology that includes the impact of information on the investment decision.

Forecasting Methods of Key Ratios and Their Impact in Company’s Value

This paper aims to develop a comprehensive procedure for calculating the fair value of a company by predicting its future values using historical data of key ratios and applying dynamic algorithms to improve the selection of forecasting methods. The most important business valuation methodologies are based on discounting a firm’s future variables, and there are many ways to predict them through financial and quantitative methodologies. This paper provides the most important and commonly used time series forecasting methodologies that can be used for variables, such as financial ratios, and proposes three different algorithms to help and improve the selection of the best-fit method for each of the model’s variables. Another, more indirect way of predicting values is using operational research methodologies, such as Monte Carlo simulation, where the output of the sensitivity analysis gives the most likely firm value, taking into account the distribution of each variable. This paper includes a complete example of using the above procedures in a real Greek company to calculate its fair value. It offers alternative approaches to the problem that exists around the process of predicting variables, with the help of technology. We hope this will be a useful tool for future use.

Corrigendum: Strengthened multi-stakeholder linkages in valuation studies is critical for improved decision making outcomes for valuable mangroves – The Malaysian case study

In the published article, there was an error in Figure 1 and Figure 2 as published. The image in Figure 1 and Figure 2 were incorrectly assigned. The corrected Figure 1 and Figure 2 and its caption appear below. Figure 1: Map of Malaysia. Red stars indicate valuation study sites of collated mangrove ecosystem service valuation studies in Malaysia. Green patches overlaying the map indicate mangrove forest coverage (dataset from Bunting et al., 2018). Figure 2: Summary of ecosystem service valuation (ESV) methodologies and ecosystem services that had been valued in Malaysia. CV = contingent valuation; MP = market price; BT = benefit transfer; RC = replacement cost; TC = travel cost; OT = others including the benefit transfer and ecosystem service valuation method (remote sensing).The authors apologize for this error and state that this does not change the scientific conclusions of the article in any way. The original article has been updated.

Factors affecting ability and willingness of community members to enrol Improved Community Health Fund in Dodoma and Iringa regions

Financial protection has been recognised as an important element within the healthcare financing system of many low and middle-income countries. Pre-payment schemes have been advocated as a means of curbing high out of pocket expenditure and achieving universal health coverage. A number of financing reforms have been taking place, however there is a limited rigorous contextual evidence on the willingness-to-pay (WTP) for the recently Improved Community Health Fund (iCHF) in Tanzania. The study took place in district councils of Dodoma and Iringa regions. Data were collected from a household survey conducted in 2021. Contingent valuation methodology was used to elicit households’ the willing to pay (WTP) for iCHF premium using the bidding game technique. In addition, the relationship between WTP and other socio-economic variables was examined using logistic regression models. Majority 88% respondents said they will repay their package after expiry considering the quality of the services provided by health insurance. The results showed a statistically significant negative relationship 0.526 (p = 0.034) between household aged above 55 years of age and WTP. More specifically, as age increases above 55 years, the likelihood to pay for health insurance premium decreases. We also found a positive statistically significant relationship 1.882 (p = 0.034) between the household with small business and WTP, which suggest the individuals with small business are in a better position to pay for iCHF premium compared to those with formal employment. It is important to educate the households to raise awareness about the benefits of being a member of insurance scheme in both formal and informal sector. The households should be encouraged to formalize their small business, this will improve their income and enrolment into the insurance schemes. The benefit packages should be revised to fit the need of the people as WTP was also influenced by the nature of the packages.

Stock Valuation and Financial Performance of Nickel Mining Company in Indonesia (Case Study: PT Vale Indonesia Tbk)

Indonesia is home to 22% of the world’s nickel deposits, and its restriction on nickel ore exports since 2020 has resulted in significant changes to the supply chains of vital items such as electric vehicles and the stainless steel sector. Approximately 75% of nickel is used in the manufacturing of stainless steel, the most common use of nickel. However, nickel is also essential for the fabrication of electric vehicle (EV) battery cathodes, which are required for the shift to green energy. Current EV battery demand accounts for around 7% of worldwide output, but anticipated increases in EV demand will result in an exponential increase in nickel demand. The exponential increase in nickel demand led to volatility in global nickel prices. Volatility in global nickel prices is affecting companies that operate nickel mining businesses. PT Vale Indonesia Tbk (INCO) is listed on the Indonesia Stock Exchange as one of the nickel mining firms operating in the nickel mining business (IDX). The volatility of the global nickel price is both a breath of fresh air and a problem for the firm. INCO may also participate in and benefit from the rising worldwide demand for nickel in the foreseeable future. The primary objective of this study is to evaluate the intrinsic value of a nickel mining company in order to assist investors in making decisions in the current market environment. Evaluation of financial performance over the last five years and projections for the next five years using absolute and relative valuation methodologies. The author suggests investors to purchase this stock using a risk-reward assessment suited to each investor’s circumstances and the potential return earned. Referring to the stock valuation evaluation, investors are recommended to purchase if the price of INCO falls below the range of IDR 6,051 to IDR 6,335. When the market price is inside and above the intended range, it is not advisable for an investor to purchase INCO.

Uncertainty in firm valuation and a cross-sectional misvaluation measure

The degree of uncertainty associated with the value of a company plays a relevant role in valuation analysis. We propose an original and robust methodology for company market valuation, which replaces the traditional point estimate of the conventional Discounted Cash Flow model with a probability distribution of fair values that convey information about both the expected value of the company and its intrinsic uncertainty. Our methodology depends on two main ingredients: an econometric model for company revenues and a set of firm-specific balance sheet relations that are estimated using historical data. We explore the effectiveness and scope of our methodology through a series of statistical exercises on publicly traded U.S. companies. At the firm level, we show that the fair value distribution derived with our methodology constitutes a reliable predictor of the company’s future abnormal returns. At the market level, we show that a long-short valuation (LSV) factor, built using buy-sell recommendations based on the fair value distribution, contains information not accessible through the traditional market factors. The LSV factor significantly increases the explanatory and the predictive power of factor models estimated on portfolios and individual stock returns.

The market value of SMEs: a comparative study between private and listed firms in alternative stock markets

This study aims to compare the market value of private firms and publicly listed small and medium-sized firms (SMEs) in alternative stock markets through a private discount approach with estimates of value based on discounted cash flow projections and along with a comparable multiples approach. The valuation methodology applied in this study yielded a final sample that included 232 observations between public and private companies in the Spanish market. To calculate the discount, we apply the different approaches of discounted cash flow and multiples, such as valuation, earnings, book value, and revenue. Our results conclude there is no private discount, instead, the outcomes of this article suggest a premium over public firms for some ratios. The negative private company discounts mean a premium and, on the other hand, some multiples suggest a discount according to the method of valuation. This paper proves private discounts resulted does not have any comparable value within the same country although all firms in Spain use the same currency. We value the discounted cash flows of our forecasts using a discount rate based on the Capital Asset Pricing Model (CAPM), so our study can also be viewed as a test sensitivity of CAPM-based approaches to equity risk premium, terminal value, and growth rate. Furthermore, we compare historical transaction multiples of privately held companies with transaction multiples of similar publicly held firms.

Normative monetary valuation of an agricultural land plot within the boundaries of the Lyman rural territorial community of the rozdilnіan district of the Odessa region

In Ukraine, the process of forming the agricultural land market is underway today. In the absence of transparency of the land market, business entities have an objective need for a reliable valuation. A qualitative assessment provides the state not only with objective information about the qualitative and quantitative composition of agricultural land, but also contributes to the protection of the legitimate interests of the state and other subjects of legal relations in matters of information support for taxation and the land market. The article analyzes the existing Methodology of normative monetary valuation of land plots, gives the results of the evaluation of the agricultural land plot using data from the open land cadastre within the limits of the Lyman settlement territorial community of the Rozdilnian district of the Odesa region. The value of the land plot was determined according to the established and approved standards according to the new method approved by the resolution "On approval of the Methodology of normative monetary valuation of land plots" on November 3, 2021, and amounted to 152,248.90 hryvnias. The coefficient of indexation of the normative monetary value for agricultural lands in 2022-2023 is 1.0. Thus, the results of the calculation showed that the new Methodology of regulatory monetary assessment simplifies the assessment of agricultural land.

Issues and challenges regarding the determination of the normative monetary valuation of land plots within the territory of the territorial communities

A detailed study and analysis of the methodology for the normative monetary valuation of land plots approved by the Resolution of the Cabinet of Ministers of Ukraine dated November 3, 2021 No. 1147 was carried out regarding the possibility of its application, and the identification of problems arising in the process of its implementation. The main aspects of the normative monetary valuation of land plots and its influence on the development of territorial communities in Ukraine are considered. The methodical, economic and regulatory problems of determining the normative monetary valuation of land plots according to the current methodology as an important economic tool for regulating land relations and economic stimulation of rational use and protection of land have been studied and analysed. Methodological and technical deficiencies were identified in the process of determining the normative monetary valuation of land plots of territorial communities and calculating the size of the normative monetary valuation of a separate land plot. It was established that although according to the Law of Ukraine "On Land Valuation" the normative monetary value is "capitalized rental income", the current method of its determination is not based on the income that can be obtained from the use of the land plot, but on fixed tabular norms, which are differentiated according to population of the administrative center of the community. Only for agricultural lands, the income from their use is taken into account according to the current methodology, however, they are taken into account through soil quality scores, which have not been updated since the 1980s. It was revealed that due to the fact that there is no indexation of the normative monetary valuation of agricultural land, the revenues of local budgets do not increase by at least UAH 0.6 billion every year on the scale of Ukraine.

Inventory control and accounting valuation of electronic money and crypto assets in electronic transactions

The monetary basis of the digital economy is electronic money and cryptographic objects that have specific characteristics, consideration of which significantly complicate accounting and control. In order to ensure the identification, inventory and valuation of crypto assets, it is necessary to optimize the methodology and organization of accounting for electronic money transactions in the digital economy. The purpose of the article is to improve the inventory control and accounting assessment methodology from the point of view of the current and future value of electronic and cryptographic money in the context of electronic money transactions. The article substantiates the possibility of a permanent automatic inventory of electronic and cryptographic money funds based on the information synchronization of crypto exchanges (electronic transactions operators) with specialized software for automation of accounting. The procedure for carrying out inventory control of electronic money and cryptocurrencies in terms of types of electronic transactions has been improved. The features of accounting valuation of crypto assets characterized by intangible nature, significant volatility, speculative nature, confidentiality, decentralization, etc. have been determined. The methodology of accounting valuation of crypto assets has been optimized with the determination of their initial and future value in the context of distinguishing types of electronic transactions, as well as the need to revalue accounting objects used as a means of circulation or as investment and financial instruments. The methodology for valuation of newly created crypto assets has been clarified in terms of taking into account the costs of labor and social insurance, electricity and utilities, and depreciation of equipment related to the maintenance of the electronic transaction system. The use of the author's proposals will contribute to reliable and timely accounting of electronic and cryptographic money funds.

Methods of Building Resilience Valuation: A Literature Review

Resilience valuation appears to be gaining ground in the real estate and built environment profession globally, although its level of acceptance may not yet have been ascertained in Nigeria and other emerging economies. More than at any other time it has become imperative to examine investors' commitment to making buildings resilient in valuation practice. Today many countries are battling with the effects of extreme weather conditions, even as they confront the aftermath of the COVID-19 pandemic. Against this backdrop, this article reviews the literature on the valuation of building resilience with a view to deepening the understanding and knowledge of valuers and other stakeholders. In achieving this aim, we undertake a review of different perspectives on resilience valuation methodologies and initiatives as well as their applications and the challenges faced in the valuation process. We found varying approaches to valuing resilience that cut across disciplines. Moreover, issues of green buildings and sustainability were also found to be prominent in the literature. While some approaches e.g., RDVM model, etc. are seen to be at infancy, others have been applied to specific situations. We therefore suggest a multidisciplinary approach to valuation of resilience in buildings.

The economic valuation of ecosystem services: bibliometric analysis

Research background: The services provided by ecosystems are the main support for human populations and for the development of any type of activity. Today, the provision of these services is under threat. The economic valuation of ecosystem services is vital to design appropriate policies, define strategies and manage ecosystems. Purpose of the article: The objective of this study is to analyse the evolution of research on the economic valuation of ecosystem services over the last two decades. More specifically, it aims firstly to identify the main agents driving research and, secondly, it seeks to synthesize in a single document the relevant information on the main economic valuation methods, relating them to the categories of services, ecosystems and regions where they have been employed. Methods: A quantitative review was first carried out through a bibliometric analysis to identify the main drivers of this line of research and its development trends. Secondly, a qualitative review was conducted through a systematic review focusing on the most commonly used valuation techniques in relation to the characteristics of the service, the geographical scope and the ecosystem analysed. Findings & value added: The main novelty of this work, compared to previous literature, is that the relationship between the study area, the type of ecosystem, the category of service and the economic valuation methodology are analysed for the first time. The results highlight the need to continue expanding knowledge in relation to the temporal and spatial scale in the economic value of ecosystem services, the subjective nature of the estimates and the heterogeneity between the different social sectors with respect to the benefit obtained.

Valuing Resilience Benefits of Microgrids for an Interconnected Island Distribution System

Extreme climate-driven events such as hurricanes, floods, and wildfires are becoming more intense in areas exposed to these threats, requiring approaches to improve the resilience of the electrical infrastructure serving these communities. Long-duration outages caused by such high impact events propagate to economic, health, and social consequences for communities. As essential service providers, electric utilities are mandated to provide safe, economical and reliable electricity to their customers. The public is becoming less tolerant to these more frequent disruptions, especially in view of technological advances that are intended to improve power quality, reliability and resilience. One promising solution is state-of-the-art microgrids and the advanced controls employed therein. This paper presents and demonstrates an approach to technoeconomic analysis that can be used to value the avoided economic consequences of grid resilience investments, as applied to the islands of Vieques and Culebra in Puerto Rico. This valuation methodology can support policies to incorporate resilience value into any investment decision-making process, especially those which serve the public interest.

PD56 Conceptual Issues In The Valuation Of Health States In Children

IntroductionAssessing the cost utility of health technologies for pediatric patients requires robust utility values for child health states, but the methods for valuing these pediatric health states are much less established than those for valuing adult health states. This is partly because the elicitation of preferences for child health states poses many normative, ethical, and practical challenges.MethodsThis presentation examines the conceptual issues in the valuation of health states in children by addressing the following questions.(i)Normative theories of health state values: What are we attempting to elicit?(ii)Sources of preferences: Whose preferences should we elicit, and from which perspective?(iii)Valuation methodologies: How should we elicit preferences?(iv)Attaching different values to child and adult health: Is a lack of consistency problematic?To answer these questions, we used desk research (non-systematic literature reviews) and findings from a two-part workshop held in April 2021. The workshop included 25 participants with expertise in health economics, health state valuation, child health, health technology assessment (HTA) decision-making, and ethics.ResultsWe identified a lack of consensus on what is being elicited for both adults and children. Many HTA agencies recommend that the public be involved in utility generation exercises, but some criteria for defining who constitutes a member of the public exclude children. Of the many candidate sample types, perspectives, and methodologies, only a few were deemed relevant, acceptable, and feasible for use in the child health context. In addition, there were diverging views on whether it is possible to compare and integrate adult and child value sets with different properties.ConclusionsSeveral questions remain to be answered before the public and other stakeholders can have confidence in child health state valuation protocols. We propose a research agenda, including both empirical and conceptual work, to inform future methodological development and to help HTA agencies make recommendations about how child utility values should be generated.