The value of flexibility in the valuation of aquaculture investments

Loreto Pardo Sempere, José Javier Rodríguez Alcaide


The loud initial investments that are necessary to start aquaculture activities, united to the so expanded period of the cycle of production and to the risk that this activity entails, are situations that appoint the future of the activity whose continuity requires necessarily of its economic viability. For it, it is important to pay attention to those studies that justify this economic viability capturing important aspects such like the managerial flexibility or the strategic value embedded in each project of investment, often perceived as critical success factors. From this perspective, it shows the need and the opportunity of this investigation, based on the application of Real Options method to value projects, considering the value of the strategic options embedded in them and that traditional discounted cash flow models does not capture. In short it is applied to a project of investment in a sea bream Sparus aurata offshore fish farm. After the election of the model of cage, the project was valued considering the strategic options to delay or abandon the project according to the events along 10 years. This valuation allowed concluding that the project is highly viable, considering the option to delay from only upon the 9th year analysis, if the preceding years are always unfavourable, being its probability very low. The option to abandon does not have value in this project of investment.


Aquaculture; Real options; Risk; Flexibility in operations

Subject classification

B41, C15, D81.

Full Text:



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