Valuation of investment projects in the context of sustainable development: Real option approach

Traditionally, the evaluation of development projects is made on the basis of financial criteria. In the context of sustainable development, the social and environmental aspects must also be considered. Contemporary project valuation takes into account not only the static planned cash flows but also opportunities that may appear, known as real options. This paper describes a method for the valuation of development projects, taking into account the above aspects of valuation.