Risks And Risk Management Of BOT Investment & Financing In Environmental Protection Industry

Environmental protection industry belongs to public industry and its most marked characteristic is social public welfare, with externality. The prevailing investment & financing system in environmental protection industry in China was gradually formed and developed under planned-economy system, characterizing in that the Government is the biggest investor with main objective of pursuit of environmental benefits and social welfare while neglecting economic benefits. This traditional system has some problems in such as insufficiency in total investment, low efficiency in investment & financing, invertion of investment & financing principal subjects, etc. BOT (build-operate-transfer), as one form of project financing, is more beneficial to development of environmental protection industry than traditional ones, helping to solve the problems such as high demand of total investment and low efficiency in environmental protection industry. However, BOT projects have much higher risks than traditional investment projects, and risk is a core problem in BOT investment & financing . Therefore, study on identification, assessment and management on a series of risks in BOT investment & financing in environmental protection industry has its practical significance. This thesis is mainly focused on discussion on these points.Chapter One generalizes the BOT investment & financing mode, including concept, characteristics, structure and basic flow chart of BOT, and the developing status of BOT abroad and in China.Chapter Two analyses choices on investment & financing modes in environmental protection industry and concludes BOT as the most ideal mode through analyses and comparison of characteristics, concepts and current status of environmental protection industry.Chapter Three discusses risks and its identification of BOT investment & financing in environmental protection industry, including systematic and non-systematic risks in BOT projects, qualitative analysis on BOT investment & financing——risks identification (project risks and project investment & financing risks; classification of these risks)Chapter Four probes into risk assessment in investment & financing in environmental protection, including commonly-used risk assessment methods in BOT investment& financing and project comprehensive risk assessment method——AHP.Chapter Five discusses the characteristics and measures in risk management in BOT investment & financing in environmental industry, including the characteristics, microcosmic measures ( risk control and financial treatment), some practical risk handling ways in BOT projects in environmental industry and a case study followed in the end.It is expected that the study and discussion in this thesis could provide some guidance and reference to the Government and relating enterprises in strategic decision and risk control in investment & financing in environmental industry.