Research On Investment Decision Of Y County Sewage Treatment PPP Project Based On Real Option Method

With people’s living standards improving day by day,people’s requirements on living environment,water safety,ecological construction and other aspects of life quality are getting higher and higher.In recent years,urban water governance has been rapidly promoted,and PPP model has been increasingly applied in sewage treatment and other infrastructure construction.Compared with the traditional project investment model,PPP projects have the characteristics of long duration cycle,large initial investment amount and high project investment risk.Based on these characteristics,social capital will have many considerations when choosing whether to invest in these projects.Because the traditional project valuation method only considers the basic situation of the initial investment of the project,it may ignore the hidden value of the project due to the later environmental changes,so social capital may miss some good investment opportunities by using the traditional investment evaluation method.Based on the real option method,this paper takes the SEWAGE treatment PPP project of Y County as an example to provide a more reasonable method for project value evaluation,so that social capital can make a more rational investment decision.Based on the previous research results,this paper firstly analyzes the project investment decision theory,real option theory and PPP model deeply.Secondly,through the use of the traditional investment decision method of net present value method for Y county sewage treatment PPP project investment decision analysis,found that the net present value method has many limitations in the project investment decision,and demonstrated the feasibility and applicability of real option method in sewage treatment PPP project investment decision.Thus,the investment decision model of sewage treatment PPP project based on real option method is further established.Finally,sewage treatment by the method of real option is applied in this article the PPP project investment decision-making model to analyze Y county sewage disposal PPP project evaluation,through comparing with traditional investment decision method,and considering the project value of future investment opportunities than calculated value by the net present value method,reflected by the project uncertainty and flexible management decision-making of the option value,It provides a reference for the application of this model in the investment decision-making field of sewage treatment PPP projects.