| China is a country with scarce water resources, which have uneven distribution and little per capita quantity. What is worse, much industrial and domestic sewage generates with the rapid development of China’s economy. Some row sewage directly discharged into environment, which seriously polluted China’s water environment and even threatens the safety of drinking water.According to statistical data, there is68.48billion tons of sewage discharged in2012, of which41.26billion tons treated. As a result, about26.86billion tons of raw sewage was directly discharged. In addition, about50%of China’s urban water does not meet drinking water standards, and drinking water for about400million people is in unsafe condition.Facing the serious water pollution problem, the Twelfth Five year Plan of State Environmental Protection proposed that, the new sewage treatment capacity should be added42million tons per day, and strike to achieve the goal that all counties and important towns have sewage treatment capacity by2015. Facing the huge demand of investment, BOT financing model has been widely used in sewage treatment plants construction because that it can solve the problem of government construction funds lackage, and accelerate infrastructure construction. Beside, it has many other advantages such as saving investment improve productivity and operational efficiency and so on.The length of concession agreement is the key to BOT agreement. However, there are many problems in BOT projects concession period in practice. For example, the decision is lack of effective estimate, the project company obtains excess returns, which does serious harm to the public interest and may lead to society doubt about the rationality of BOT. Therefore, to determine the length of concession period scientifically and reasonably is of great significance to healthy and rapidly development of sewage treatment BOT projects.In the paper, it proposed HP filtering method to calculate the real option volatility The fluctuation of sewage treatment capacity is on behalf of volatility of project value. HP filter method is used to separate the fluctuation factors in sewage treatment capacity, which is the basis of calculating the project value volatility. It verifies the validity and accuracy of the method with comparision to other method. The thesis establishes a game decision-making model, for sewage treatment BOT projects concession period based on real option. Sewage treatment BOT projects usually have large amount of investment, long payback period, high uncertainty, and high flexibility for investing and operational management. According to those charactors, it proposed real option approach to assess the project value, which reflects the flexible value of management and is closer to the real project value. Given the advantage of dynamic game theory in decision analysis, it establishes the dynamic game model based on maximizing the benefits of both government and project companies. It obtains optimal length of the concession period for government and the optimal investment scale for project company by solving the game model,which provides theory basis and quantification method for both parties.By solving the model and analysis the model, it concludes that, for large investment projects, it is appropriate to use the minimum payback period of the project company to determine the length of the concession period; while for smaller investment projects, it should extend the length of the concession period properly to incentive the companies to increase investment and construct better quality and more advanced projects, which ultimately achieve a win-win on both sides. |
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