Research On Options Risk Evaluation Of Circular Economic Projects

With the increasingly prominent contradiction between economic development andresource depletion, development of circular economic project has been the trend, at thesame time, the demand of scientificity and accuracy of investment decisions for thecircular economic projects evaluation have become increasingly high, a variety ofevaluation methods of investment decision-making which apply to circular economicprojects have been considerably developed.As widely used in the field of project investment desision, and its advantage that it iscloser to the practical than traditional investment appraisal methods, make the real optionevaluation method automatically applied to the circular economic project investmentevaluation. However, with continuously applied to theory and practice of projectinvestment evaluation, there also exposed some shortcomings, which include the accuracyof the model parameters are usually influenced by environmental factors, managersdecision-making level is difficult to meet the requirements that the achievement of optionvalue needs, and so on. Thus there exists risk and possibility of deviation of project optionevaluation in the application process. This article is accurally on this starting point,research the risks and countermeasures of options evaluation of circular economic projects.This paper firstly subdivided the risk factors that influence the achievement of projectoptions value into14risk indicators, on this basis to construct the probabilistic influencediagram model of project option evaluation. Through data simulation to simulate theprocess of model simplification and probabilistic reasoning, and ultimately determine theimpact of each factor’s change on the evaluation of project option value, and identify thekey risk factors. Secondly, based on the similar characteristics between circular economyproject options and financial call options, draw lessons from the mainstream method tomeasure the risk of financial options: Value at Risk method (VaR) and conditional value atrisk method (CVaR), derived the VaR and CVaR formula of circular economic projectoptions, and use analytical method to simulate the process that use these two methods tomeasure the risk of circular economic project options. Thirdly, through the combination of circular economic project option evaluation correction model with stackelberg model indynamic game, to make up for the shortcomings of real options theory that ignore theimpact of other market participants, simultaneously solve the uncertainty, irreversibilityand competition issues of investment projects. Finally, focusing on the risks that within theinvestors’ acceptable range, proposed to handle the risks from four aspects, which aredecision-making process, model selection, management level, information application.This study is designed to reduce the risk of circular economic project optionsevaluation, make it more scientific and reasonable to evaluate the value of circulareconomic projects.