Utilising portfolio theory in environmental research

New perspectives and considerations

Brent D. Matthies, Jette Bredahl Jacobsen, Thomas Knoke, Carola Paul, Lauri Valsta

Tutkimustuotos: ArtikkelijulkaisuArtikkeliTieteellinenvertaisarvioitu

Kuvaus

Modern Portfolio Theory is a well-established method in economic research for considering the risks and returns in asset allocations and the potential benefits of diversification for risk averse agents. Thus, it is a useful tool for guiding sustainability discourse under uncertain future states. Existing discussions around the method's use in environmental research have evolved during over the 75 years of its application, leading to a continued renewal of perspectives on utilising it. We classify the environmental questions where portfolio theory has been applied, and critically discuss the methodological approaches taken; providing a stepping stone for future use of the method. This article provides a framework for its application in environmental research using the following questions: 1) what is the type of research or management question and objective(s) of the decision-maker(s); 2) what are the definitions of the assets to be included in the portfolio; 3) what are the ways that returns are valued, discounted, distributed and weighted; 4) what is the most appropriate way for risks to be accounted for and managed, including the selection of the appropriate model and taking into account risk preferences; and 5) what are the definitions of constraints in the programming problem.
Alkuperäiskielienglanti
LehtiJournal of Environmental Management
Vuosikerta231
Sivut926-939
Sivumäärä14
ISSN0301-4797
DOI - pysyväislinkit
TilaJulkaistu - 1 helmikuuta 2019
OKM-julkaisutyyppiA1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä, vertaisarvioitu

Tieteenalat

  • 4112 Metsätiede

Lainaa tätä

Matthies, Brent D. ; Bredahl Jacobsen, Jette ; Knoke, Thomas ; Paul, Carola ; Valsta, Lauri. / Utilising portfolio theory in environmental research : New perspectives and considerations. Julkaisussa: Journal of Environmental Management. 2019 ; Vuosikerta 231. Sivut 926-939.
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Utilising portfolio theory in environmental research : New perspectives and considerations. / Matthies, Brent D.; Bredahl Jacobsen, Jette; Knoke, Thomas; Paul, Carola; Valsta, Lauri.

julkaisussa: Journal of Environmental Management, Vuosikerta 231, 01.02.2019, s. 926-939.

Tutkimustuotos: ArtikkelijulkaisuArtikkeliTieteellinenvertaisarvioitu

TY - JOUR

T1 - Utilising portfolio theory in environmental research

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AU - Matthies, Brent D.

AU - Bredahl Jacobsen, Jette

AU - Knoke, Thomas

AU - Paul, Carola

AU - Valsta, Lauri

PY - 2019/2/1

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N2 - Modern Portfolio Theory is a well-established method in economic research for considering the risks and returns in asset allocations and the potential benefits of diversification for risk averse agents. Thus, it is a useful tool for guiding sustainability discourse under uncertain future states. Existing discussions around the method's use in environmental research have evolved during over the 75 years of its application, leading to a continued renewal of perspectives on utilising it. We classify the environmental questions where portfolio theory has been applied, and critically discuss the methodological approaches taken; providing a stepping stone for future use of the method. This article provides a framework for its application in environmental research using the following questions: 1) what is the type of research or management question and objective(s) of the decision-maker(s); 2) what are the definitions of the assets to be included in the portfolio; 3) what are the ways that returns are valued, discounted, distributed and weighted; 4) what is the most appropriate way for risks to be accounted for and managed, including the selection of the appropriate model and taking into account risk preferences; and 5) what are the definitions of constraints in the programming problem.

AB - Modern Portfolio Theory is a well-established method in economic research for considering the risks and returns in asset allocations and the potential benefits of diversification for risk averse agents. Thus, it is a useful tool for guiding sustainability discourse under uncertain future states. Existing discussions around the method's use in environmental research have evolved during over the 75 years of its application, leading to a continued renewal of perspectives on utilising it. We classify the environmental questions where portfolio theory has been applied, and critically discuss the methodological approaches taken; providing a stepping stone for future use of the method. This article provides a framework for its application in environmental research using the following questions: 1) what is the type of research or management question and objective(s) of the decision-maker(s); 2) what are the definitions of the assets to be included in the portfolio; 3) what are the ways that returns are valued, discounted, distributed and weighted; 4) what is the most appropriate way for risks to be accounted for and managed, including the selection of the appropriate model and taking into account risk preferences; and 5) what are the definitions of constraints in the programming problem.

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