Title: Risk associated with managed investment primary production projects

Authors: David G. Carmichael, Maria C.A. Balatbat

Addresses: School of Civil and Environmental Engineering, The University of New South Wales, Sydney, New South Wales 2052, Australia. ' Australian School of Business, The University of New South Wales, Sydney, New South Wales 2052, Australia

Abstract: The paper presents a model of investment risk associated with projects that promote primary production, such as plantations, forests, aquaculture and agribusiness generally, commonly through managed investment schemes (MISs) set up as businesses. An analysis of business failures leads to a finite probability that the investor will lose money. The attractiveness of the investment is further diminished because of the uncertainty in the downstream return on investment and time of the return. Based on probabilistic arguments, the paper presents a robust model and method on which to make investment decisions. The approach is practical and will be useful to people interested in managed agribusiness investments. The approach is significant in that it quantifies what heretofore was largely undertaken qualitatively.

Keywords: investment risks; feasibility; managed investment schemes; MIS; project failure; primary production projects; agribusiness investments; risk management; investment decisions.

DOI: 10.1504/IJPOM.2011.042033

International Journal of Project Organisation and Management, 2011 Vol.3 No.3/4, pp.273 - 289

Received: 15 Sep 2009
Accepted: 16 Aug 2010

Published online: 21 Aug 2011 *

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