Abstract
Mining haul road traffic can have significant impacts on nearby animal populations that can threaten an entity’s licence to operate. As operators have the ability to control heavy vehicle traffic flow through mining road networks, opportunities exist to reroute traffic away from more damaging roads in response to uncertain animal population dynamics. The presence of this flexibility in turn has a positive effect on the future value of proposed road designs. In this paper, we present an approach for evaluating the flexibility of controlling traffic flow in proposed road designs between two locations separated by an intervening species habitat. We do this by treating the design problem as a Real Options Valuation (Stochastic Optimal Control) problem solved using Least-Squares Monte Carlo. Here, the different control actions are the discrete traffic flow rates, and the uncertain-state variables are the animal populations at each location in the region of interest. Because the control chosen has a direct impact on the path of the uncertain variables, we use the technique of control randomisation in generating the Monte Carlo paths and computing the costs-to-go in the Real Options Valuation. In addition, we use a state-reduction parameter called Animals at Risk to reduce the dimensionality of the problem to improve tractability. In an example scenario, the addition of routing flexibility resulted in an increase in project value over the case without flexibility while maintaining the animal population above a critical threshold.
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Davey, N., Dunstall, S., Halgamuge, S. (2018). The Value of Flexible Road Designs Through Ecologically Sensitive Areas. In: Sarker, R., Abbass, H., Dunstall, S., Kilby, P., Davis, R., Young, L. (eds) Data and Decision Sciences in Action. Lecture Notes in Management and Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-319-55914-8_5
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DOI: https://doi.org/10.1007/978-3-319-55914-8_5
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