Chiara D'Alpaos

It Is Never too late: Optimal Penalty for Investment Delay in Public Procurement Contracts

We provide a general framework in which to determine the optimal penalty fee inducing the contractor to respect the contracted delivery date in public procurement contracts (PPCs). We do this by developing a real option model that enables us to investigate the contractor’s value of investment timing flexibility which the penalty rule - de facto - introduces. We then apply this setting in order to evaluate the range of penalty fees in the Italian legislation on PPCs. According to our calibration analysis, there is no evidence that the substantial delays recorded in the execution times of Italian PPCs are due to incorrectly set penalty fees. This result opens the way for other explanations of delays in Italian PPCs: specifically, we extend our model to investigate the probability of enforcing a penalty which we assume negatively affected by the quality of the judicial system and the discretionality of the court in voiding the rule. Our simulations show that the penalty fee is highly sensitive to the quality of the judicial system. Specifically referring to the Italian case, we show that the optimal penalty should be higher than those set according to the present Italian law.

Concession Length and Investment Timing Flexibility

When assigning a concession contract, the regulator faces the issue of setting the concession length. Another key issue is whether or not the concessionare should be allowed to set the timing of new investments. In this paper we investigate the impact of concession length and investment timing flexibility on the concession value. It is generally argued that long-term contracts are privately valuable as they enable a concessionaire to increase her overall discounted returns. Moreover, the real option theory suggests that investment flexibility has an intrinsic value, as it allows concessionaires to avoid costly errors. By combining these two conventional wisdoms, one may argue that long-term contracts, which allow for investment timing flexibility, should always result in higher concession values. Our result suggests that this is not always the case. Firstly, investment flexibility does not always increase the concession value. Secondly, long-term contracts do not necessarily increase the concession value.

Una valutazione delle ipotesi di revisione del Metodo tariffario normalizzato per il servizio idrico integrato

L’acqua e un bene pubblico essenziale in grado di generare una pluralita di domande spesso in concorrenza tra loro. Sebbene l’obiettivo di assicurare un accesso alla risorsa non subordinato alla “ability to pay” rimanga uno dei principi cardine dell’offerta, la riforma italiana del servizio idrico – avviata a partire dalla Legge Galli 36/1994 - configura una gestione industriale su larga scala dell’intera filiera di produzione, distribuzione e depurazione dell’acqua potabile, con il duplice scopo di rilanciare gli investimenti nello sviluppo dei servizi e di creare una gestione in grado di “autofinanziarsi” attraverso entrate tariffarie, secondo un principio di full cost recovery. Il metodo tariffario vigente - conosciuto come Metodo Tariffario Normalizzato – incorpora concretamente tali principi; recentemente, tale metodo e stato oggetto di una proposta di revisione da parte del Comitato di Vigilanza sull’Uso delle Risorse Idriche. In questo lavoro viene dapprima presentata una breve rassegna degli obiettivi di regolamentazione perseguiti attraverso il Metodo Tariffario Normalizzato e vengono, quindi, illustrati gli elementi ed i parametri oggetto di revisione. L’analisi si concentra, in particolare, sulla revisione degli elementi di regolazione che concernono la determinazione della cosiddetta “tariffa di riferimento”: a questo riguardo viene effettuata una simulazione sui diversi parametri oggetto della proposta di revisione prendendo come riferimento di analisi il caso dell’ATO Bacchiglione e del gestore Acegas-APS e ne vengono proposti e discussi i risultati.

The Value of Flexibility in the Italian Water Service Sector: A Real Option Analysis

We analyze the optimal investment strategy of a monopolist which has subscribed a concession contract to provide a public utility, i.e. water service. We present a strategic model in which a monopolist chooses both the timing of the investment and the capacity. We focus not only on the value of the immediate investment, but rather on the value of the investment opportunity. We then extend the model to two interdependent projects, where investing in the first project provides the opportunity to acquire the benefits of the new investment by making a new outlay. We show that flexibility to defer an investment may generate, ceteris paribus, additional profits which may induce positive effects in terms of policy and consumers surplus.

How Regulation Affects Energy Saving: Smart Grid Innovation in Tall Buildings

The economic problems involved in new high-rise buildings are mainly approached from the developer’s perspective, especially in private-public partnerships, popular in Italian urban planning. Interest in energy savings and sustainability for buildings has recently increased considerably. Italian regulations have generally approached these problems from the viewpoint of materials and structures; zoning regulations do not cover energy from the viewpoint of investment projects and their externalities, either in urban development or from the economic viewpoint.

Optimal sustainable use of drinking water sources and interactions between multiple providers

The provision and conservation of drinking water are key issues worldwide. Optimal management involves conjunctive use of different sources by multiple providers, who share the same surface water source while using a personal stock source. In this paper we consider the interaction between two profit maximizer providers. We solve two optimal control problems where the optimal abstraction policy of the upstream provider influences the feasible controls of the downstream one. We determine the optimal sustainable policies at every catchment point.

How Regulation Affects Innovation: The Smart Grid Case At Urban Scale

Purpose: The paper discusses energy saving policies implemented in Italy in the last ten years and shows their ineffectiveness in promoting innovation in new energy systems, such as Smart Grids.The economic fundamentals involved in energy consumption are investigated with specific reference to high rise – high density settlements and their prevalent building typology, i.e. tall buildings. The paper discusses how the energy demand and consumption of a single building can affect the energy trade-off of entire cities.Approach – We examine current local and national policies- for energy consumption reduction, then we discuss how Italian urban planning should adopt ad hoc regulation in order to pursue innovative systems of energy saving. We also - debate on the present absence of procedures to evaluate these policies’ effects on market demand in both new building construction and deep energy retrofit. Finally we argue the inadequacy of Italian national and local legislation in promoting Smart Grids as innovative systems of electric energy production, distribution and consumption.Findings – We represent the stat of art in the Italian legislation for energy saving and we offer a theoretical framework to verify the effectiveness of these measures. Furthermore we propose a new way to promote innovative systems of energy production for high density settlements. In this respect, due to technological and facility management characteristics tall buildings are an opportunity to experiment smart grids at neighborhood level. Beyond the construction engineering advances, we present how regulation should help to improve innovation.Research limitations/implications – The paper is mainly exploratory and identifies some issues for further research. Data on housing market demand related to public incentives must be collected to measure the effectiveness of local norms. Furthermore, selected case studies must be investigated to verify the energy demand at diverse urban density: this survey is preliminary to the definition of protocols for both technological and regulatory interventions.Originality/values – The paper is the first attempt in Italy to present the role of town planning norms in the promotion of Smart Grids and, in general, to match innovative distributed energy systems to legislation in planning. Furthermore the present contribution highlights the potential of specific building typologies, e.g. tall buildings, in the promotion of Smart Grids.

Do Smart Grids Increase Real Estate Market Values

Purpose –Buildings energy efficiency is generally considered in terms of energy consumption, costs and GHG emissions reduction in line with the 2020 goals. It is commonly agreed that the greater the building energy efficiency, the greater the property market value. To increase energy efficiency, deep retrofitting was set in place and simultaneously photovoltaic power plants (PV) were installed, boosted through feed-in-tariffs that made them extremely attractive for both institutional and small private investors. Nonetheless Government incentives and regulations were not able to foster consumers to substantially change their energy consumption patterns. In this scenario overall cost-savings by PV-generation systems would only have a marginal impact on real estate market values, if the energy consumption pattern of the household does not match the most beneficial generation pattern and energy management is not properly performed. Aim of the paper is to investigate whether Smart Grids can increase market values due to higher production and consumption flexibility. Smart grids give de facto producers and consumers, the opportunity to be active in the market and strategically decide their optimal production/consumption pattern. We provide a model based on the real option theory to determine the value of this flexibility and the related market value increase. Design/Methodology/Approach – We model the homeowner decision to invest in a PV plant and connect to a Smart Grid. We determine the property potential market value increase due to the opportunity to perform active energy management given by smart grids and we compare this value increase to the PV plant value per se. To capture the value of managerial flexibility we implement a real option approach. Findings – The paper provides a theoretical framework to model the owner’s decision to invest in a PV plant, to be integrated in a smart grid, and determines the real estate market value increase. The greater the flexibility the greater the market value Research limitations/implications – Interesting policy implications might be driven from the model implementation. It might be derived the optimal mix between building energy retrofitting and energy market participation that increases property values in a smart grid scenario. Originality/values – The novelty of the paper lies in the attempt to define energy efficiency also in terms of flexible energy management and its implications in the energy market.

La valutazione ex-ante degli effetti sul valore immobiliare di interventi della salvaguardia ambientale nell'isola di Sant'Erasmo nella laguna di venezia : un approccio gerarchico

Il presente contributo si prefigge lo scopo di valutare gli effetti degli interventi di salvaguardia dell’isola di Sant’Erasmo, nella Laguna di Venezia, sul patrimonio immobiliare, nel tentativo di verificare se la loro attuazione possa portare ad un incre∗ Giuseppe Stellin, professore ordinario di Economia ed Estimo civile, Giuliano Marella, ricercatore in Estimo, e Chiara D’Alpaos, dottoranda di ricerca in Estimo ed Economia territoriale, afferiscono al Dipartimento di Innovazione Meccanica e Gestionale dell’Università degli Studi di Padova; Paolo Rosato, professore associato di Economia ed Estimo Civile, al Dipartimento di Ingegneria Civile, Università degli Studi di Trieste ed alla Fondazione ENI Enrico Mattei. La presente ricerca è stata finanziata dal CORILA – Consorzio per la gestione del centro di coordinamento delle attività di ricerca inerenti il sistema lagunare di Venezia e svolta nell’ambito del Laboratorio di Valutazioni Immobiliari e Ambientali dell’Università degli Studi di Padova diretto dal prof. G. Stellin. Questo lavoro è stato sviluppato in stretta collaborazione dagli autori. Tuttavia la stesura dei paragrafi 3 e 4 è attribuibile a P. Rosato, 2 e 5 a G. Marella e 6, 7 e l’appendice a C. D’Alpaos. Comuni la premessa e le considerazioni conclusive. Si ringrano i tecnici del Consorzio Venezia Nuova per le informazioni fornite. La descrizione degli interventi fa riferimento al Progetto Generale Definitivo e al Primo Intervento Attuativo del Progetto Generale Definitivo approvato dal Comune di Venezia e dalla Commissione per la Salvaguardia di Venezia, è datato luglio 2000. Il valore attuale degli edifici nello stato attuale è stato stimato utilizzando la seguente funzione: Vui = 1786 Ii. Il coefficiente è stato stimato dividendo la somma dei prezzi unitari di mercato registrati per gli immobili compravenduti nell’ultimo anno per la somma dei relativi indicatori di valore. A questo proposito si ringrazia l’arch. Alfredo Marascalchi per le preziose informazioni fornite sul mercato immobiliare veneziano.