Valuation of Infrastructure Projects: Review of the Real Options Literature

Given the infrastructure sector development and the worldwide trend to grant infrastructure projects to private investors, a growing number of articles in the literature have been devoted to the issue of evaluating this class of investments. To consider the risk and irreversibility of infrastructure investments, researchers have resorted to the real options approach (ROA), which captures the value of managerial flexibility under uncertainty. This article analyzes the research focus, trends, and design found in the literature devoted to the ROA in infrastructure concession project valuation. The results are presented in a quantitative form. They provide insights that may be of value to researchers, project developers, and policymakers who intend to plan and evaluate infrastructure concession projects.