Baumont de Oliveira, F.J., Ferson, S., Dyer, R.A.D. orcid.org/0000-0002-0030-7542 et al. (3 more authors) (2022) How high Is high enough? Assessing financial risk for vertical farms using imprecise probability. Sustainability, 14 (9). 5676.
Abstract
Vertical farming (VF) is a method of indoor agricultural production, involving stacked layers of crops, utilising technologies to increase yields per unit area. However, this emerging sector has struggled with profitability and a high failure rate. Practitioners and academics call for a comprehensive economic analysis of vertical farming, but efforts have been stifled by a lack of valid and available data as existing studies are unable to address risks and uncertainty that may support risk-empowered business planning. An adaptable economic analysis is necessary that considers imprecise variables and risks. The financial risk analysis presented uses with a first-hitting-time model with probability bounds to evaluate quasi-insolvency for two unique vertical farms. The UK farm results show that capital injection, robust data collection, frequent cleaning, efficient distribution and cheaper packaging are pathways to profitability and have a safer risk profile. For the Japanese farm, diversification of revenue streams like tours or education reduce financial risk associated with yield and sales. This is the first instance of applying risk and uncertainty quantification for VF business models and it can support wider agricultural projects. Enabling this complex sector to compute with uncertainty to estimate financials could improve access to funding and help other nascent industries.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2022 The Authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). |
Keywords: | financial risk assessment; vertical farming; urban agriculture; probability bounds analysis; economic viability |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 17 May 2022 09:13 |
Last Modified: | 17 May 2022 09:13 |
Status: | Published |
Publisher: | MDPI AG |
Refereed: | Yes |
Identification Number: | 10.3390/su14095676 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:186871 |