SIMULATION TOOL FOR EVALUATION OF INVESTMENT IN SUSTAINABLE TECHNOLOGY

Sustainable technology enables valuable use of natural resources and reduced ecological impact, whereas impact management is the ongoing practice of measuring, assessing and improving impacts on sustainability issues. The aims are to achieve the balance between economic, environmental and social impacts through the effective management of resources whilst maximising organisational profitability. A financial evaluation helps an investor to take rational decision about an analyzed investment, whereas an economic analysis broadens this perspective to include effects of the investment imposed on other stakeholders and the environment. Changing technology landscapes, development risks and new opportunities are characterized by a need of innovative financing and investment models in order to adequately assess the uncertainty and risks. Traditional quantitative analysis calculates measures of risk and financial return for hypothetical investments based on some time series for the analysis, that also should account for market dynamics. The shortcomings with this approach could be a single constituent dominate a risk and return profile, where noise is a random variation, including any variation that is not predicted, except in terms of a statistical distribution function. Simulation, however, improves on this by looking at the impact of many variables changing at the same time. The simulation process consists of successively generating random numbers, used to select from the probability distribution of each uncertain input parameter. The process continues repeatedly to obtain a sufficient number of variable values for statistical analysis and a sufficient number of output parameters, where probability curves are used to determine the likelihood of the outcome and create a picture of risk.