Investment uncertainty in rangeland improvements

In a rangeland investment plan, the uncertainties are ought to the lack of knowledge about the evolution of various natural processes (physical or random uncertainties) as well as to the limited amount of the available data (manmade or technological uncertainties). In a typical problem of failure, under the conditions of uncertainty, there must be answered three critical questions: When the system will fail? How often the failure is expected? What are the possible consequences? The answer to the first question will be provided if it is possible to create the “critical condition” or the “critical conditions” the investigation of which will lead to the conclusion of the failure or the success of the under study investment. By the answer to the second question, essentially, it will be determined the percent probability of failure of the plan and next, according to the known procedure, this risk could be incorporated in the discount rate of interest. For answering to the third question, it is necessary to be determined, recorded and analyzed the various types of consequences and naturally, if is possible, to be quantified and expressed into economic terms. Moreover, determining the “rates of return” of every alternative solution, also, it may be assessed the risk of the investment by the assistance of the “standard deviation” of these rates.