Modeling the Concession Period and Subsidy for BOT Waste-to-Energy Incineration Projects

Abstract

Build-operate-transfer (BOT) arrangements are increasing in popularity with the development of the waste-to-energy (WTE) incineration industry in China and many other countries. For BOT WTE incineration projects, decision-making regarding the concession period and the subsidy is critical for balancing the potential interests of the government, the private sector, and the public. However, the public’s concerns with and influence over the decision-making process of BOT projects have been omitted in recent research. The aim of this paper is to propose a reasonable, systematic, and multiobjective model for determining the concession period and subsidy for BOT WTE incineration projects based on system dynamics and prospect theory. By applying the system dynamics approach, a revenue model is constructed and simulated considering the causal relationship and mathematical formulations among the influencing factors, and some acceptable alternatives for the concession period and subsidy are obtained. To gain the support of the public, the public perception is measured and quantified using prospect theory and fuzzy set theory, and a fuzzy multiobjective model is proposed to identify the most feasible and satisfactory alternative for the concession period and subsidy. Finally, the proposed model is verified by a real BOT WTE incineration project in China. This research is helpful for creating a ‘multiwins’ mechanism for the government, the private sector, and the public in a BOT WTE incineration project.