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<br /> - - ' ---'1'
<br /> , , '11'• „, ' 11' f
<br /> •,,,,'• 1, ',173" ' - '•„•, .
<br /> '"-•-I,....1-!,1.'''''' • r,::..,,,,
<br /> ' ' 7;':, - •, `.;0',..:'s
<br /> 2Z A Specific Approach to Estimating the Financial Value of Underground Spe,neeL,:,' ,
<br /> Pasqual and Riera (1990) provide what they term a first attempt at a means of estimatint,....2_1e
<br /> of underground space as follows:
<br /> , :t av '. • c.
<br /> First, the value of underground land is determined from consideration of a hypothetical.; _,un 0,,Etient
<br /> which includes both aboveground and underground development. The value of---E----u - an"4,.' d is I
<br /> ' 1,r--
<br /> derived by considering the assigned profit, construction cost and land value to each fwd() ' ',0,=,
<br /> development, ix.
<br /> - i'..,'.- .f-tr- .
<br /> P
<br /> U = ---- - c I!
<br /> 1 + b
<br /> • .,-; '',',, f , ,
<br /> where ,,T,NiP,',Y•,,u = price of subsurface land
<br /> p = price of the portion of the building built underground
<br /> b = developer's rate of profit
<br /> c = construction cost of the underground portion of the building ,-., 1
<br /> This formulation leads to the conclusion that as the construction cost of an underground facility
<br /> increases, the value of the subsurface "land" should decrease by the same amount. This relationship
<br /> stems from the fact that the land is assumed to be worth what a developer is willing to pay for it.
<br /> The developer cannot afford to pay as much for the underground land if the construction costs more
<br /> and if the same profit margin is to be maintained. The relationship also indicates that the value of 'pi,
<br /> underground land will decrease with higher profit requirements on the part of the developer.-.
<br /> The above formulation does not provide information about the change of value with depth.
<br /> Rewriting the above equation as a function of parcels of underground land at different depths, i, one 1
<br /> has (Pasqual and Riera, 1990): -,-.::-- '- .•
<br /> Pi
<br /> U1 - 1 + b - ci
<br /> 1
<br /> If the price of the underground space is assumed to decrease with depth and the construction cost is
<br /> assumed to increase with depth, then it follows that the calculated value of undergroundland will
<br /> necessarily'decrease with depth. (Note: these two assumptions are normally validinay not be
<br /> satisfied in geological conditions which allow cheaper underground construction inlSpcfic geologic
<br /> zones at greater depth).
<br /> •
<br /> The main problem in applying this more detailed analysis is that it is difficult to issessthe price of
<br /> underground space as it relates to depth below the surface. A second problemiii112(iiriiderground
<br /> "land" cannot be considered as a commodity defined by its area in a horizotalyi?7,cas is surface
<br /> 1:41'14iii;.;
<br /> 16 .„.:4,..1,--.)-•k,.,„,,-,.,,r I.
<br /> .-4:..,,,,',.it ,....a. .
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