Abstract Manager

We study the investment options for transportation infrastructures in remote regions, focusing on Canada’s North, where most remote communities depend on a seasonal transportation network, including all-weather highways, winter/ice roads, ferries, and air travel. The government (and sometimes private operators), responsible for maintaining the existing transportation infrastructure and operating it, as well as planning new investments to improve connectivity and thus encourage economic growth, face increased challenges and costs in doing the above due to the impacts of climate change. Recognizing the need to consider both climate change-related uncertainties and growing financial demands, this research introduces a flexible investment decision-making framework employing Real Option Analysis. The objective is to determine the optimal timing for discontinuing use of some transportation modes and infrastructures in favor of new or different modes that can possibly provide greater reliability in terms of the costs of maintenance and operations in the face of climate change impacts. We also propose a new dynamic remoteness index that considers uncertainties regarding seasonal operational windows for seasonal transportation modes like winter roads. This index captures the effects of new investments – including improved reliability – on community accessibility and remoteness. The results provide insights into the optimal timing for infrastructure changes, clarifying the relationship between investment decisions and the region's remoteness status.