FINANCIAL AND ECONOMIC JUSTIFICATION OF INVESTMENT DECISIONS IN LAND ASSETS UNDER WAR-RELATED CHALLENGES

Hanna Kostovyat Uzhhorod National University https://orcid.org/0000-0001-8498-3419
Viktoriia Levkulych Uzhhorod National University https://orcid.org/0000-0002-8839-7182

Keywords: Land Assets, War Risk, Investment Analysis, Discount Rate, Asset Valuation

Abstract

In this article, we examine the financial and economic rationale for investment decisions in land assets under the intensified uncertainty caused by wartime conditions. We argue that standard valuation approaches become insufficient in environments characterized by information asymmetry, spatially uneven security threats, and difficulties in verifying the actual quality and usability of land resources. We refine the concept of a war-risk premium and propose its structured incorporation into the discount rate, taking into account territorial specifics, the probability of asset deterioration, and the expected costs associated with restoring land functionality. Our analysis demonstrates that an adequate assessment of capital costs requires the integration of both financial indicators and security-related factors that directly influence long-term investment feasibility.

We further evaluate the need to broaden land-asset verification beyond classical Due Diligence procedures. The proposed framework includes satellite-based land monitoring, contamination assessment, verification of factual land use, and projections of potential productivity losses. To capture the volatility of market and security dynamics, we develop scenario-based cash-flow models and show the advantages of applying a weighted NPV compared to deterministic estimations. This approach enables the identification of a more realistic range of investment outcomes and strengthens the reliability of decision-making. We also construct an integral efficiency indicator that combines risk-adjusted financial metrics with aggregated security parameters. The proposed methodological results can support institutional and private investors, financial intermediaries, and development organizations involved in evaluating and financing land-related projects during wartime and post-war recovery. These findings form a basis for further applied research and for designing mechanisms to derisk investments in land assets.

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Author Biographies

Hanna Kostovyat, Uzhhorod National University

PhD (Economics), Associate Professor

Viktoriia Levkulych, Uzhhorod National University

PhD (Economics), Associate Professor

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