FINANCIAL AND ECONOMIC JUSTIFICATION OF INVESTMENT DECISIONS IN LAND ASSETS UNDER WAR-RELATED CHALLENGES
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.
Downloads
References
Matsybora, T. (2023). Investment activity in Ukrainian agriculture during the war: New challenges and threats. Ekonomika APK, 30(5), 10–18. https://doi.org/10.32317/2221-1055.202305010
Grytsenko, A., Bilorus, O., Burlay, T., Podliesna, V., & Borzenko, O. (2024). Ukraine’s economy: Resilience under war and challenges for post-war recovery. Science and Innovation, 20(5), 16–34. https://doi.org/10.15407/scine20.05.016
Shtal, T., Butenko, O., Kot, O., Kozub, V., & Malakhov, V. (2025). Modelling economic productivity of Ukraine in the context of military challenges. Scientific Bulletin of Mukachevo State University. Series “Economics”, 12(2), 107–120. https://doi.org/10.52566/msu-econ2.2025.107
Trehub, O., Hudima, T., Kirin, R., Khomyn, V., Fedulova, I., Dzhulai, M. et al.; Cherniavska, T. (Ed.). (2024). Transformations of national economies under conditions of instability. Tallinn: Scientific Route OÜ. https://doi.org/10.21303/978-9916-9850-6-9
Klymenko, N., Voronenko, I., Nehrey, M., Rogoza, K., & Rogoza, N. (2023). Risk assessment of shock periods and investment attractiveness of agroholdings of Ukraine. Agricultural and Resource Economics: International Scientific E-Journal, 9(2), 163–182. https://doi.org/10.51599/are.2023.09.02.07
Suescún Barón, C. A., Guevara, C., & Guevara, D. (2024). Financialization of land in peripheral countries: Disciplining agrarian structures and perpetuating macroeconomic vulnerabilities. Review of Political Economy, 1–28. https://doi.org/10.1080/09538259.2024.2421305
Makrenko, I., Makarenko, S., & Rubanov, P. (2022). Greenwashing detection and impact on responsible business and investment: Case of Ukrainian companies (agriculture leaders). In PRIZK International Conference — Novel Insights in the Leadership in Business and Economics After the COVID-19 Pandemic (pp. 129–145). Springer Nature Switzerland. https://doi.org/10.1007/978-3-031-28131-0_10
Trofymenko, P., Minzhyner, A., Zatserkovnyi, V., Stakhiv, I., & Kobylynska, S. (2024). Cartographic and analytical assessment of land price formation depending on physical and geographical conditions of the territory under military aggression in Ukraine. Visnyk of V. N. Karazin Kharkiv National University, Series: Geology. Geography. Ecology, (61), 259–271. https://doi.org/10.26565/2410-7360-2024-61-21
Blank, I. A. (2020). Financial Management (textbook). Nika-Centre. (in Ukrainian)
Savluk, M. I. (2021). Corporate Finance (textbook). KNEU. (in Ukrainian)
Saik, P., Koshkalda, I., Bezuhla, L., Stoiko, N., & Riasnianska, A. (2024). Achieving land degradation neutrality: land-use planning and ecosystem approach. Frontiers in Environmental Science, 12, 1446056, 1-12. https://doi.org/10.3389/fenvs.2024.1446056
Tibiletti, L. (2022). One-size risk-adjusted discount rate does not fit all risky projects. The Journal of Risk Finance, 23(3), 289-302. https://doi.org/10.1108/JRF-03-2021-0035
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley.
Camacho-Sanchez, C., Yie-Pinedo, R., & Galindo, G. (2023). Humanitarian demining for the clearance of landmine-affected areas. Socio-Economic Planning Sciences, 88, 101611. https://doi.org/10.1016/j.seps.2023.101611
Kostovyat, H., & Kucherova, H. (2025). Analysis of macroeconomic risks during war: The role of financial institutions and state policy under conditions of incomplete data. Porta Universorum, 1(4), 122–137. https://doi.org/10.69760/portuni.0104012
Mystrioti, C., & Papassiopi, N. (2024). A comprehensive review of remediation strategies for soil and groundwater contaminated with explosives. Sustainability, 16(3), 961. https://doi.org/10.3390/su16030961
Didenko, N. (2024). Soil damage and recovery in Ukraine: Lessons from global post-war experiences. Land Reclamation and Water Management, (2), 79–86. https://doi.org/10.31073/mivg202402-391
Tsymbaliuk, I., Khomiuk, N., Kozliuk, V., & Kulii, V. (2025). Land resources management under conditions of degradation, war-related threats and socio-economic instability. Scientific Messenger of LNU of Veterinary Medicine and Biotechnologies. Series Economical Sciences, 27(105), 14–20. https://doi.org/10.32718/nvlvet-e10503
Subedi, Y. R., Kristiansen, P., & Cacho, O. (2022). Drivers and consequences of agricultural land abandonment and its reutilisation pathways: A systematic review. Environmental Development, 42, 100681. https://doi.org/10.1016/j.envdev.2021.100681
Raj, A., Jhariya, M. K., Banerjee, A., Nema, S., & Bargali, K. (2023). Land degradation and restoration: Implication and management perspective. Land and environmental management through forestry. Wiley, 1–21. https://doi.org/10.1002/9781119910527.ch1
Wang, S., Guo, J., Yu, Y., Shi, P., & Zhang, H. (2023). Quality evaluation of land reclamation in mining areas based on remote sensing. International Journal of Coal Science & Technology, 10(1), 43. https://doi.org/10.1007/s40789-023-00601-9
This work is licensed under a Creative Commons Attribution 4.0 International License.
