While green infrastructure has outperformed the 'core' infrastructure market over the past decade, this is largely the result of temporary excess demand for such assets that has pushed asset prices up and discount rates down, says research by Noël Amenc, associate professor of finance at the EDHEC Business School, and Frédéric Blanc-Brude, director of the EDHEC Infrastructure Institute. ‘The Pricing of Green Infrastructure’ says after controlling for a number of risk factors that are present in the returns of unlisted infrastructure equity investment, there is no persistent 'green' risk factor premium from which investors in green infrastructure projects might benefit over the long term. However, there is instead a 'green price premium' that investors have been willing to pay to increase their holdings of such assets.
- PWC