Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach

The growing demand for renewable energy sources, particularly solar photovoltaic (PV) technology, poses a significant challenge to agricultural land use, creating a conflict over land allocation critical for food production and energy generation. This study addresses this issue by proposing a real o...

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Authors: Lazo, Joaquín, Trujillo-Baute, Elisa, Watts, David
Format: article
Status:Published version
Publication Date:2026
Country:España
Institution:Universitat de Lleida (UdL)
Repository:Repositori Obert UdL
OAI Identifier:oai:repositori.udl.cat:10459.1/469526
Online Access:https://doi.org/10.1016/j.jclepro.2026.147468
https://hdl.handle.net/10459.1/469526
Access Level:Open access
Keyword:Photovoltaic
Real options
Land-use change
Agriculture
Uncertainty
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spelling Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approachLazo, JoaquínTrujillo-Baute, ElisaWatts, DavidPhotovoltaicReal optionsLand-use changeAgricultureUncertaintyThe growing demand for renewable energy sources, particularly solar photovoltaic (PV) technology, poses a significant challenge to agricultural land use, creating a conflict over land allocation critical for food production and energy generation. This study addresses this issue by proposing a real options model to evaluate the timing of PV plant installation on agricultural land, incorporating uncertainties related to electricity prices and PV technology costs. This methodology has the advantage of incorporating flexibility in decision-making and the consideration of irreversibility, making it especially suitable for analyzing land-use changes. The model is applied to a case study in Spain, analyzing 134 crop types across 15 regions, to estimate the optimal timing for farmers to switch from traditional agriculture to solar PV installations. The findings indicate that the cost of PV technology is the primary driver of this transition, with the model predicting that PV installations will become more profitable than agriculture within the next 20 years, particularly in southern Spain, where higher solar irradiance accelerates the process. Furthermore, the study highlights the need for differentiated regulatory policies, with stricter measures recommended for regions with higher land-use change risk. This research contributes to the literature by providing a tool for assessing land-use conflicts between agriculture and renewable energy, offering insights for policymakers, investors, and academics.The authors acknowledge the support and funding from ANID-Subdireccion de Capital Humano/Doctorado Nacional/2021–21210320, Conicyt-Fondecyt 1221943, Conicyt-FONDAP 1522A0006 (SERC Chile), MCIU/AEI&ERDF-EU PID2022-140546OB-I00 and Departament de Recerca i Universitat de la Generalitat de Catalunya 2021SGR00355.Elsevier2026info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttps://doi.org/10.1016/j.jclepro.2026.147468https://hdl.handle.net/10459.1/469526reponame:Repositori Obert UdL instname:Universitat de Lleida (UdL)Inglésinfo:eu-repo/grantAgreement/AEI/Plan Estatal de Investigación Científica y Técnica y de Innovación 2021-2023/PID2022-140546OB-I00Reproducció del document publicat a https://doi.org/10.1016/j.jclepro.2026.147468Journal of Cleaner Production, 2026, vol. 540, 147468cc-by-nc-nd (c) authors, 2026Attribution-NonCommercial-NoDerivatives 4.0 Internationalinfo:eu-repo/semantics/openAccesshttp://creativecommons.org/licenses/by-nc-nd/4.0/oai:repositori.udl.cat:10459.1/4695262026-06-24T12:42:17Z
dc.title.none.fl_str_mv Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
title Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
spellingShingle Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
Lazo, Joaquín
Photovoltaic
Real options
Land-use change
Agriculture
Uncertainty
title_short Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
title_full Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
title_fullStr Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
title_full_unstemmed Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
title_sort Land-use dilemma: Evaluating the transition from crops to solar PV plants using a real options approach
dc.creator.none.fl_str_mv Lazo, Joaquín
Trujillo-Baute, Elisa
Watts, David
author Lazo, Joaquín
author_facet Lazo, Joaquín
Trujillo-Baute, Elisa
Watts, David
author_role author
author2 Trujillo-Baute, Elisa
Watts, David
author2_role author
author
dc.subject.none.fl_str_mv Photovoltaic
Real options
Land-use change
Agriculture
Uncertainty
topic Photovoltaic
Real options
Land-use change
Agriculture
Uncertainty
description The growing demand for renewable energy sources, particularly solar photovoltaic (PV) technology, poses a significant challenge to agricultural land use, creating a conflict over land allocation critical for food production and energy generation. This study addresses this issue by proposing a real options model to evaluate the timing of PV plant installation on agricultural land, incorporating uncertainties related to electricity prices and PV technology costs. This methodology has the advantage of incorporating flexibility in decision-making and the consideration of irreversibility, making it especially suitable for analyzing land-use changes. The model is applied to a case study in Spain, analyzing 134 crop types across 15 regions, to estimate the optimal timing for farmers to switch from traditional agriculture to solar PV installations. The findings indicate that the cost of PV technology is the primary driver of this transition, with the model predicting that PV installations will become more profitable than agriculture within the next 20 years, particularly in southern Spain, where higher solar irradiance accelerates the process. Furthermore, the study highlights the need for differentiated regulatory policies, with stricter measures recommended for regions with higher land-use change risk. This research contributes to the literature by providing a tool for assessing land-use conflicts between agriculture and renewable energy, offering insights for policymakers, investors, and academics.
publishDate 2026
dc.date.none.fl_str_mv 2026
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv https://doi.org/10.1016/j.jclepro.2026.147468
https://hdl.handle.net/10459.1/469526
url https://doi.org/10.1016/j.jclepro.2026.147468
https://hdl.handle.net/10459.1/469526
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv info:eu-repo/grantAgreement/AEI/Plan Estatal de Investigación Científica y Técnica y de Innovación 2021-2023/PID2022-140546OB-I00
Reproducció del document publicat a https://doi.org/10.1016/j.jclepro.2026.147468
Journal of Cleaner Production, 2026, vol. 540, 147468
dc.rights.none.fl_str_mv cc-by-nc-nd (c) authors, 2026
Attribution-NonCommercial-NoDerivatives 4.0 International
info:eu-repo/semantics/openAccess
http://creativecommons.org/licenses/by-nc-nd/4.0/
rights_invalid_str_mv cc-by-nc-nd (c) authors, 2026
Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Repositori Obert UdL
instname:Universitat de Lleida (UdL)
instname_str Universitat de Lleida (UdL)
reponame_str Repositori Obert UdL
collection Repositori Obert UdL
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