Evaluation of Trans-water Project Financial Risk

Investment in water transfer project is huge. Water volume, water price and operation cost to some extent are also not certain. There is a possibility that these factors have an influence on the future finance of the project. Therefore the analysis of the financial risk of the project seems very important. The Monte-Carlo Simulation method can better overcome the traditional disadvantages of the sensitivity analysis, calculate the probability distribution of the project financial risk and the possible variation of the uncertain factors. Taking the Transfer of Taohe Water Project as a case study, this paper brings out how to adjust the water price properly and suggests ways of establishing a responsible project decision-making.