Motivations to grow energy crops: the role of crop and contract attributes

Abstract

Energy crops are a promising feedstock for biofuels due to their relatively high yields, even on low quality land and their potential to improve soil and water quality. However, these crops are perennials and their production involves upfront investments, a lag between establishment and income generation and a long term commitment of land.

Redesigning oilseed tree biofuel systems in India

“…The literature also puts emphasis on the revenue lag and associated investment risk of smallholder perennial-based systems, in particular for the poorest smallholders (Alexander et al, 2012;Kumar et al, 2012;Sharma et al, 2016). Khanna et al (2017) in particular use a CE to show the importance of discount rates and upfront investments, and to a lesser extent riskiness of returns, for adoption of perennial energy crops in the U.S. Our results only partially support these observations. We find that supply contracts (which decrease marketing risk and policy uncertainties) provide an additional incentive to adopt mahua and pongamia only for more endowed respondents ('potential adopters' and 'mahua adopters').…”

“…While the current public program focuses on independent farm production, there are numerous examples of contract-farming models for biofuels, in India and elsewhere (Altenburg et al, 2009;German et al, 2011;Negash and Swinnen, 2013;Padula et al, 2012;Shepherd, 2013;van Eijck et al, 2014b), albeit rarely involving trees. For both the company and the farmers, a contractual agreement could share and largely reduce risks, uncertainties and transaction costs, especially given the novelty of the biofuel tree value chain with its associated policy and market uncertainties, and its long-term investment nature involving revenue lags (Alexander et al, 2012;Bijman et al, 2010;Eaton and Shepherd, 2001;Khanna et al, 2017). We define three contractual agreements under which seedlings are provided free of charge.…”

“…Additional insights are required to decide who should be the main actor in such set-ups (smallholders, private companies or the government) and how the value chain should be structurally and spatially organized, while supply chain dynamics and actor-specific profitability, under various conditions, should also be further explored (Altenburg et al, 2009;Chen and Önal, 2014;Van Eijck et al, 2012). Also further exploration of contract specifications (e.g., duration, input support, enforcement and renegotiation, trustworthiness, quality standards) for an effective design is needed, especially given the long-term commitments (Alexander et al, 2012;Eaton and Shepherd, 2001;Khanna et al, 2017;Montefrio et al, 2015;Shepherd, 2013). Khanna et al (2017) provide an excellent example on how contract specification preferences can be assessed through a CE, and find for instance a robust positive effect of input support on adoption of perennial energy crops in the U.S., while the effect of contract duration is more ambiguous.…”

“…Oilseed trees have received little if any attention in the literature on biofuels (Achten et al, 2014). Yet, trees are inherently a long-term investmentbecause of their maturation period and long lifetimerequiring longterm commitments of land, and involving upfront investments as well as yield and price risks (Khanna et al, 2017). The latter holds in particular for biofuels, given substantial policy and market uncertainties (Chen and Önal, 2014;Kumar et al, 2012;Locke and Henley, 2013).…”

A technical and socioeconomic approach to estimate forest residues as a feedstock for bioenergy in northern Mexico

“…Stated-preference methods are increasingly common in environmental research as a way of explaining the most preferred alternatives of respondents (Hjerpe et al 2015). Two of them are contingent valuation and choice experiments (CE); the latter being increasingly used in recent years for bioenergy studies (Susaeta et al 2011;Joshi et al 2013;Bergtold et al 2014;Khanna et al 2017). It uses a survey instrument in which participants are asked to choose their preferred alternative from a set of scenarios characterized by different levels of qualitative or quantitative attributes (Horne et al 2005).…”