Producer Preferences for Contracts on a Risky Bioenergy Crop

Abstract

This study employed a stated choice experiment survey to identify southeastern U.S. farmers' preferences for contracts to produce Giant Miscanthus. We developed a more theoretically consistent framework which takes into account risk preference and perception information and also accounts for heterogeneous status-quo alternatives. Results from our Random Parameter Logit model indicated that price per ton of harvested Giant Miscanthus, biorefinery harvest, and establishment cost-share all had significant positive effects on the probability of a producer accepting a contract to produce Giant Miscanthus, whereas contract length had a significant negative effect. Our analysis also found evidence of significant preference heterogeneity in producers' preferences for biorefinery harvest, yield insurance, and contract length. We also found that incorporating risk perception and risk preference information, as well as accounting for heterogeneous status-quo alternatives in the decision framework improved overall model performance even though the respective individual coefficients for these variables were not statistically significant. ii DEDICATION I dedicate this research to my parents, Mr. Kwaku Frimpong Brenyah and Mrs.

Designing Agri-Environmental Schemes to Cope with Uncertainty

“…A recent paper regarding a contract for carbon sequestration offered to US farmers finds similar results (Gramig and Widmar, 2018). Results regarding the length of the contract or opt-out options have also been highlighted in the context of biofuel production (Krah et al, 2018) and of forest management, which often involves longer contracts of 10 to 20 years (Klosowski et al, 2001;Horne, 2006;Vedel, 2010, 2012). In a way our study combines both shorter contracts and the opt-out option, by providing the possibility of renewing the contract for two years at the end of the first three years.…”

Combining choice modeling estimates and stochastic simulations to assess the potential of new crops—The case of lignocellulosic perennials in Southwestern Germany

“…In contrast, Fewell, Bergtold, and Williams () and Krah et al. () found that the risk attitude had no significant effect on the cultivation of switchgrass and miscanthus. Albeit at a relatively low significance level, the covariate farm size shows a negative part‐worth parameter for SRC.…”

“…() and Krah et al. () have already illustrated the importance of purchase contracts with respect to the production of energy crops.…”