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Effect of Production Parameters on the Economic Feasibility of a Biofuel Enterprise

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  • Zapata, Samuel D.
  • Ribera, Luis A.
  • Palma, Marco A.

Abstract

In order to guarantee the success of the nascent cellulose-based biofuel industry, it is crucial to identify the most economically relevant components of the biofuel production path. To this aim, an original stochastic financial model is developed to estimate the impact that different feedstock production and biofuel conversion parameters have on the probability of economic success. Estimation of the model was carried out using Monte Carlo simulation techniques along with parametric maximum likelihood estimation procedures. Results indicate that operational efficiency strategies should concentrate on improving feedstock yields and extending the feedstock growing season.

Suggested Citation

  • Zapata, Samuel D. & Ribera, Luis A. & Palma, Marco A., 2017. "Effect of Production Parameters on the Economic Feasibility of a Biofuel Enterprise," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 49(3), February.
    • Handle: RePEc:ags:joaaec:352110
    DOI: 10.22004/ag.econ.352110
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    References listed on IDEAS

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    1. Richardson, James W. & Herbst, Brian K. & Outlaw, Joe L. & Gill, Robert Chope, II, 2007. "Including Risk in Economic Feasibility Analyses: The Case of Ethanol Production in Texas," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 25(2), pages 1-18.
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    3. Richardson, James W. & Lemmer, Wessel J. & Outlaw, Joe L., 2007. "Bio-ethanol Production from Wheat in the Winter Rainfall Region of South Africa: A Quantitative Risk Analysis," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 10(2), pages 1-24.
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    5. Palma, Marco A. & Richardson, James W. & Roberson, Brad E. & Ribera, Luis A. & Outlaw, Joe L. & Munster, Clyde, 2011. "Economic Feasibility of a Mobile Fast Pyrolysis System for Sustainable Bio-crude Oil Production," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 14(3), pages 1-16, September.
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    More about this item

    Keywords

    Resource/Energy Economics and Policy;

    JEL classification:

    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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