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Which factors influence the expansion of bioenergy? An empirical study of the investment behaviours of German farmers

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  • Reise, Christian
  • Musshoff, Oliver
  • Granoszewski, Karol
  • Spiller, Achim

Abstract

The German government is planning to increase the share of renewable energy sources. In this context, it is important to understand the decision-making behaviour of farmers regarding investments in renewable energy systems that generate energy from biomass and farmers' reactions to investment-support measures. To study this behaviour, we conduct a survey and confront farmers with a hypothetical opportunity to invest in a biogas plant. Our findings reveal that farmers have heterogeneous investment thresholds. Their investment decisions are mainly driven by capital costs and the subjective perception of the risk resulting from the investment. Other decision parameters like sustainability and non-monetary objectives that are also examined in this paper, play only minor roles. However, bounded rationality is an important factor. Moreover, the influence of an investment subsidy was analysed. Only about half of the amount of the subsidy — as expected according to normative forecast models — is reflected in an increased willingness to invest. Furthermore, farmers who have previously invested in bioenergy plants show lower investment thresholds and have stronger reactions to the subsidy. Regarding the expansion of renewable energies these findings are meaningful for policy impact analysis.

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  • Reise, Christian & Musshoff, Oliver & Granoszewski, Karol & Spiller, Achim, 2012. "Which factors influence the expansion of bioenergy? An empirical study of the investment behaviours of German farmers," Ecological Economics, Elsevier, vol. 73(C), pages 133-141.
    • Handle: RePEc:eee:ecolec:v:73:y:2012:i:c:p:133-141
    DOI: 10.1016/j.ecolecon.2011.10.008
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    2. Chodkowska-Miszczuk, Justyna & Szymańska, Daniela, 2013. "Agricultural biogas plants—A chance for diversification of agriculture in Poland," Renewable and Sustainable Energy Reviews, Elsevier, vol. 20(C), pages 514-518.
    3. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(3).
    4. Reise, Christian & Liebe, Ulf & Musshoff, Oliver, 2012. "Design of substrate supply contracts for biogas plants," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124428, Australian Agricultural and Resource Economics Society.
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    7. Steinhorst, Martin P. & Bahrs, Enno, 2012. "Renditeansprüche Im Kontext Gleichmäßiger Rückflüsse Ergebnisse Eines Experiments Mit Stakeholdern Des Agribusiness," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137390, German Association of Agricultural Economists (GEWISOLA).
    8. Chodkowska-Miszczuk Justyna & Kulla Marián & Novotný Ladislav, 2017. "The role of energy policy in agricultural biogas energy production in Visegrad countries," Bulletin of Geography. Socio-economic Series, Sciendo, vol. 35(35), pages 19-34, March.
    9. Rakotovao, Miravo & Godard, Lucile & Sauvée, Loïc, 2021. "Dynamique agricole d’une filière de valorisation de la biomasse : cas de la Centrale Biométhane en Vermandois," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 376(April-Jun).
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    17. Stephan Vachon & Sara Hajmohammad, 2016. "Supply chain uncertainty and environmental management," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 1(1), pages 77-89, December.
    18. Sorda, G. & Sunak, Y. & Madlener, R., 2013. "An agent-based spatial simulation to evaluate the promotion of electricity from agricultural biogas plants in Germany," Ecological Economics, Elsevier, vol. 89(C), pages 43-60.
    19. Shuangjin Wang & Yuan Tian & Xiaowei Liu & Maggie Foley, 2019. "How Farmers Make Investment Decisions: Evidence from a Farmer Survey in China," Sustainability, MDPI, vol. 12(1), pages 1-19, December.
    20. Glithero, Neryssa J. & Wilson, Paul & Ramsden, Stephen J., 2013. "Prospects for arable farm uptake of Short Rotation Coppice willow and miscanthus in England," Applied Energy, Elsevier, vol. 107(C), pages 209-218.
    21. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(03), pages 1-16, August.
    22. Julio Pombo-Romero & Hans Langeveld & Marta Fernández-Redondo, 2023. "Diffusion of renewable energy technology on Spanish farms: drivers and barriers," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11769-11787, October.
    23. María J. Ruiz-Fuensanta & María-Jesús Gutiérrez-Pedrero & Miguel-Ángel Tarancón, 2019. "The Role of Regional Determinants in the Deployment of Renewable Energy in Farms. The Case of Spain," Sustainability, MDPI, vol. 11(21), pages 1-17, October.

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