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Policy incentives for switchgrass production using valuation of non-market ecosystem services

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  • Chamberlain, Jim F.
  • Miller, Shelie A.

Abstract

This study presents a linear profit model with combined economic and environmental factors for a switchgrass-for-biofuels agricultural system in the southeastern U.S. The objectives are to establish conversion-to-switchgrass thresholds for various market prices and identify policy incentives that would ensure economic profit while also maximizing environmental benefits (carbon sequestration, displacement of fossil fuels) and minimizing negative impacts (global warming potential, nitrate loss). Weighting factors are chosen to represent incentives and penalties by assigning value to the impacts. With no other incentives, switchgrass market prices of at least $51 and $58/dton would be needed in order to make a profitable switch from corn/Conservation Reserve Program (CRP) lands and cotton, respectively. At a mid-range offering of $50/dton, feasible carbon credit prices of $3/ $8/ $23 per metric tonne CO2e would incentivize conversion from corn, CRP, or cotton, respectively. Similarly, a water quality penalty of $0.20/ $3/ $2 per kilogram NO3–N leached would incentivize the same conversions with resultant watershed improvement. At a lower price of $30/dton switchgrass, incentives based on valuation of ecosystem services begin to exceed feasible ranges of these valuations.

Suggested Citation

  • Chamberlain, Jim F. & Miller, Shelie A., 2012. "Policy incentives for switchgrass production using valuation of non-market ecosystem services," Energy Policy, Elsevier, vol. 48(C), pages 526-536.
    • Handle: RePEc:eee:enepol:v:48:y:2012:i:c:p:526-536
    DOI: 10.1016/j.enpol.2012.05.057
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    3. Zanxin Wang & Fangyuan Zheng & Shiya Xue, 2019. "The Economic Feasibility of the Valorization of Water Hyacinth for Bioethanol Production," Sustainability, MDPI, vol. 11(3), pages 1-21, February.
    4. Pamela Kaval & Marjan van den Belt, 2017. "The Organizing Framework of Ecosystem Services and its use in River Management," Working Papers in Economics 17/22, University of Waikato.
    5. Noe, Ryan R. & Nachman, Elizabeth R. & Heavenrich, Hannah R. & Keeler, Bonnie L. & Hernández, Daniel L. & Hill, Jason D., 2016. "Assessing uncertainty in the profitability of prairie biomass production with ecosystem service compensation," Ecosystem Services, Elsevier, vol. 21(PA), pages 103-108.
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    7. Rahman, Md. Mizanur & B. Mostafiz, Suraiya & Paatero, Jukka V. & Lahdelma, Risto, 2014. "Extension of energy crops on surplus agricultural lands: A potentially viable option in developing countries while fossil fuel reserves are diminishing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 108-119.

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