IDEAS home Printed from https://ideas.repec.org/a/kap/compec/v58y2021i1d10.1007_s10614-020-09984-2.html
   My bibliography  Save this article

Plant location decisions in the ethanol industry: a dynamic and spatial analysis

Author

Listed:
  • Jason Wood

    (Agriculture and Forestry, Government of Alberta)

  • James Nolan

    (University of Saskatchewan)

Abstract

As a process relevant to the evolution of modern agriculture in North America, in this research we examine simulated ethanol plant location decisions. Due to the inherent complexity of these decisions, we develop an agent based simulation framework in order to identify relevant factors applicable to both current and future plant location decisions. For broader applicability, we chose a major agricultural production region (the province of Saskatchewan in Western Canada) as the area for analysis. The simulation also allows us to examine the consequences of a counterfactual scenario involving the removal of government subsidies to the ethanol industry. Overall, we generate several interesting predictions concerning the evolution of future plant sizing and industry concentration in the ethanol sector across North America.

Suggested Citation

  • Jason Wood & James Nolan, 2021. "Plant location decisions in the ethanol industry: a dynamic and spatial analysis," Computational Economics, Springer;Society for Computational Economics, vol. 58(1), pages 103-132, June.
    • Handle: RePEc:kap:compec:v:58:y:2021:i:1:d:10.1007_s10614-020-09984-2
    DOI: 10.1007/s10614-020-09984-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10614-020-09984-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10614-020-09984-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yuya Sasaki & Paul Box, 2003. "Agent-Based Verification of Von Thünen's Location Theory," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 6(2), pages 1-9.
    2. Low, Sarah A. & Isserman, Andrew M., 2008. "Ethanol: Implications for Rural Communities," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6157, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Perrin, Richard K. & Fretes, Nickolas F. & Sesmero, Juan Pablo, 2009. "Efficiency in Midwest US corn ethanol plants: A plant survey," Energy Policy, Elsevier, vol. 37(4), pages 1309-1316, April.
    4. Brian S. Freeze & T. Peters, 1999. "A Note on the Profitability of Wheat-ethanol-feedlot Production in Alberta," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 67-78, March.
    5. Lambert, Dayton M. & Wilcox, Michael D. & English, Alicia & Stewart, Lance A., 2008. "Ethanol Plant Location Determinants and County Comparative Advantage," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(1), pages 1-19, April.
    6. Camilo Sarmiento & William W. Wilson & Bruce Dahl, 2012. "Spatial Competition and Ethanol Plant Location Decisions," Agribusiness, John Wiley & Sons, Ltd., vol. 28(3), pages 260-273, June.
    7. Chan, J.H. & Reiner, D., 2011. "Dynamics of Evolution in the Global Fuel-Ethanol Industry," Cambridge Working Papers in Economics 1129, Faculty of Economics, University of Cambridge.
    8. Wang, Xin & Lim, Michael K. & Ouyang, Yanfeng, 2015. "Infrastructure deployment under uncertainties and competition: The biofuel industry case," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 1-15.
    9. Berger, Thomas, 2001. "Agent-based spatial models applied to agriculture: a simulation tool for technology diffusion, resource use changes and policy analysis," Agricultural Economics, Blackwell, vol. 25(2-3), pages 245-260, September.
    10. Graubner, Marten & Balmann, Alfons & Sexton, Richard J., 2011. "Spatial Pricing and the Location of Processors in Agricultural Markets," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114601, European Association of Agricultural Economists.
    11. Aguilar, Francisco X., 2009. "Spatial econometric analysis of location drivers in a renewable resource-based industry: The U.S. South Lumber Industry," Forest Policy and Economics, Elsevier, vol. 11(3), pages 184-193, May.
    12. Van Wart, Justin & Perrin, Richard K., 2009. "Understanding Spatial Welfare Impacts of a Grain Ethanol Plant," 2009 Conference, August 16-22, 2009, Beijing, China 50823, International Association of Agricultural Economists.
    13. repec:cup:jagaec:v:40:y:2008:i:1:p:117-135_4 is not listed on IDEAS
    14. Atakelty Hailu & Sophie Thoyer, 2007. "Designing Multi‐unit Multiple Bid Auctions: An Agent‐based Computational Model of Uniform, Discriminatory and Generalised Vickrey Auctions," The Economic Record, The Economic Society of Australia, vol. 83(s1), pages 57-72, September.
    15. Adam Arsenault & James Nolan & Richard Schoney & Donald Gilchrist, 2012. "Outstanding in the Field: Evaluating Auction Markets for Farmland Using Multi-Agent Simulation," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 15(1), pages 1-11.
    16. Taylor, Richard D. & Koo, Won W., 2010. "Optimizing Ethanol Production in North Dakota," Agribusiness & Applied Economics Report 91841, North Dakota State University, Department of Agribusiness and Applied Economics.
    17. Klose, Steven L. & Anderson, David P. & Outlaw, Joe L. & Herbst, Brian K. & Richardson, James W., 2003. "The Feasibility Of Ethanol Production In Texas," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35181, Southern Agricultural Economics Association.
    18. Seungmo Kang & Hayri Önal & Yanfeng Ouyang & Jürgen Scheffran & Ü Deniz Tursun, 2010. "Optimizing the Biofuels Infrastructure: Transportation Networks and Biorefinery Locations in Illinois," Natural Resource Management and Policy, in: Madhu Khanna & Jürgen Scheffran & David Zilberman (ed.), Handbook of Bioenergy Economics and Policy, chapter 0, pages 151-173, Springer.
    19. Happe, Kathrin, 2004. "Agricultural policies and farm structures: Agent-based modelling and application to EU-policy reform," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 30, number 14945.
    20. Kathrin Happe, 2005. "Agricultural policies and farm structures - agent-based simulation and application to EU-policy reform," Others 0504011, University Library of Munich, Germany.
    21. Derek G. Brewin, 2016. "Competition in Canada's Agricultural Value Chains: The Case of Grain," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(1), pages 5-19, March.
    22. Eathington, Liesl & Swenson, David A., 2007. "Dude, Where's My Corn? Constraints on the Location of Ethanol Production in the Corn Belt," Staff General Research Papers Archive 12777, Iowa State University, Department of Economics.
    23. Colin A. Carter & Andrew Schmitz, 1986. "Cattle feeding in western Canada: The economics of its location," Agribusiness, John Wiley & Sons, Ltd., vol. 2(1), pages 119-135.
    24. Sarah A. Low & Andrew M. Isserman, 2009. "Ethanol and the Local Economy," Economic Development Quarterly, , vol. 23(1), pages 71-88, February.
    25. Robert Cherry, 2000. "The Dominant Firm Model Revisited," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(1), pages 89-95, February.
    26. Tyler Freeman & James Nolan & Richard Schoney, 2009. "An Agent‐Based Simulation Model of Structural Change in Canadian Prairie Agriculture, 1960–2000," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(4), pages 537-554, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tatiana Filatova & Dawn C. Parker & Anne van der Veen, 2009. "Agent-Based Urban Land Markets: Agent's Pricing Behavior, Land Prices and Urban Land Use Change," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 12(1), pages 1-3.
    2. Kellermann, Konrad & Balmann, Alfons, 2006. "How Smart Should Farms Be Modeled? Behavioral Foundation of Bidding Strategies in Agent-Based Land Market Models," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25446, International Association of Agricultural Economists.
    3. Elodie Letort & Pierre Dupraz & Laurent Piet, 2017. "The impact of environmental regulations on the farmland market and farm structures: An agent-based model applied to the Brittany region of France," Working Papers SMART 17-01, INRAE UMR SMART.
    4. Rasmussen, Svend & Damgaard, Martin, 2008. "Numerical Estimation of Agricultural Supply Functions - A Micro Economic Approach based on Mathematical Programming," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44181, European Association of Agricultural Economists.
    5. Möhring, A. & Zimmermann, A. & Mack, G. & Mann, S. & Ferjani, A. & Gennaio, M.-P., 2010. "Multidisziplinäre Agentendefinitionen für Optimierungsmodelle," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45, March.
    6. Mack, Gabriele & Möhring, Anke & Ferjani, Ali & Zimmermann, Albert & Mann, Stefan, 2013. "Transfer of single farm payment entitlements to farm successors: impact on structural change and rental prices in Switzerland," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 2(2), pages 1-18, August.
    7. Katchova, Ani L., 2011. "Are Local Corn Prices Affected by the Location of Ethanol Biorefineries?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114769, European Association of Agricultural Economists.
    8. Berger, Thomas & Schreinemachers, Pepijn, 2006. "From Bioeconomic Farm Models to Multi-Agent Systems: Challenges for Parameterization and Validation," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25577, International Association of Agricultural Economists.
    9. Mack, Gabriele & Mohring, Anke & Zimmermann, Albert & Gennaio, Maria-Pia & Mann, Stefan & Ferjani, Ali, 2011. "Farm Entry Policy and Its Impact on Structural Change Analysed by and Agent-based Sector Model," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114374, European Association of Agricultural Economists.
    10. Schreinemachers, Pepijn & Berger, Thomas, 2006. "Simulating Farm Household Poverty: From Passive Victims to Adaptive Agents," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25479, International Association of Agricultural Economists.
    11. Sahrbacher, Amanda, 2012. "Impacts of CAP reforms on farm structures and performance disparities: An agent-based approach," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 65, number 65.
    12. 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.
    13. Anke Möhring & Gabriele Mack & Albert Zimmermann & Maria Pia Gennaio & Stefan Mann & Ali Ferjani, 2011. "Modellierung von Hofübernahmeund Hofaufgabeentscheidungen in agentenbasierten Modellen," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 4(1), pages 163-188.
    14. Thomas Berger & Regina Birner & Nancy Mccarthy & JosÉ DíAz & Heidi Wittmer, 2007. "Capturing the complexity of water uses and water users within a multi-agent framework," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 21(1), pages 129-148, January.
    15. Mônica A. Haddad & Gary Taylor & Francis Owusu, 2010. "Locational Choices of the Ethanol Industry in the Midwest Corn Belt," Economic Development Quarterly, , vol. 24(1), pages 74-86, February.
    16. Akinfenwa, Samson O. & Qasmi, Bashir A., 2014. "Ethanol, the Agricultural Economy, and Rural Incomes in the United States: A Bivariate Econometric Approach," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(2), pages 1-15, August.
    17. Heinrich, F. & Appel, F., 2018. "Do investors ruin Germany s peasant agriculture?," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277171, International Association of Agricultural Economists.
    18. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    19. Ostermeyer, Arlette & Balmann, Alfons, 2011. "Perception of dairy farming from different views - results of a stakeholder discussion in the region Altmark, Germany," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114578, European Association of Agricultural Economists.
    20. Sanwar A. Sunny & Cheng Shu, 2019. "Investments, incentives, and innovation: geographical clustering dynamics as drivers of sustainable entrepreneurship," Small Business Economics, Springer, vol. 52(4), pages 905-927, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:compec:v:58:y:2021:i:1:d:10.1007_s10614-020-09984-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.