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Producer preferences for contracts on a risky bioenergy crop

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  • Krah, Kwabena
  • Petrolia, Daniel
  • Williams, Angelica
  • Coble, Keith
  • Harri, Ardian
  • Rejesus, Roderick

Abstract

This study employs a stated choice experiment to identify producer preferences for contracts to produce a risky bioenergy crop. The study develops a theoretical framework that takes into account subjective risk preference and perception information while also accounting for heterogeneous status-quo (i.e., current crop) alternatives. Results from our Random Parameter Logit model indicate that price, biorefinery harvest, and establishment cost-share all had significant positive effects on the probability of a producer accepting a contract, whereas contract length have a negative effect. The study also finds evidence of significant preference heterogeneity in producer preferences for biorefinery harvest, yield insurance, and contract length. Incorporating subjective risk perception and risk preference information, as well as accounting for heterogeneous status-quo alternatives in the decision framework improves overall model performance.

Suggested Citation

  • Krah, Kwabena & Petrolia, Daniel & Williams, Angelica & Coble, Keith & Harri, Ardian & Rejesus, Roderick, 2015. "Producer preferences for contracts on a risky bioenergy crop," Working Papers 212483, Mississippi State University, Department of Agricultural Economics.
    • Handle: RePEc:ags:misswp:212483
    DOI: 10.22004/ag.econ.212483
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    2. Lapierre, Margaux & Le Velly, Gwenolé & Bougherara, Douadia & Préget, Raphaële & Sauquet, Alexandre, 2023. "Designing agri-environmental schemes to cope with uncertainty," Ecological Economics, Elsevier, vol. 203(C).
    3. Sant’Anna, Ana Claudia & Bergtold, Jason S. & Shanoyan, Aleksan & Caldas, Marcellus M. & Granco, Gabriel, 2022. "Biofuel feedstock contract attributes, substitutability and tradeoffs in sugarcane production for ethanol in the Brazilian Cerrado: A stated choice approach," Renewable Energy, Elsevier, vol. 185(C), pages 665-679.
    4. Rosburg, Alicia & Menapace, Luisa, 2018. "Factors Influencing Corn Fungicide Treatment Decisions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(2), May.
    5. Thakur, Tiesta & Hurley, Terrance M., 2020. "Will farmers grow weeds for Monarchs?," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304411, Agricultural and Applied Economics Association.
    6. Sant'Anna, Ana Claudia & Bergtold, Jason & Shanoyan, Aleksan & Caldas, Marcellus & Granco, Gabriel, 2021. "Deal or No Deal? Analysis of Bioenergy Feedstock Contract Choice with Multiple Opt-out Options and Contract Attribute Substitutability," 2021 Conference, August 17-31, 2021, Virtual 315289, International Association of Agricultural Economists.
    7. Clark Lundberg & Tristan Skolrud & Bahram Adrangi & Arjun Chatrath, 2021. "Oil Price Pass through to Agricultural Commodities†," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 721-742, March.
    8. Krah, Kwabena & Michelson, Hope & Perge, Emilie & Jindal, Rohit, 2019. "Constraints to adopting soil fertility management practices in Malawi: A choice experiment approach," World Development, Elsevier, vol. 124(C), pages 1-1.

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    More about this item

    Keywords

    Crop Production/Industries; Environmental Economics and Policy; Resource /Energy Economics and Policy; Risk and Uncertainty;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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