Combining choice modeling estimates and stochastic simulations to assess the potential of new crops—The case of lignocellulosic perennials in Southwestern Germany

Abstract

In the future, the lignocellulosic perennial crops short rotation coppice (SRC) and miscanthus are supposed to provide renewable raw materials for a bio‐based economy. To assess the potential regional supply of these crops, which are not yet widespread in Baden–Wuerttemberg (Southwest Germany), we used a two‐step approach. In a first step, we conducted a Discrete Choice Experiment (DCE) in regions of Baden–Wuerttemberg that—given their site conditions—are suitable for SRC or miscanthus. The respondents were characterized by significant preference heterogeneity for both (negatively valued) perennial crops and for all presented choice attributes. Thus, it was appropriate to estimate a random parameter logit model (RPL). The attributes average yearly contribution margin, long‐term purchase guarantee and cultivation by colleagues in the neighborhood had a significantly positive effect on the likelihood of cultivation, whereas the attributes contribution margin variability and initial investment need showed a significantly negative effect. In a second step, assuming realistic values for the levels of the attributes considered in the DCE, in stochastic simulations, we randomly draw part‐worth utilities from the multivariate normal distribution of these parameters according to the RPL results. This way, for alternative biomass prices, we derived shares of farmers’ willing to engage in perennial crop production and produced related regional supply functions. Under moderate yield and realistic input and farmland opportunity cost assumptions, the full regional miscanthus potential can only be achieved when farmers are offered either subsidies or price‐risk‐reducing long‐term contracts. Based on empirically determined heterogeneous farmer preferences, our two‐step approach is suitable to yield realistic estimations of any not yet implemented farming practices. We finally note caveats related to our analysis and discuss some policy implications of the major findings.

Implications of large‐scale miscanthus cultivation in water protection areas: A Life Cycle Assessment with model coupling for improved policy support

“…Currently, almost no miscanthus is grown in BW, mainly because farmers are reluctant to grow perennial crops due to the long land occupation. For this reason, the model considers a ‘willingness to accept premium’ that Gillich et al (2018) determined by means of a choice experiment.…”

“…This commitment reduces the farmers' flexibility to respond to volatile prices. A guaranteed long-term purchase contract, for example with energy producers or biorefineries, as well as one-off or annual subsidies can increase farmers' willingness to cultivate miscanthus (Gillich et al, 2018). Also, private water companies could be interested in reduced nitrate leaching, especially in areas with values above threshold levels.…”

Downscaling of agricultural market impacts under bioeconomy development to the regional and the farm level—An example of Baden‐Wuerttemberg

“…Hence, farmers request an additional premium on top of the market price to compensate for the occupation and risk. This willingness to accept (WTA) has been quantified based on a choice experiment with actual famers (Gillich, Narjes, Krimly, & Lippert, ) and is implemented in EFEM. The maximum cultivation area of PBC is restricted by regional cultivation conditions and environmental limitations (Kaule et al, ).…”

Potential risks and problems in the cultivation of perennial energy crops

“…Although they are not currently attractive to farmers who are oriented toward profit, perennial energy crops have a higher potential for successfully competing with corn under marginal conditions for plant production (Skevas et al, 2016). Co-variant risk (risk changing by coordination through transfer from one to another crop growing system), according to Gillich et al (2019), has a significant negative effect on the decision on growing of short rotation coppice (poplar, willow) period or miscanthus. On the contrary, Fewell et al (2016) have established that farmers' attitude toward risk did not have a significant impact on the decision concerning growing prairie millet or miscanthus.…”