Inelastic and Fragmented Farm Supply Response for Second‐generation Bioenergy Feedstocks: Ex Ante Survey Evidence from Wisconsin

Abstract

Second‐generation bioenergy feedstocks stand poised to become a key component of the nation's agricultural and energy sectors, yet few studies have examined farm supply response using survey information. We use contingent valuation data from farmers in southwestern Wisconsin to develop ex ante supply estimates for two prospective feedstocks—corn stover and switchgrass—in terms of farmers' extensive and intensive acreage decisions. Supply response is found to be price inelastic and spatially fragmented, making widespread production unlikely in the near‐term. However, heterogeneity in farmer reservation prices suggests that agglomerations or “hot spots” of feedstock supply could arise at local or regional levels.

Landowner willingness to supply marginal land for bioenergy production

“…The same study found that around 30 percent of the surveyed farmers were willing to adopt switchgrass for energy production. Mooney et al (2015) employed a contingent valuation (CV) approach to investigate farmers' willingness to grow bioenergy crops on marginal lands in Southwest Wisconsin. Their findings show that marginal lands for bioenergy production are scarce and costly and potential spatial agglomeration of bioenergy production could arise.…”

A sustainability framework for assessing studies about marginal lands for planting perennial energy crops

“…Swinton et al . defined marginal lands as the ‘farmable noncropland,’ and Mooney et al . defined marginal lands as the land ‘having one or more limiting soil characteristics, including poor drainage, shallow bedrock/water table, seasonal flooding, and excessive stoniness.’ After identifying marginal lands, these studies adopted a spatial sampling method to locate landowners who own the identified marginal lands to collect socioeconomic information by sending surveys.…”

“…However, the effect of these two factors varies across different regions. Mooney et al . found that marginal land area has a positive effect on a landowner's initial decision on energy crop supply and, for landowners who are willing to supply energy crops, the marginal land area has a positive effect for landowners from southwestern Wisconsin.…”

“…Other socioeconomic factors appearing in these studies were landowner attitudes, knowledge, and concerns regarding bioenergy. Mooney et al . noted that landowners who hold a positive attitude towards renewable energy and a stronger preference for environmental quality are more likely to supply energy crops, and these variables have a positive effect on how many hectares landowners would like to dedicate to energy crop plantations.…”

“…Freeman defines CV as a survey‐based study that elicits individual valuation of a specified commodity or environmental change using landowner responses to questions about hypothetical scenarios. Given the immature market of energy crops, CV is an appropriate method to elicit landowners’ decisions . The two‐step model corresponds to the two‐step land‐use decision process.…”