The adoption of switchgrass and miscanthus by farmers: Impact of liquidity constraints and risk preferences

Bocquého, Géraldine; Jacquet, Florence

doi:10.1016/j.enpol.2010.01.005

Cited by 78 publications

(44 citation statements)

References 35 publications

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“…1 is the benefits of adopting the technology and π 0 is the benefits of non-adoption 6 As per Arrow-Pratt, risk aversion is expressed as the 2 nd derivative of utility function with respect to profit (0 <U'') while intensity (absolute risk aversion) is measured by (-U''/U'). (Maddala, 1986).…”

Section: Theoretical Modelmentioning

confidence: 99%

Risk and Social Interactions in the Adoption of Improved Dairy Breeds by Smallholder Farmers in Kenya

Kimani

2017

ESJ

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This study investigates the role of production risk and social interaction in the adoption of improved dairy breeds by smallholder farmers in Kenya. In agricultural production outputs are uncertain and they may turn out to be favorable or unfavorable. Therefore, farmers may not always get the output they expect to produce. Deviation from expected output constitutes production risk. This form of risk is said to hinder the adoption of yield increasing technologies. Farmers rarely have complete information about the performance of new agricultural technologies. Lack of perfect information about the performance of new technologies may as well hinder adoption. To fill the information gap farmers seek to acquire information through formal and informal sources. Informal sources include social interations with peers and neighbors. Flexible moments method is used to derive production risk variables. The mean values of selected variables of a reference group defined at village level are used as proxies for social interactions. The study applies three different methods, probit, two-stage instrumental variable, and control function on cross-sectional data collected from a sample of 373 smallholder farmers to evaluate role of risk and social interactions in the adoption of improved dairy breeds. The finding shows that endogenous social interactions as measured by proportion of improved breeds' adopters in a reference group have positive and significant effect on adoption of improved dairy breeds. Production risk as measured by variance and skewness of milk output is found to have negative and significant effects of adoption of improved dairy breeds.

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Section: Theoretical Modelmentioning

confidence: 99%

Risk and Social Interactions in the Adoption of Improved Dairy Breeds by Smallholder Farmers in Kenya

Kimani

2017

ESJ

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“…establishment period costs for e.g. planting [9,49] and maintenance [34,71] occur while no revenues are generated [41] which may result in liquidity shortages of the farm-household [67]. The assumed first harvest of a fully operational Miscanthus plantation that provides regular yields varies between years 2 and 4 [10,16] with a mode of year 3.…”

Section: Establishment-to-revenue Periodmentioning

confidence: 99%

“…Eight additional articles state that yield volatility could be expected but do not quantify this statement [15,30,38,40,41,67,71,72]. While the assessment of yield volatility by means of statistical measures falls short in the reviewed literature the number of studies reporting assumptions about minimum and maximum yield expectations is higher with n ¼20.…”

Section: Yield Assumptionsmentioning

confidence: 99%

“…For instance, Clancy et al [10] assume Miscanthus prices being normally distributed around a stochastic time trend and use them as input variables in the modified Monte Carlo simulation Repetitive Latin Hypercube sampling. A similar approach is conducted by Bocquého and Jacquet [67] where prices are supposed to follow a normal distribution. Due to a lack of historic data for energy crops, Bocquého and Jacquet [67] assume Miscanthus prices to show the same volatility as wheat prices.…”

Section: Pricesmentioning

confidence: 99%

“…A similar approach is conducted by Bocquého and Jacquet [67] where prices are supposed to follow a normal distribution. Due to a lack of historic data for energy crops, Bocquého and Jacquet [67] assume Miscanthus prices to show the same volatility as wheat prices. Thus, a coefficient of variation of 15% and 35% is applied as a measure of volatility in a low and a high price-volatility scenario assuming a mean Miscanthus output price of 70 €/t.…”

Section: Pricesmentioning

confidence: 99%

See 2 more Smart Citations

Economic evaluation of Miscanthus production – A review

Witzel

Finger

2016

Renewable and Sustainable Energy Reviews

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a b s t r a c tThis paper reviews the peer-reviewed literature dealing with the economics of Miscanthus cultivation, to identify factors influencing the adoption of Miscanthus and to reveal shortcomings in research. In total, 51 studies have been identified for this review. The majority of these publications are recent (i.e. the majority is published after 2009) and concern case studies in Europe (particularly the UK and Ireland) and North America. This review reveals that the economic viability of Miscanthus depends on largely uncertain assumptions especially concerning yields (10-48 t dry matter per ha) and prices (48-134 €/t dry matter) but also concerning the lifespan (10-20 years) and different cost items. A lack of established markets, high establishment costs and uncertainties, arising to a large extent from the long term commitment, are identified as major barriers to Miscanthus adoption. In addition, the level of support for Miscanthus production (e.g. via subsidies) is identified as crucial for Miscanthus profitability, but is found to be highly heterogeneous across countries. Next to diversity in agronomic and economic assumptions, also the assessment criteria and research techniques used to investigate the profitability of Miscanthus differ widely. While the net present value criterion was most frequently used, we identify a lack of approaches that account for risks and uncertainties, which seem to potentially play a critical role in the uptake of Miscanthus by farmers.

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Carbon mitigation payments can reduce the riskiness of bioenergy crop production

Majeed

Khanna

Miao

et al. 2023

J of Agr & App Econ Assoc

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Perennial bioenergy crops provide substantial carbon mitigation benefits but have risky returns. We couple economic analysis with a biogeochemical model (DayCent) to examine the effect of carbon mitigation payments on the spatially varying bioenergy crop returns and risk profiles relative to conventional crops across the rainfed United States. These payments increase the likelihood of positive profit in the Midwest for miscanthus and southern states for switchgrass. At low biomass prices, these payments make bioenergy crops appealing to risk‐averse farmers. At moderate biomass prices, these payments make bioenergy crops appealing to all farmers regardless of risk preference.

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The adoption of switchgrass and miscanthus by farmers: Impact of liquidity constraints and risk preferences

Cited by 78 publications

References 35 publications

Risk and Social Interactions in the Adoption of Improved Dairy Breeds by Smallholder Farmers in Kenya

Risk and Social Interactions in the Adoption of Improved Dairy Breeds by Smallholder Farmers in Kenya

Economic evaluation of Miscanthus production – A review

Carbon mitigation payments can reduce the riskiness of bioenergy crop production

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