NRES Departmental Seminar by Dr. Madhu Khanna, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign.
High yielding energy crops, such as miscanthus and switchgrass, have been considered promising feedstock’s for cellulosic biofuel production in the US. We use simulated yields, county-level yield over thirty years to examine the economic returns and risks of producing energy crops in rain-fed US and the price incentives needed to induce farmers to convert land for their production. We analyze the design of an actuarially fair crop insurance for energy grasses that reduces the riskiness of producing them and compare the effectiveness of three policy instruments, a crop insurance subsidy, an establishment cost share and a biomass price subsidy in promoting energy crop production. We find that if farmers are not credit constrained then crop insurance is most efficient and biomass price subsidy is least efficient among the three policy instruments. If there is a credit constraint then crop insurance is less efficient than establishment cost share in inducing adoption. The implications of these policies for the geographical distributions of energy crop acreage are analyzed as well.
Speaker's website: http://ace.illinois.edu/directory/madhu-khanna.
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