Data/hora: 09/06/2024 12:36:53

Provedor de dados: | Research in Agricultural & Applied Economics (AgEcon Searh)
País: | United States
Título: | Switching to Perennial Energy Crops under Uncertainty and Costly Reversibility
Autores: | Song,   Feng; Zhao,   Jinhua; Swinton,   Scott M.
Data: | 2009-12-30
Ano: | 2009
Palavras-chave: | Real options; Irreversibility; Sunk costs; Land conversion; Biofuel; Cellulosic biomass; Dynamic modeling; Stochastic process; Biofuel policy; Land Economics/Use; Resource /Energy Economics and Policy; Risk and Uncertainty; Q42; Q24.
Resumo: | We study a farmer’s decision to convert traditional crop land into growing dedicated energy crops, taking in account sunk conversion costs, uncertainties in traditional and energy crop returns, and learning. The optimal decision rules differ significantly from the expected net present value rule, which ignores learning, and from real option models that allow only one way conversions into energy crops. These models also predict drastically different patterns of land conversions into and out of energy crops over time. Using corn-soybean rotations and switchgrass as examples, we show that the model predictions are sensitive to assumptions about stochastic processes of the returns. Government policies might have unintended consequences: subsidizing conversion costs into switchgrass reduces proportions of land in switchgrass in the long run.
Tipo: | Working or Discussion Paper
Idioma: | Inglês
Identificador: | http://purl.umn.edu/56195

Relação:

Michigan State University&gt;Department of Agricultural, Food, and Resource Economics&gt;Staff Paper Series

Dept. of Agricultural, Food, and Resource Economics&gt;Staff Paper Series

2009-14

Formato: | 37