Producer Preferences for Contracts on a Risky Bioenergy Crop

Applied Economic Perspectives & Policy 40(2): 240-58, 2018, DOI:10.1093/aepp/ppx034

Posted: 18 Nov 2015 Last revised: 19 May 2018

See all articles by Kwabena Krah

Kwabena Krah

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Daniel R. Petrolia

Mississippi State University - Department of Agricultural Economics

Angelica Williams

Mississippi State University - Department of Agricultural Economics

Keith H. Coble

Mississippi State University - Department of Agricultural Economics

Ardian Harri

Mississippi State University - Department of Agricultural Economics

Roderick M. Rejesus

North Carolina State University

Date Written: 2018

Abstract

We employ a choice experiment to examine producer preferences for contracts to produce a risky bioenergy crop. We develop a framework accounting for subjective risk preferences and perceptions, and heterogeneous status-quo alternatives. Results indicate that price, biorefinery harvest, and establishment cost-share have significant positive effects, whereas contract length has a negative effect. We also find evidence of significant heterogeneity in preferences for biorefinery harvest, yield insurance, and contract length. Incorporating subjective risk perception and risk preference information, as well as accounting for heterogeneous status quo alternatives improves overall model performance.

Keywords: choice experiment, contract, preference heterogeneity, random parameters logit, risk perceptions, risk preferences, willingness to accept compensation

JEL Classification: Q12,Q42,D81

Suggested Citation

Krah, Kwabena and Petrolia, Daniel R. and Williams, Angelica and Coble, Keith H. and Harri, Ardian and Rejesus, Roderick M., Producer Preferences for Contracts on a Risky Bioenergy Crop (2018). Applied Economic Perspectives & Policy 40(2): 240-58, 2018, DOI:10.1093/aepp/ppx034. Available at SSRN: https://ssrn.com/abstract=2692202 or http://dx.doi.org/10.2139/ssrn.2692202

Kwabena Krah

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics ( email )

1301 W. Gregory Drive
Urbana, IL 61801
United States

Daniel R. Petrolia (Contact Author)

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Angelica Williams

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Keith H. Coble

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Ardian Harri

Mississippi State University - Department of Agricultural Economics ( email )

Box 5187
Mississippi State, MS 39762
United States

Roderick M. Rejesus

North Carolina State University ( email )

Hillsborough Street
Raleigh, NC 27695
United States

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