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
Date Written: 2018
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: Suggested Citation