The Impacts of an Ethanol Plant Placement on Cotton Acreage in the Texas High Plains

International Center for Agricultural Competitiveness, Texas Tech University, WP-17-01

40 Pages Posted: 21 Oct 2017

See all articles by Bing Liu

Bing Liu

Texas Tech University - Department of Agricultural and Applied Economics

Darren Hudson

Texas Tech University

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics

Michael C. Farmer

Texas Tech University - Department of Agricultural and Applied Economics

Date Written: October 20, 2017

Abstract

This study examines the impacts of a sorghum-based ethanol plant established in a major cotton producing area on local sorghum basis and cotton acreage distribution using county-level panel data from 2002 to 2014. Spatial econometric models are employed to account for any spatial dependence. Our results support the conclusion sorghum basis and cotton acreage within a county depends on characteristics of its neighbors. Specifically, the findings indicate that the sorghum basis increased by 1.5 cents per bushel in the short-run resulting from hosting a 40-million-gallon ethanol plant, and a short-run increase by 0.2 percent in cotton acres over all counties.

Keywords: cotton acreage, ethanol plant location, ethanol production, sorghum basis, spatial models

JEL Classification: C31, Q16, Q18, R12

Suggested Citation

Liu, Bing and Hudson, Darren and Bologna Pavlik, Jamie and Farmer, Michael C., The Impacts of an Ethanol Plant Placement on Cotton Acreage in the Texas High Plains (October 20, 2017). International Center for Agricultural Competitiveness, Texas Tech University, WP-17-01 . Available at SSRN: https://ssrn.com/abstract=3056305 or http://dx.doi.org/10.2139/ssrn.3056305

Bing Liu

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Box 42132
Lubbock, TX 79409-2132
United States

Darren Hudson (Contact Author)

Texas Tech University ( email )

Box 42132
Lubbock, TX 79409-2132
United States

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Box 42132
Lubbock, TX 79409-2132
United States

Michael C. Farmer

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Box 42132
Lubbock, TX 79409-2132
United States

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