Source: PURDUE UNIVERSITY submitted to NRP
APPLICATION OF OPERATIONS RESEARCH METHODS TO PROBLEMS IN AGRICULTURAL BUSINESS, NATURAL RESOURCE AND ENERGY MANAGEMENT, AND POLICY ANALYSIS
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
Reporting Frequency
Annual
Accession No.
0233198
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
(N/A)
Project Start Date
Oct 1, 2013
Project End Date
Sep 30, 2018
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Recipient Organization
PURDUE UNIVERSITY
(N/A)
WEST LAFAYETTE,IN 47907
Performing Department
Agricultural Economics
Non Technical Summary
Energy and the environment are both central to the health and well-being of mankind, and they are inextricably linked. Promoting efficiency in energy use will have strong environmental benefits relative to business as usual. Understanding the impact of alternative environmental policies on the energy delivery system and on the environment is critical to the development of good policy. This project will use operations techniques, primarily mathematical programing but also statistical and simulation techniques, to determine economically efficient strategies for operation of energy systems and to evaluate the impacts of alternative energy and environmental policies. These will include long-term investment planning models for energy infrastructure, as well as models of international trade that take the impacts of global climate change into account. The expected outcomes include guidance for policy makers regarding the most effective and economically efficient policy designs.
Animal Health Component
(N/A)
Research Effort Categories
Basic
100%
Applied
(N/A)
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6106110301050%
6106120310020%
6116120301010%
6116120310020%
Goals / Objectives
The overall objective is to apply optimization, statistical, and simulation techniques to the analysis of problems confronting natural resource and energy management firms, and policy analysts. Specific objectives are: 1) Determine how the behavior of agricultural producers and international trade in agricultural products will change as a result of global climate change, 2)Develop assessments of the impacts of regulatory changes on energy systems, particularly the electricity supply chain, for the State of Indiana; and 3) Determine the benefits of alternative approaches to operating electricity generation and transmission resources both internationally in developing parts of the world and domestically.
Project Methods
The general approach will be to apply optimization, statistical, and simulation techniques to the analysis of problems primarily in the energy and agricultural sectors of the economy. Of course, due to the strong linkages between and importance of these sectors to the rest of the economy, the analysis will often go beyond the boundaries of these sectors. As promising problems are identified, the salient features of these problems will be determined through academic literature searches to identify the features of existing approaches. Shortcomings of these approaches will be identified to facilitate improvements in the analysis. The resulting models and methodologies will be extended to the research community and used to influence the policy making process. The general objective will be accomplished by providing advice and analytical support to research and outreach projects in the Departments of Agricultural Economics, in the State Utility Forecasting Group within the Energy Center of Purdue's Discovery Park, as well as elsewhere within the University and beyond its walls as requested. This work will focus on the formulation of economic models of management of agricultural production systems, international trade and on the electricity supply chain.

Progress 10/01/13 to 09/30/18

Outputs
Target Audience:The target audiences reached during this project include: domestic and international agricultural and natural resource policy makers and analysts; and other researchers. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Six Ph.D. students were mentored through the publicatoin process. How have the results been disseminated to communities of interest?All of the analyses and methods pieces have been either published or are awaiting publication. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? A variety of policy analyses were performed using optimization, statistical and simulation techniques. These included analysis of: the impacts of aquaculture promotion efforts on the adoption of fish farming enterprises and the welfare of farmers; the evidence of adverse selection in crop insurance contracts; sustainable approaches to soil and water resource management; precision agricultural technology for managing tomato late blight; and the impacts of long-term climate change on the energy supply/demand system in the state of Indiana. In addition, methodologically oriented pieces were developed for: assessment of the sensitivity of results of large-scale models of international trade due to uncertainties regarding input parameters; design of optimized roadways for rural two-lane highways; determining the optimal timing for either rejuvenating/retrofitting or replacing existing capital assets; and a new approach to downscaling national crop statistics to a fine spatial scale.

Publications

  • Type: Journal Articles Status: Published Year Published: 2016 Citation: Zhao, Y., Z. Chai, M.S. Delgado, P.V. Preckel, 2016. A Test on Adverse Selection of Farmers in Crop Insurance: Results from Inner Mongolia in China, Journal of Integrative Agriculture, 16(2):478-485.
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Villoria, N.B., and P.V. Preckel, 2017. Gaussian Quadratures vs. Monte Carlo Experiments for Systematic Sensitivity Analysis of Computable General Equilibrium Model Results, Economics Bulletin, 30(1):480-487 http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I1-P43.pdf.
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Labi, S., S. Chen, P.V. Preckel, Y. Qiao, W. Woldemariam, 2017. Multi-objective Optimization of Lane and Shoulder Widths at Rural Two-Lane Highways, under revision after revise and resubmit decision from Transportmetrica A: Transport Science, 2017:1-28, http://www.tandfonline.com/doi/abs/10.1080/23249935.2017.1315841.
  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Amankwah, A., K.K. Quagrainie, and P.V. Preckel, 2017. Impact of Aquaculture Feed Technology on Fish Income and Poverty in Kenya, Aquaculture Economics and Management, 2018, https://doi.org/10.1080/13657305.2017.14136.
  • Type: Journal Articles Status: Accepted Year Published: 2018 Citation: Liu, Y., M.R. Langemeier, I.M. Small, L. Joseph, W.E. Fry, J.B. Ristaino, A. Saville, B.M. Gramig, P.V. Preckel, 2018. A Risk Analysis of Precision Agriculture Technology to Manage Tomato Late Blight, Sustainability, (In Press).
  • Type: Journal Articles Status: Accepted Year Published: 2018 Citation: Song, J., M.S. Delgado, P.V. Preckel, and N.B. Villoria, 2018. Downscaling of National Crop Area Statistics Using Drivers of Cropland Productivity Measured at Fine Resolutions, PLOS One, (In Press).
  • Type: Journal Articles Status: Accepted Year Published: 2018 Citation: Gotham, D., W. McClain, S. Mukherjee, R. Nateghi, P.V. Preckel, L.S. Raymond P.J. Schubert, S. Singh, E. Wachs, 2018. Projected Climate Change Impacts on Indiana's Energy Demand and Supply, Climatic Change, (In Press).


Progress 10/01/16 to 09/30/17

Outputs
Target Audience:Global climate change creates challenges in many sectors of the economy, notably agriculture and the energy sector. Government and non-government research organizations need to have a good understanding of the impacts of climate change on productivity. Important aspects of producer behavior include adaptations that are made to blunt the impacts of climate change. In agriculture, this may focus on shifting cropping patterns and cultural practices. Past efforts have focused on making good decisions at the beginning of the year. Efforts under this project during the past year have focused on elucidating how to also reflect within year adaptations as year-specific weather unfolds. Results show that these within year adaptations can have significant impacts not only on producer incomes, but also on the sustainability of soil resources. In the energy sector, one important adaptation involves increased use of biomass as a means of extending the life of coal-fired power plants. This life extension combined with a reduction in greenhouse gas emissions allows utilities to delay costly decisions regarding building new power plants. There is substantial option value in being able to delay these decisions in the face of uncertainties regarding future fuel prices, the path of global warming, and energy policy. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Four current students and one former student were mentored through the process of performing research, writing a scholarly paper about the approach and results, and working with a journal editor to move the paper towards publication. In addition,two of the papers were presented by the students at professional meetings, providing the students with valuable opportunities to hone their presentation skills. How have the results been disseminated to communities of interest?The publications communicate these results to other researcheres working in the area. What do you plan to do during the next reporting period to accomplish the goals?Ongoing work will focus on developing improved approaches for predicting land use at a fine spatial resolution. The goal will be to publish two journal articles on this subject in the next year or so. We will also work with a graduate student to develop methods to optimize the supply chain of a food manufacturer. The issue is that the raw materials (e.g. flour) that go into food products have inherently variable attributes (e.g. protein, moisture content, etc.) require adjustments to the manufacturing process. These adjustments are costly, and finding the apprpriate tradeoffs between costand atttribute variability will allow us to assess the advantages of alternative supply chain structures.

Impacts
What was accomplished under these goals? We developed an approach to determining how agriculturalproducers can adapt to weather as it unfolds during the yearso as to increase farm income while sustaining their soil resources for the indefinite future. This approach was demonstrated for the farming situation in the country of Jordan. These adaptations were especially importnat there because the arid conditions and highly variable weather (esp. rainfall) make shifting crop choice and cultural practices in response to weather (esp. the timing of the arrival of rains at the end of the dry season) extremely important. Electric energy generators also have opportunities to adapt to changing, uncertainweather with the potential of improving environmental outcomes. One adaptation is to convert coal-fired generators to co-firing with pelleted biomass. This provides opportunities for delaying costly and irreversible generating capacity investments. Such delays may provide an opportunity to "wait and see" how severe climate change will be before investing, while simultaneously improving environmental outcomes. Another opportunity for the electricity sector is to modify the operating rules for a hydro electric dam so as to reduce the negative environmental impact on the down-stream riverine ecosystem.

Publications

  • Type: Journal Articles Status: Published Year Published: 2017 Citation: Stutzman, S., B. Weiland, P.V. Preckel, M. Wetzstein, 2017. "Optimal Replacement Poliies for an Uncrtain Rejuvenated Asset," International Journal of Production Economics, 185:21-33.
  • Type: Journal Articles Status: Under Review Year Published: 2017 Citation: Opgrand, J., P.V. Preckel, F.T. Sparrow, G. Thomas, and D.P. Loucks, 2017. "Cost of Partial Restoration of the Akosombo/Kpong Hydroelectric Complex Natural Flow Regime," in review at Water and Resource Management, submitted August.
  • Type: Journal Articles Status: Other Year Published: 2017 Citation: Boussios, D., P.V. Preckel, Y.A. Yigezu, P. Dixit, S. Akroush, H.C. M'hamed, M. Annabi, A. Aw-Hassan, Y. Shakatreh, O. Hadi, A Al-Abdallat, J.A. El Enein, and J. Ayad, 2017. "Modeling Producer Response with Dynamic Programming: A Case for Adaptive Crop Management," under revision for second round submission to Agricultural Economics.


Progress 10/01/15 to 09/30/16

Outputs
Target Audience:One problem is of importance to governments and non-governmental organizations need guidance for targeting aid and education efforts to achieve maximum impact. In the agricultural arena, this often makes it essential to know where particular crops are being produced so that extension efforts and technology inputs can be focused in areas where they are most relevant. The goal of such efforts is to target programs in the region or country, so as to most efficiently achieve the goals of policy. The other problem is of importance to energy policy makers who need to understand the incentives of firms for retrofitting or replacing electricity generating assets. These will have large impacts on the effectiveness of efforts to reduce greenhouse gas emissions. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Graduate students were lead authors on all of the publications. They played (or are playing for the pieces in submission)major roles in the original drafts, revisions, and communications with editors. How have the results been disseminated to communities of interest?The publications communicate these results to other researchers in the field. What do you plan to do during the next reporting period to accomplish the goals?Continuing work will enhance the downscaling methodology for land use prediction, and may be modified to include economic in addition to biophyisical variables. Work the energy area will shift towards developinga deeper understanding of energy markets and the impact of various electricity products on market equilibria and the welfare of market participants.

Impacts
What was accomplished under these goals? Methods were developed and preliminary results were estimated for downscaling regional land use data to a fine spatial scale. This work has since developed into her dissertation topic. The idea is that, while fine scale (e.g. 5 minutes longitude by 5 minutes latitude) spatial data is increasingly available for physical land attributes, as well as other variables (e.g. climate measures such as temperature, precipitation, etc.), the factors of interest - in our case agricultural land use - are generally only available on a regional (i.e., national, state, or county) basis. A model of rejuvenation and replacement was created for assessing the sensitivity of the timing of asset renewal/replacement. The model was illustrated with an application to the problem of whether to retrofit an existing coal fired electricity generator to co-fire wood pellets with coal for a period before replacing the plant with a new plant. This approach has significant possibilities for helping meet targets for CO2 emissions reductions specified under the Clean Power Plan (CPP). Other work assessed how Indiana will achieve compliance under the CPP and estimates how compliance will differ depending on the policy regime used to implement the plan.

Publications

  • Type: Journal Articles Status: Submitted Year Published: 2016 Citation: Song, J., M.S. Delgado, P.V. Preckel, S. Zhe, I.J. Campbell, L. Zhao, C. Song, 2016. "Fine-scale Land Allocation Tool for Global Land Use Analysis," in review at Environmental Modeling Software, submitted September 6.
  • Type: Journal Articles Status: Submitted Year Published: 2016 Citation: Stutzman, S., B. Weiland, P.V. Preckel, M. Wetzstein, 2016. "Optimal Replacement Policies for an Uncertain Rejuvenated Asset," in review at International Journal of Production Economics, submitted June.
  • Type: Journal Articles Status: Published Year Published: 2016 Citation: Lu, L., P.V. Preckel, D. Gotham, A.L. Liu, 2016. "An Assessment of Alternative Carbon Mitigation Policies for Achieving the Emission Reduction of the Clean Power Plan: Case Study for the State of Indiana," Energy Policy, 96:661-672.
  • Type: Journal Articles Status: Published Year Published: 2016 Citation: Wu, J., A. Iyer, P.V. Preckel, 2016. "Information Visibility and Its Impact in a Supply Chain," Operations Research Letters, 44(1):74-79.


Progress 10/01/14 to 09/30/15

Outputs
Target Audience:One target audience includes stakeholders in the electricity supply system: electricity customers, generators, load serving entities, transmission suppliers, state and Federal government agencies concerned with electricity, independent system operators, environmental organizations, etc. Another audience includes stakeholders concerned with agricultural production in developing countries: producers, non-governmental organizations, government agencies, etc. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Graduate students were involved in the modeling work for both the land allocation project and the investigation of the impact of virtual electricity products. Both of these students wrote papers and presented them at professional meetings during the reporting period. They also both wrote and defended their Ph.D. thesis prospectus papers. How have the results been disseminated to communities of interest?The modeling work for both the land allocation project and the investigation of the impact of virtual electricity products was presented at professional meetings. What do you plan to do during the next reporting period to accomplish the goals?Papers will be prepared on the topics offine spatial land allocation and the impact of virtual electricity products. We hope to submit these to a journal during the next reporting period. We will also work to help students identify thesis topics related to agriculture and electricity markets during the next reporting period.

Impacts
What was accomplished under these goals? Progress was made towards developing a scheme for allocating land across alternative uses -- in particular allocating crop land to individual crops. The allocation method provides a way to do this allocation at a fine spatial scale (5 minutes longitude by 5 minutes latitude) based on fine scale explanatory variables and land use observations that are not fine scale. This work was presented at the summer meetings of the Agricultural and Applied Economics Association in San Francisco this summer. We expect to submit a methods paper to a journal during this year. We have also made progress towards developing an understanding of the motives and impacts of financial participants in the so called virtual markets for electricity. Preliminary analysis and results appear to indicate that the virtual electricity products are bad for electricity consumers and drive up their cost of electricity. Essentially, there is a welfare transfer from consumers to the financial participants.

Publications

  • Type: Journal Articles Status: Published Year Published: 2014 Citation: Coulibaly, J., J. Sanders and P.V. Preckel, 2014. "Will cotton make a comeback in West Africa-Mali," Agricultural Economics, 46:53:67.
  • Type: Other Status: Published Year Published: 2014 Citation: Nderitu, D., D. Gotham, D. Mize, T. Phillips, P.V. Preckel, M. Velastegui, F. Wu, and J. Young, 2014. "2014 Indiana Renewable Energy Resources Study," Research Report, State Utility Forecasting Group, Energy Center, Discovery Park, West Lafayette, IN, September, 142 pages.
  • Type: Other Status: Published Year Published: 2015 Citation: Nderitu, D., D. Gotham, D. Mize, T. Phillips, P.V. Preckel, M. Velastegui, F. Wu, and J. Young, 2015. "2015 Indiana Renewable Energy Resources Study," Research Report, State Utility Forecasting Group, Energy Center, Discovery Park, West Lafayette, IN, September, 142 pages.
  • Type: Conference Papers and Presentations Status: Other Year Published: 2015 Citation: Boussios, D., P.V. Preckel, and Y.A. Yigezu, 2015. "Dynamic Crop Production Responses to Realizations of Weather and Production with Application in Jordan," submitted for presentation at the Agricultural and Applied Economics Association in San Francisco, California.
  • Type: Conference Papers and Presentations Status: Other Year Published: 2015 Citation: Song, J., N. Villoria, M.S. Delgado, P.V. Preckel, 2015. "Fine-scale Land Use Allocation Using Maximum Likelihood," submitted for presentation at the Agricultural and Applied Economics Association in San Francisco, California.
  • Type: Conference Papers and Presentations Status: Other Year Published: 2015 Citation: Gramig, B.M., E.M. Sajeev, and P.V. Preckel, 2015. "Farm-scale Integrated Assessment to Identify Profit-Maximizing Adaptations to Climate Change in the Corn Belt," Climate Change Symposium, American Society of Agricultural and Biological Engineers, Chicago, IL, May 4.
  • Type: Conference Papers and Presentations Status: Other Year Published: 2015 Citation: Kim, H.-K., P.V. Preckel, J. Eales, 2015. "Impact Assessment of Time-of-Use Pricing: Evidence from a Natural Experiment in Ontario," submitted for presentation at the Agricultural and Applied Economics Association in San Francisco, California.


Progress 10/01/13 to 09/30/14

Outputs
Target Audience: Target audiences include the Indiana Utility Regulatory Commission, the Indiana state legislature, other researchers working on similar topics, and the general public. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? The assessment of climate adaptation strategies was the subject of a M.S. thesis that is very near completion. The assessment of the use of renewable energy in Indiana involve a M.S. student who assisted with the research and writing of the report. The cost/benefit analysis for wind power was extracted from the Ph.D. thesis of a student. How have the results been disseminated to communities of interest? The assessment of the national prospects for electricity generation from biomass produced a report that has been posted on a website at the U.S. Department of Agriculture. The assessment of the use of renewable energy in Indiana is (a) posted onthe Purdue Energy Center websiteand(b) was presented to the Indiana State Legislature. The wind power study was published in a scholarly journal, What do you plan to do during the next reporting period to accomplish the goals? Analyses are planned with special emphasis on the impact of Environmental Protection Agency regulations on the Indiana electricity generating system. These will be part of a Ph.D. dissertation by one of our students. An assessment of the costs/benefits of combining a wind power generator with a utility scale battery will be drafted and submitted to a scholarly journal. This is another spin-off from a former Ph.D. student.

Impacts
What was accomplished under these goals? Preliminary work was completed to assess adaptation strategies of farms to climate change in the corn belt. An assessment of the national prospects for electricity generation from biomass was performed. An assessment of the current use of renewable energy in the state of Indiana was made. The costs/benefits of electricity generation capacity from wind was estimated.

Publications

  • Type: Conference Papers and Presentations Status: Other Year Published: 2014 Citation: Gramig, B.M., E.M. Sajeev, P.V. Preckel, and O.C. Doering, 2014. Profit Maximizing Adaptations to Projected Climate Change in the U.S. Corn Belt, presented at meetings of the Agricultural and Applied Economics Association in Minneapolis, MN, July 27-29.
  • Type: Other Status: Published Year Published: 2014 Citation: Nderitu, D., P.V. Preckel, D.J. Gotham, E.A. Dobis, and M. Duncan, 2014. Assessment of the National Prospects for Electricity Generation from Biomass, Research Report, U.S. Department of Agriculture, Office of Energy Policy and New Uses, Washington, D.C., April, 20 pages.
  • Type: Other Status: Published Year Published: 2014 Citation: o Nderitu, D., D. Gotham, D. Mize, T. Phillips, P.V. Preckel, M. Velastegui, F. Wu, and J. Young, 2014. 2014 Indiana Renewable Energy Resources Study, Research Report, State Utility Forecasting Group, Energy Center, Discovery Park, West Lafayette, IN, September, 142 pages
  • Type: Journal Articles Status: Published Year Published: 2013 Citation: Davis, C.D., D.J. Gotham, P.V. Preckel, A.L. Liu, 2013. Determining the Impact of Wind on System Costs via the Temporal Patterns of Load and Wind Generation, Energy Policy, 60(September):122-131.