Source: AUBURN UNIVERSITY submitted to
INCENTIVIZING FEEDSTOCK SUPPLY FOR THE BIOECONOMY: IMPLICATIONS FOR ECOSYSTEM SERVICES AND POLICY DESIGN
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
NEW
Funding Source
Reporting Frequency
Annual
Accession No.
1012169
Grant No.
2017-67019-26283
Project No.
ALA011-3-16035
Proposal No.
2016-08641
Multistate No.
(N/A)
Program Code
A1413
Project Start Date
May 1, 2017
Project End Date
Apr 30, 2020
Grant Year
2017
Project Director
Miao, R.
Recipient Organization
AUBURN UNIVERSITY
108 M. WHITE SMITH HALL
AUBURN,AL 36849
Performing Department
Agricultural Economics
Non Technical Summary
The emerging cellulosic biofuel and bioproduct industry will require the development of markets where technological and demand uncertainty is high and economic and policy challenges need to be overcome for farmers to successfully engage as viable suppliers of biomass. The purpose of this proposed research is to combine innovative economic and ecological modeling to identify the economic barriers to biomass production, to evaluate the effectiveness of the Biomass Crop Assistance Program (BCAP) in stimulating biomass market expansion, and to explore the economic and ecosystem service implications of biomass production. Specifically, we will 1) assess the technical potential to produce biomass for biofuels and bioproducts from corn stover, miscanthus, switchgrass, and energy cane in the rainfed United States and quantify the potential ecosystem service impacts of this production; 2) examine the economic incentive and environmental impacts of producing biomass from aforementioned feedstocks on various types of available land under a wide range of biomass prices, accounting for production risk of these feedstocks and farmers' attitude toward risk, loss, and present value of future returns; and 3) analyze the impacts of the current BCAP and of alternatively designed BCAP on the crop mix and quantity of biomass supply, on spatial pattern of biomass production, and on the environmental consequences of the production. In addition to expanding the knowledge on farmers' biomass production decisions by accounting for both objective production risk and farmers' subjective attitude toward risk and loss, and on the economic and ecosystem implications of incentivizing policies of biomass production, this project will also generate a comprehensive database of crop yields, greenhouse gas (GHG) fluxes (CO2, CH4, and N2O), soil organic carbon, an overall GHG intensity and nitrate losses for each crop covered in this study at a 10km×10km grid level on an annual basis based on daily weather information over 1986-2015. This research will provide both a conceptual and simulation modeling framework and a rich database as a publically available resource to the research community in the area of bio-economic and policy analysis.
Animal Health Component
0%
Research Effort Categories
Basic
30%
Applied
40%
Developmental
30%
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6011629301070%
1021629107030%
Goals / Objectives
The purpose of this proposed research is to combine innovative economic and ecological modeling to identify the economic barriers to biomass production, to evaluate the effectiveness of the Biomass Crop Assistance Program (BCAP) in stimulating biomass market expansion, and to explore the economic and ecosystem service implications of biomass production. Specifically, we will1) assess the technical potential to produce biomass for biofuels and bioproducts from corn stover, miscanthus, switchgrass, and energy cane in the rainfed United States and quantify the potential ecosystem service impacts of this production;2) examine the economic incentive and environmental impacts of producing biomass from aforementioned feedstocks on various types of available land under a wide range of biomass prices, accounting for production risk of these feedstocks and farmers' attitude toward risk, loss, and present value of future returns; and3) analyze the impacts of the current BCAP and of alternatively designed BCAP on the crop mix and quantity of biomass supply, on spatial pattern of biomass production, and on the environmental consequences of the production.
Project Methods
This project will combine innovative economic and ecological modeling to identify the economic barriers to biomass production, to evaluate the effectiveness of the Biomass Crop Assistance Program (BCAP) in stimulating biomass market expansion, and to explore the economic and ecosystem service implications of biomass production. The specific methods are:1). We will first compile a comprehensive database of crop yields, GHG fluxes (CO2, CH4, and N2O), soil organic carbon, an overall GHG intensity and nitrate losses for each of the five crops: corn (with and without corn stover harvesting), soybeans, miscanthus, switchgrass, and energy cane on an annual basis over 1986-2015 at a 10km×10km grid level by using DayCent model.2). Since farmers' crop choice decisions depend both on the objective risks of crop profits and on farmers' subjective risk, loss, and time preferences, we will measure objective risks of crop profits by estimating profit distributions of each crop due to variation in yields (and also prices for conventional crops) over the lifespan of the crop. Farmers' subjective preferences towards risk, loss, and time will be modeled using two alternative decision theories: prospect theory and expected utility theory. Based on the objective risks and farmers' subjective preferences, we will then develop a conceptual model of a farmer's decision problem of allocating a tract of land between a conventional use and an energy crop to maximize the farmer's expected utility (or, in another term, subjective value) from cropping land over a period of time. A numerical simulation model will be developed to analyze farmers' optimal crop choices at various biomass prices at the 10km×10km grid level. We will then examine how the optimal land allocation is affected by the farmer's risk, loss, and time preferences. Economic and environmental implications of the land allocation will be examined as well. This task includes three key components: 1) assessing crop specific profit distributions reflecting the risk of producing biomass with each feedstock; 2) prospect theory and expected utility theory as two alternative approaches to model farmers' risk and loss attitude; and 3) conceptual framework and numerical simulation model that combine profit distribution and prospect theory (or separately, expected utility theory) to identify optimal crop choices.3). The BCAP affects farmers' crop choice and land use through its payments that influence profit distributions of various crops. We will first incorporate the BCAP payments specified under the 2014 Farm Bill into landowners' profit calculations and re-calculate the profit distribution for each crop. We will then feed the new profit distributions incorporating BCAP payments into the simulation model to re-simulate farmers' crop choice and land-use decisions under BCAP's budget. As a benchmark case, we will assume that land is selected for enrollment based on the additional biomass produced per dollar of BCAP payment. For example, if $1,000 of BCAP payment causes larger biomass increase on land tract A than that on land tract B, then land tract A will have higher priority to be enrolled in the BCAP than land tract B. This mechanism implies that the analysis will provide an upper bound on the effectiveness of BCAP in inducing additional biomass production for a given budget. Then we will further investigate alternative designs of BCAP enrollment mechanism and these designs' impact on biomass production and associated environmental outcomes as well as the tradeoff between GHG emission and nitrate losses.The practical application and usefulness of the results of this project will be assessed by our advisory committee that includes a miscanthus grower, a sustainable energy extension specialist, and leaders of organizations focusing on outreach, agribusiness, clean energy, or conservation (please see the Management Plan for details). A series of papers are expected to be generated by the work under this project. These will be presented to a wide ranging policy and research community at relevant workshops and regional and national conferences. Moreover, they will also be subject to peer-review when submitted for publication.

Progress 05/01/18 to 04/30/19

Outputs
Target Audience:The target audiences that our efforts reached during this reporting period included policy makers, academics, students, non-governmental organizations, and bioenergy companies. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?This project has provided training for one post-doc in a) quantifying the yields of energy crops (miscanthus and switchgrass) by using DayCent model and b) assessing the implications of growing the energy crops for soil carbon sequestration and nitrate-runoff. The project has also provided training for two PhD students in a) economic modeling by using prospect theory and expected utility theory to assess the effects of farmers' risk and loss preferences on their incentives to grow energy crops; and b) large scale economic simulations based on economic models and computational software. How have the results been disseminated to communities of interest?The results have been disseminated through presentations at conferences in this reporting period. The presentations are: "Effects of Risk and Uncertainty on the Cellulosic Biofuel Supply Chain: Implications for Policy" International Association of Agricultural Economics, Vancouver, CA, July 28-August 2, 2018. "Willingness of Farmers to Grow Energy Crops: Role of Behavioral Drivers" Environmental Science Division, Argonne National Laboratory, Lemont, IL, September 13, 2018. "Realizing the Environmental Benefits of Energy Crops: Economic Incentives and Policy Implications" Advanced Bioenergy Leadership Conference, San Francisco, November 7-9, 2018. "Nexus Between Food, Energy and Ecosystem Services: Synergies and Trade-offs" 2018 International Workshop on "Multifunctional Agriculture - Management and Utilization of Bioresources" NWAFU, Yangling, China, Nov 18-20, 2018. "Lessons Learnt From a Decade of Experience with Biofuels: Comparing Hype with Evidence" Keynote Talk at Low Carbon Markets Conference, University of Sao Paulo, Brazil, December, 2018. "Nexus Between Food, Energy and Ecosystem Services: Synergies and Trade-offs" Division of Nutritional Sciences, University of Illinois, Urbana-Champaign, IL, March 26, 2019. "Contracting in the Presence of Insurance: The Case of Bioenergy Crop Production." Southern Agricultural Economics Association (SAEA) Annual Meetings, February 2-5, 2019, Birmingham, AL. What do you plan to do during the next reporting period to accomplish the goals?In the next reporting period, we will finalize the work under the first goal so that we will produce the updated DayCent simulation resultsabout energy crop yields and associated environmental metrics such as soil carbon and nitrate-runoff at a 4km-by-4km scale. Then we will then expand our economic model that was developed in this reporting period under the thrid goal by incorporating the data obtained under the first goal to study a) various BCAP payment schemes on farmers' crop choice decisions and and b) the environmental impacts of these correspondng bioenergy crop production decisions while considering farmers' risk and loss preferences.

Impacts
What was accomplished under these goals? In this reporting period, the second year of the 3-year project, the team proceeded simultaneously on the three goals ofthe project. For the first goal, the post-doctoral research associate recruited under this project, Dr. Elena Blanc, was guided by Drs.Evan DeLucia and Madhu Khanna to simulate miscanthus and switchgrass yields by using DayCent model. We have completed DayCent model simulations reproducing contemporary (1980-2016) and 30-year projections of net primary productivity, annual yields, soil organic carbon content (SOC budgets), nitrate runoff, and greenhouse gas emissions (i.e. CH4 and N2O) at a county level under various scenarios. We developed county specific model descriptors integrating county- and land use- specific soil attributes (SSURGO-NRCS and ISRIC soil databases) and county-specific climate reconstructions of historic daily weather (DayMet, ONRL). Our model simulations consider USDA plant hardiness zones described by 30-year normals of temperature and precipitation records (USDA, National Agricultural Statistics Service) to reproduce county-level planting and harvesting dates and irrigation intensities, and use historical records for the correct parameterization of region specific fertilization loads and common cultivation events (USDA, NASS). Model projections of business as usual scenarios and conversion to alternative land uses incorporate randomized iterations of the last 15-year records of daily weather to integrate climate variability, and include alternative practices of tillage (conventional till and no till) and stover removal (0%, 30% and 50%) to integrate current variability in agricultural management. We used a complete 10-year data set of above- and below-ground productivity, annual yields and soil carbon content from the Energy Farm (UIUC, Champaign, IL) for all land uses considered for the calibration of the DayCent productivity and decomposition modules incorporating these implementations. For the second goal, a graduate student recruited under this project, Mohit Anand, was guided by Drs. Ruiqing Miao and Madhu Khanna to complete the paper "Adopting Energy Crops: Does Farmers' Attitude toward Loss Matter?" and to make it accepted for publication by Agricultural Economics. Mohit Anand has earned his PhD and was placed as a faculty member in Miles College. He no longer works under this project. For the third goal, another PhD student recruited under this project, Fahd Majeed, was guided by Drs. Madhu Khanna and Ruiqing Miao to examine the impact of various payment schemes on farmers' crop choices and biomass supply, as well as their environmental consequences.

Publications

  • Type: Journal Articles Status: Accepted Year Published: 2019 Citation: Anand, Mohit*, Ruiqing Miao, and Madhu Khanna. Accepted for publication. Adopting Bioenergy Crops: Does Farmers Attitude toward Loss Matter? Agricultural Economics.


Progress 05/01/17 to 04/30/18

Outputs
Target Audience:The target audiences that our efforts reached during this reporting period included policy makers, academics, and students. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? This project has provided training for one post-doc in a) quantifying the yields of energy crops (miscanthus and switchgrass) by using DayCent model and b) assessing the implications of growing the energy crops for soil carbon sequestration and nitrate-runoff. The project has also provided training for one PhD student in economic modeling by using prospect theory to assess the effects of farmers' risk and loss preferences on their incentives to grow energy crops. How have the results been disseminated to communities of interest?The results from the economic analysis have been disseminated through presentations at conferences in this reporting period. The presentations are: Anand, Mohit. "Adopting Energy Crops: Does Farmers' Attitude toward Loss Matter?" Co-authors: Ruiqing Miao and Madhu Khanna. Southern Agricultural Economics Association (SAEA) Annual Meetings, February 2-6, 2018, Jacksonville, Florida. Anand, Mohit. "Adopting Energy Crops: Does Farmers' Attitude toward Loss Matter?" Co-authors: Ruiqing Miao and Madhu Khanna. Agricultural & Applied Economics Association (AAEA) Annual Meeting, July 30 - August 1, 2017, Chicago, IL. Miao, Ruiqing. "Incentivizing Feedstock Supply for the Bioeconomy: Implications for Ecosystem Services and Policy Design." USDA-NIFA Bioeconomy Agroecosystem and Natural Resources Project Directors Meeting, October 20-23, 2017, Tampa, FL. Miao, Ruiqing. "Adopting Bio-Energy Crops: Does Farmers' Attitude toward Loss Matter?" (Poster Presentation). USDA-NIFA Bioeconomy Agroecosystem and Natural Resources Project Directors Meeting, October 20-23, 2017, Tampa, FL. Khanna, Madhu. "Role of Land in Mitigating GHG Emissions," Workshop on A Decade of Biofuel Policies- Lesson Learnt, University of California Los Angeles, Los Angeles, CA, September 27, 2017. Khanna, Madhu. "Regulating indirect land use change due to biofuels: is it worth it?" 23rd Annual Conference of the European Association of Environmental and Resource Economists, Athens, Greece, June 28-July 1, 2017. Khanna, Madhu. "Perennial Biomass Crops for Multiple Ecosystem Services in Corn-Soy Landscapes," Coalition on Agricultural Greenhouse Gases meeting, Chicago, IL, July 19, 2017. Khanna, Madhu. "Assessment of the Additionality of GHG Savings with Biofuel Production," CRC Workshop on Life Cycle Analysis of Transportation Fuels, Argonne National Laboratory, Argonne, IL, October 24-26, 2017. Khanna, Madhu."The Hidden Costs of Regulating Indirect Land Use Change Due to Biofuels," Advanced Bioeconomy Leadership Conference on Next-Gen of Technology, San Francisco, CA, Oct 16-19. 2017. What do you plan to do during the next reporting period to accomplish the goals?In the next reporting period, we plan to complete the first goal that will provide us with the updated DayCent simulation results about energy crop yields and associated environmental metrics such as soil carbon and nitrate-runoff. Then we will expand our economic model that was developed in this reporting period by incorporating the data obtained under the first goal to study the environmental impacts of bioenergy crop adoption while considering farmers' risk and loss preferences.

Impacts
What was accomplished under these goals? In this reporting period, the first year of the 3-year project, the team proceeded simultaneously on the first two goals of the project. For the first goal, the post-doctoral research associate recruited under this project, Dr. Elena Blanc, was guided by Drs. Evan DeLucia and Madhu Khanna to simulate miscanthus and switchgrass yields by using DayCent model. We have finished developing county specific weather record files based on CRU-NCEP climate reconstructions of historic daily weather records from 1901 to 2016 to integrate climatic variability into our model simulations. We have reassessed the historical reconstruction of the original biomes based on Olson 2001 classification for an improved representation of the historical land use country wide. Further, we are rebuilding and parameterizing the event descriptor files integrating our new climatic inputs for the fine calibration of historical ecosystem dynamics of the above mentioned ecoregions that will set the basis for the precise simulation of contemporary and future biogeochemical dynamics in crop- and marginal-land at a county level country wide. For the second goal, the graduate student recruited under this project, Mohit Anand, was guided by Drs. Ruiqing Miao and Madhu Khanna to develop the economic model based on prospect theory to study farmers' economic incentive of adopting energy crops. We have finished a manuscript titled "Adopting Energy Crops: Does Farmers' Attitude toward Loss Matter?" and obtained a request for revision and resubmission under Agricultural Economics. Currently we are revising the manuscript to make the manuscript publishable under the journal.

Publications

  • Type: Journal Articles Status: Under Review Year Published: 2018 Citation: Anand, Mohit, Ruiqing Miao, and Madhu Khanna. Adopting Bioenergy Crops: Does Farmers Attitude toward Loss Matter? Revision and Resubmission requested from Agricultural Economics.