Three essays on modeling biofuel feedstock supply

Wei Zhou

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The general theme of this dissertation is modeling biofuel feedstock supply. All three essays focuses on different topics relating to the theme. The first essay considers supply of corn stover for a commercial production of a cellulosic ethanol plant. The economic trade-offs in determining the plant size under uncertain future corn stover yields and cellulosic ethanol prices are analyzed. We also estimate the impacts on optimal plant sizes under two payment schemes for corn stover procurement: plant pays for transportation cost and farmers pay for the transportation cost. My second essay analyzes the impact of ethanol mandates on corn prices. A rational expectations competitive storage model is built to capture the dynamic behavior of corn market and tradable permit market through which mandate is enforced. We use the model to estimate the impacts of alternative future ethanol mandate levels. Results indicate that future corn prices are about 6 percent lower with reduced mandates. The third paper presents a new model of agricultural supply which combines Positive Mathematical Programming (PMP) with the rational expectations storage model and compares methods in solving the combined model. We find that Smolyak collocation method performs better than Generalized Stochastic Simulation Algorithm considering computational time and accuracy in solving the multi-crop storage model.

Date: 2015-01-01
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