Inelastic and Fragmented Farm Supply Response for Second-generation Bioenergy Feedstocks: Ex Ante Survey Evidence from Wisconsin

Daniel Mooney, Bradford L. Barham and Chang Lian

Applied Economic Perspectives and Policy, 2015, vol. 37, issue 2, 287-310

Abstract: Second-generation bioenergy feedstocks stand poised to become a key component of the nation's agricultural and energy sectors, yet few studies have examined farm supply response using survey information. We use contingent valuation data from farmers in southwestern Wisconsin to develop ex ante supply estimates for two prospective feedstocks—corn stover and switchgrass—in terms of farmers' extensive and intensive acreage decisions. Supply response is found to be price inelastic and spatially fragmented, making widespread production unlikely in the near-term. However, heterogeneity in farmer reservation prices suggests that agglomerations or "hot spots" of feedstock supply could arise at local or regional levels.

Date: 2015
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