A study examining how certain decisions impact what farmers plant and harvest identified one crucial factor that researchers believe needs to be added to the list of decision variables when considering bioenergy crops: the option value.
Most studies have not examined the role of the option value, which has to do with farmers waiting to see how bioenergy crop prices will change in the future, said Jerome Dumortier, an associate professor in the IU School of Public and Environmental Affairs at IUPUI and a co-author of the study.
The study, “Production and spatial distribution of switchgrass and miscanthus in the United States under uncertainty and sunk cost,” was published in the journal Energy Economics and is one of the first to consider adding the option value to the list of barriers to widespread planting of bioenergy crops. It also shows the spatial distribution of potential bioenergy crops in the U.S. when considering the option value. (more…)