Willingness to produce perennial bioenergy crops: A contingent supply approach

In order to reduce economic and national security risks, U.S. energy policy, in 2005 and 2007, mandated production of renewable biofuels. By 2010, the renewable biofuel industry was consuming approximately one-third of domestic corn and soybean production. To meet this growing demand, conservation and pastureland has been cultivated with corn and soybean, resulting in a reduction in ecosystem services. Perennial bioenergy crops (e.g., switchgrass) offer a more sustainable alternative. However, unlike annual crops, farmers and landowners have little experience with perennial bioenergy crop production. Uncertainty in production and prices may impact the supply of these novel crops into an emerging market. Using a contingent supply method, we show that agricultural landowners are willing to produce perennial bioenergy crops, given competitive returns, but only on a portion of their land.