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Abstract

This study employs a stated choice experiment to identify producer preferences for contracts to produce a risky bioenergy crop. The study develops a theoretical framework that takes into account subjective risk preference and perception information while also accounting for heterogeneous status-quo (i.e., current crop) alternatives. Results from our Random Parameter Logit model indicate that price, biorefinery harvest, and establishment cost-share all had significant positive effects on the probability of a producer accepting a contract, whereas contract length have a negative effect. The study also finds evidence of significant preference heterogeneity in producer preferences for biorefinery harvest, yield insurance, and contract length. Incorporating subjective risk perception and risk preference information, as well as accounting for heterogeneous status-quo alternatives in the decision framework improves overall model performance.

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