On the (De)Stabilization Effects of Biofuels: Relative Contributions of Policy Instruments and Market Forces

Ethanol production has recently surged in response to biofuel policies and increased fossil oil prices. We develop a partial equilibrium model focused on U.S. corn-based ethanol production with downside risk-averse farmers to assess the consequences of ethanol production on agricultural volatility. We report substantial effects on the distribution of corn prices with increases in the variance of prices received by farmers. Risk-averse corn farmers still benefit due to the higher mean price effect. From a methodological perspective, this analysis reveals that downside risk aversion may be important.


Keywords:
Issue Date:
2010
Publication Type:
Journal Article
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/61061
PURL Identifier:
http://purl.umn.edu/61061
Published in:
Journal of Agricultural and Resource Economics, 35, 1
Page range:
72-86
Total Pages:
15
Series Statement:
JARE
35(1)




 Record created 2017-04-01, last modified 2020-10-28

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