Skevas, T., S. M. Swinton, S. Tanner, G. Sanford, and K. D. Thelen. 2016. Investment risk in bioenergy crops. Global Change Biology Bioenergy 8:1162-1177.

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Perennial, cellulosic bioenergy crops represent a risky investment. The potential for adoption of these crops depends not only on mean net returns, but also on the associated probability distributions and on the risk preferences of farmers. Using 6-year observed crop yield data from highly productive and marginally productive sites in the southern Great Lakes region and assuming risk neutrality, we calculate expected breakeven biomass yields and prices compared to corn (Zea mays L.) as a benchmark. Next we develop Monte Carlo budget simulations based on stochastic crop prices and yields. The crop yield simulations decompose yield risk into three components: crop establishment survival, time to maturity, and mature yield variability. Results reveal that corn with harvest of grain and 38% of stover (as cellulosic bioenergy feedstock) is both the most profitable and the least risky investment option. It dominates all perennial systems considered across a wide range of farmer risk preferences. Although not currently attractive for profit-oriented farmers who are risk neutral or risk averse, perennial bioenergy crops have a higher potential to successfully compete with corn under marginal crop production conditions.

DOI: 10.1111/gcbb.12320

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