Abstract
The literature on technology adoption provides key insights that can explain the incentives and barriers to the adoption of new energy crops for producing biofuels to displace fossil fuels. Energy crops are perennials with high upfront costs and establishment lags. They also differ from conventional crops in their riskiness. Their production involves foregoing returns from existing uses of the land. These features differ spatially and across farmers due to difference in farmer risk and time preferences. Understanding patterns of adoption is important for designing farming systems, supply chains, and policies. The literature investigates the influence on the adoption decision of many sources of heterogeneity across time and location including differences in the characteristics of technologies, farmers, market conditions, and policy incentives. Factors likely to influence adoption are explained using the example of two high-yielding and promising energy crops: miscanthus and switchgrass. Energy crop adoption decision is shown to be based on monetary factors (profit and costs) and the composition of mechanisms to address risk and uncertainty available to a region, as well as the risk and time preferences, attitudes, and beliefs of farmers. The paper ends with a discussion of market mechanisms and policy incentives to induce adoption and create supply chains needed to engender this industry.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Wuepper and Lybbert (2017) provide a survey of this recent line of research.
- 2.
McWilliams and Zilberman (1996) analyzed the timing of adoption of a technology (computers) whose price declines over time. They found that larger firms, with more educated entrepreneurs and more complex businesses, are likely to be early adopters of computers while firms that do not have the sufficient scale or human capital tend to wait and make lower investment. Khanna et al. (2000) find that adoption of site-specific crop management technologies (precision farming) is likely to occur first on farms with high soil quality and high variability in soil fertility and quality. This is because the profit differential is sufficiently high on such farms and it is able to offset the disincentives to adoption due to price uncertainty and investment irreversibility.
References
Adams, P. W., G.P. Hammond, M.C. McManus, and W.G. Mezzullo. 2011. Barriers to and drivers for UK bioenergy development. Renewable and Sustainable Energy Reviews 15 (2): 1217–1227.
Arthur, W.B. 1994. Increasing returns and path dependence in the economy. USA: The University of Michigan Press.
Bocqueho, G., and F. Jacquet. 2010. The adoption of switchgrass and miscanthus by farmers: Impact of liquidity constraints and risk preferences. Energy Policy 38 (5): 2598–2607.
Byerlee, D., and E.H. de Polanco. 1986. Farmers’ stepwise adoption of technological packages: evidence from the Mexican Altiplano. American Journal of Agricultural Economics 68 (3): 519–527.
Chen, X. 2010. A dynamic analysis of U.S. biofuels policy impact on land use, greenhouse gas emissions and social welfare. Dissertation, University of Illinois at Urbana-Champaign.
Chen, X., H. Huang, M. Khanna, and H. Önal. 2011. Meeting the mandate for biofuels: implications for land use, food, and fuel prices. In The intended and unintended effects of US agricultural and biotechnology policies, pp. 223–267. University of Chicago Press.
Clifton-brown, J. C., and P. F. Stampfl. 2004. Miscanthus biomass production for energy in Europe and its potential contribution to decreasing fossil fuel carbon emissions. Global Change Biology 10 (4): 509–518.
David, P.A. 1975. Technical choice, innovation and economic growth: essays on American and British experience in the nineteenth century. Cambridge University Press.
Feder, G., R.E. Just and D. Zilberman. 1985. Adoption of agricultural innovations in developing countries: a survey. Economic Development and Cultural Change 33 (2): 255–298.
Foster, A. D., and M. R. Rosenzweig. 2010. Microeconomics of technology adoption. Annual Review of Economy 2 (1): 395–424.
Freeh, E.D. 2011. Biomass energy crop production and residential pellet consumption in the midwestern U.S. M.S. Thesis, University of Illinois at Urbana-Champaign.
Ghadim, A.K.A., and D.J. Panell. 1999. A conceptual framework of adoption of an agricultural innovation. Agricultural Economics 21: 145–154.
Hipple, P.C., and M.D. Duffy. 2002. Farmers’ motivations for adoption of switchgrass. In: Trends in New Crops and New Uses, (eds.) J. Janick and A. Whipkey pp. 252–266. Alexandria, VA: ASHS Press.
Jain, A.K., M. Khanna, M. Erickson, and H. Huang. 2010. An integrated biogeochemical and economic analysis of bioenergy crops in the midwestern United States. GCB Bioenergy 2 (5): 217–234.
Jensen, K., et al. 2007. Farmer willingness to grow switchgrass for energy production. Biomass and Bioenergy 31: 773–781.
Khanna, M., X. Chen, H. Huang, and H. Onal. 2011. Supply of cellulosic biofuel feedstocks and regional production patterns. American Journal of Agricultural Economics: Papers and Proceedings 93 (2): 473–480.
Khanna, M., M. Isik, and A. Winter Nelson. 2000. Investment in site specific crop management under uncertainty: implications for nitrogen pollution control and environmental policy. Agricultural Economics 24 (1): 9–12.
Khanna, M., J.J. Louviere, and X. Yang, Motivations to grow energy crops: the role of crop and contract attributes. Agricultural Economics, (forthcoming).
Lobell, D.B., K.G. Cassman, and C.B. Field. 2009. Crop yield gaps: their importance, magnitudes, and causes. Annual Review of Environment and Resources 34 (1): 179–204.
Mattison, E., and K. Norris. 2007. Intentions of UK farmers toward biofuel crop production: implications for policy targets and land use change. Environmental Science and Technology 41 (16): 5589–5594.
McCormick, K., and T. Kåberger. 2007. Key barriers for bioenergy in Europe: economic conditions, know-how and institutional capacity, and supply chain co-ordination. Biomass and Bioenergy 31 (7): 443–452.
McWilliams, B., and D. Zilberman. 1996. Time of technology adoption and learning by using. Economics of Innovation and New Technology 4 (2): 139–154.
Paulrud, S., and T. Laitila. 2010. Farmers’ attitudes about growing energy crops: A choice experiment approach. Biomass and Bioenergy 34 (12): 1770–1779.
Rogers, E.M. 1962. Diffusion of innovations, 1st ed. New York: Free Press.
Rogers, E.M. 1983. Diffusion of innovations, 3rd ed. New York: Free Press.
Sherrington, C., J. Bartley, and D. Moran. 2008. Farm-level constraints on the domestic supply of perennial energy crops in the UK. Energy Policy 36: 2504–2512.
Sherrington, C., and D. Moran. 2010. Modelling farmer uptake of perennial energy crops in the UK. Energy Policy 38: 3567–3578.
Smeets, E.M.W., I.M. Lewandowski, and A.P.C. Faaij. 2009. The economical and environmental performance of miscanthus and switchgrass production and supply chains in a European setting. Renewable and Sustainable Energy Reviews 13 (6–7): 1230–1245.
Song, F., J. Zhao, and S.M. Swinton. 2011. Switching to perennial energy crops under uncertainty and costly reversibility. American Journal of Agricultural Economics 93 (3): 768–783.
Styles, D., F. Thorne, and M.B. Jones. 2008. Energy crops in Ireland: An economic comparison of willow and miscanthus production with conventional farming systems. Biomass and Bioenergy 32 (5): 407–421.
Sunding, D., and D. Zilberman. 2001. The agricultural innovation process: research and technology adoption in a changing agricultural sector. In Handbook of agricultural and resource economics, eds. Bruce Gardner and Gordon Rausser, pp. 207–261. Amsterdam, North Holland.
Tarde, G. 1890. Les lois de l’imitation. Paris: Alcan. English edn: The Laws of Imitation, trans Parsons EC. New York: Holt.
Thorsell, S., et al. 2004. Economics of a coordinated biorefinery feedstock harvest system: lignocellulosic biomass harvest cost. Biomass and Bioenergy 27: 327–337.
Upham, P., and S. Shackley. 2007. Local public opinion of a proposed 21.5 MW(e) biomass gasifier in Devon: questionnaire survey results. Biomass and Bioenergy 31: 433–441.
Upreti, B.R. 2004. Conflict over biomass energy development in the United Kingdom: some observations and lessons from England and Wales. Energy Policy 32 (6): 785–800.
Upreti, B.R., and D.v.d. Horst. 2004. National renewable energy policy and local opposition in the UK: the failed development of a biomass electricity plant. Biomass and Bioenergy 26: 61–69.
Vanclay, F., and G. Lawrence. 1994. Farmers rationality and the adoption of environmentally sound practices; a critique of the assumptions of traditional agricultural extension. European Journal of Agricultural Education and Extension 1: 59–90.
Varvel, G.E., K.P. Vogel, R.B. Mitchell, R.F. Follett, and J.M. Kimble. 2008. Comparison of corn and switchgrass on marginal soils for bioenergy. Biomass and bioenergy 32 (1): 18–21.
Velandia, M., D. Lambert, J. Fox, J. Walton, E. Sanford, and R. Roberts. 2010. Intent to continue growing switchgrass as a dedicated energy crop: a survey of switchgrass producers in east Tennessee. European Journal of Social Sciences 15 (3): 299–312.
Villamil, M.B., A.H. Silvis, and G.A. Bollero. 2008. Potenial for miscanthus’ adoption in Illinois: Information needs and preferred information channels. Biomass and Bioenergy 32: 1338–1348.
Wuepper, D., and T. Lybbert. 2017. Perceived Self-Efficacy and Economic Development. Annual Review of Resource Economics (forthcoming).
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing AG
About this chapter
Cite this chapter
Khanna, M., Zilberman, D., Miao, R. (2017). Innovation in Agriculture: Incentives for Adoption and Supply Chain Development for Energy Crops. In: Khanna, M., Zilberman, D. (eds) Handbook of Bioenergy Economics and Policy: Volume II. Natural Resource Management and Policy, vol 40. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-6906-7_14
Download citation
DOI: https://doi.org/10.1007/978-1-4939-6906-7_14
Published:
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4939-6904-3
Online ISBN: 978-1-4939-6906-7
eBook Packages: Economics and FinanceEconomics and Finance (R0)