Project Research Publications: Sustainability, Marketing and Policy

  • Burli, P., Forgoston, E., Lal, P., Billings, L. and Wolde, B. (2017). Adoption of switchgrass cultivation for biofuel under uncertainty: A discrete-time modeling approach. Biomass and Bioenergy 105:107-115. DOI: 10.1016/j.biombioe.2017.06.012

      • Abstract:

      • Production of biofuels from cellulosic sources, such as switchgrass, is being encouraged through mandates, incentives, and subsidies. However, uncertainty in future prices coupled with large establishment costs often inhibit their cultivation. Owing to their inability to incorporate uncertainty and dynamic decision-making, standard discounted cash flow techniques are ineffective for analyzing such investments. We formulate a discrete-time binomial framework to model output prices, allowing us to incorporate price uncertainty, stand age, and variable crop yields into the analytical framework. We analyze the feasibility of investments in switchgrass cultivation under varying price transition paths, evaluate the relationship between risk and profitability, and estimate the value of flexible decision-making options wherein the farmer can alter cultivation choices. We find that switchgrass cultivation is only 32% likely to be profitable in the base model and infer that on-farm management could play an important role in entry and exit decisions. We also find that subsidies are important for project viability and policymakers could consider incorporating payments for ecosystem services to encourage adoption.

      • https://doi.org/10.1016/j.biombioe.2017.06.012

  • Burli, P., Lal, P., Wolde, B. and Alavalapati, J. (2016). Sustainability protocols and certification criteria for switchgrass-based bioenergy. BioResources 11(3):7102-7123. DOI: 10.15376/biores.11.3.7102-7123

      • Abstract:

      • Production of bioenergy from cellulosic sources is likely to increase due to mandates, tax incentives, and subsidies. However, unchecked growth in the bioenergy industry has the potential to adversely influence land use, biodiversity, greenhouse gas (GHG) emissions, and water resources. It may have unintended environmental and socioeconomic consequences. Against this backdrop, it is important to develop standards and protocols that ensure sustainable bioenergy production, promote the benefits of biofuels, and avoid or minimize potential adverse outcomes. This paper highlights agronomic information on switchgrass, a high-potential bioenergy feedstock, and the role of specialized certification programs. The existing sustainability standards and protocols were reviewed in order to identify key gaps that justify a certification program specifically for switchgrass-based bioenergy. The criteria and indicators that should be considered for such a certification program are outlined.

      • https://doi.org/10.15376/biores.11.3.7102-7123

  • Gan, J., J.W.A. Langeveld and C.T. Smith (2014). An agent-based modeling approach for determining corn stover removal rate and transboundary effects. Environmental Management 53(2):333-342. DOI: 10.1007/s00267-013-0208-4

      • Abstract:

      • Bioenergy production involves different agents with potentially different objectives, and an agent’s decision often has transboundary impacts on other agents along the bioenergy value chain. Understanding and estimating the transboundary impacts is essential to portraying the interactions among the different agents and in the search for the optimal configuration of the bioenergy value chain. We develop an agent-based model to mimic the decision making by feedstock producers and feedstock-to-biofuel conversion plant operators and propose multipliers (i.e., ratios of economic values accruing to different segments and associated agents in the value chain) for assessing the transboundary impacts. Our approach is generic and thus applicable to a variety of bioenergy production systems at different sites and geographic scales. We apply it to the case of producing ethanol using corn stover in Iowa, USA. The results from the case study indicate that stover removal rate is site specific and varies considerably with soil type, as well as other factors, such as stover price and harvesting cost. In addition, ethanol production using corn stover in the study region would have strong positive ripple effects, with the values of multipliers varying with greenhouse gas price and national energy security premium. The relatively high multiplier values suggest that a large portion of the value associated with corn stover ethanol production would accrue to the downstream end of the value chain instead of stover producers.

      • https://doi.org/10.1007/s00267-013-0208-4

  • Golecha, R., and Gan, J. (2016). Cellulosic biorefinery portfolio and diversification: Strategies to mitigate cellulosic biorefinery risks in US Corn Belt. Energy Strategy Reviews 13/14:147-153. DOI: 10.1016/j.esr.2016.09.003

      • Abstract:

      • Several studies have highlighted that one of the largest risks with cellulosic biorefinery investments are year-to-year variability in cellulosic biomass quantity available. Yet, strategies to mitigate these risks in biofuel development are less understood. In the absence of strategies to minimize the impact due to these variations, both biorefineries and farmers venturing into the cellulosic biofuel arena will be significantly exposed. Studies have been done on using engineering approaches, such as biomass pre-treatment and storage to address biomass supply variations. Recent studies have provided market structure and contracting strategies to manage biomass supply risks. However, storage, pre-treatment and similar engineering approaches lead to higher costs and has other limitations such as additional infrastructural requirements. There is a gap in understanding the use of feedstock (biomass) diversification and portfolio strategies to mitigate such risks. In this study a portfolio approach is developed and applied to the case of the US Corn Belt, considering various types of cellulosic biomass including corn stover, wheat straw, and switchgrass. It is found that feedstock diversification mitigates up to 40% of feedstock supply variations, while biorefinery diversification can mitigate up to 70% % of feedstock supply variations although it is constrained by current cropland use patterns in the region. Overall, diversification and portfolio strategies present an effective way for mitigating risks associated with feedstock supply variations.

      • https://doi.org/10.1016/j.esr.2016.09.003

  • Golecha, R. and Gan, J. (2016). Optimal contracting structure between cellulosic biorefineries and farmers to reduce the impact of biomass supply variation: game theoretic analysis. Biofuels, Bioproducts and Biorefining 10(2):129-138. DOI: 10.1002/bbb.1626

      • Abstract:

      • There is considerable year-to-year variability in the supply of cellulosic biomass used in the production of cellulosic biofuels, yet strategies to mitigate these variations in biofuel development are not well understood. Biorefineries and farmers venturing into the cellulosic biofuel industry will require biomass supply and contracting strategies that can minimize the impact of these large variations. Some studies have proposed biomass pre-treatment and storage to address biomass supply variations. Other studies have used transportation modeling approaches to manage supply variations and select the optimal location of a cellulosic biorefinery. However, storage, pre-treatment, and similar engineering approaches lead to higher costs and have other limitations such as additional infrastructural requirements. There is a gap in understanding how contracting strategies between biorefineries and the biomass suppliers (farmers) can reduce the risks with biomass supply variations. In this study, the contracting structure between biorefineries and biomass suppliers is studied under different market structures for the US Corn Belt. A theoretical framework is then developed to use contracting strategies for mitigating the impact of biomass supply variations. First, the trade-offs between intricately linked components of biomass cost, such as biomass transport, biomass price (incentive) to suppliers, variation in biomass supply, biorefinery size, and alternative feedstock availability are examined. Next, an optimal contracting structure is developed between biorefineries and biomass suppliers using game theoretic analysis. Results show that both the impact of biomass supply variations and the overall biomass cost can be significantly reduced through the use of the optimal contracting strategy between biorefineries and suppliers.

      • https://doi.org/10.1002/bbb.1626

  • Golecha, R. and Gan, J. (2016). Effects of corn stover year-to-year supply variability and market structure on biomass utilization and cost. Renewable and Sustainable Energy Reviews 57:34-44. DOI: 10.1016/j.rser.2015.12.075

      • Abstract:

      • The availability of corn stover can vary considerably from year to year in a region due to annual changes in yield and area planted with corn. Such variations interacting with biomass market structures can affect biomass cost and utilization rate. This study first characterizes year-to-year variations in corn stover supply for the US in general and for selected major US corn producing counties in particular. There have been 20–30% year-to-year variations in stover supply in the US since 1975. Game theoretic analysis is then applied to examining corn stover utilization rate and production cost in three market structures. The analysis reveals that a free market structure will take the form of oligopoly–oligopsony, where large stover supply variations will expose both biorefineries and farmers to significant price volatility. Price equilibrium will shift significantly from year to year. Of the three market structures analysed, the “Derisked” supply market structure will be most favorable to biorefineries and farmers. Under this structure, biorefineries will maintain a stover supply region that is based on “Derisked” (lower than average) yield density to buffer for the supply uncertainty associated with annual variations. This market structure results in significantly less volatility in biomass cost while on average only 63% of collectable stover will be used for biofuel production. Our findings suggest that year-to-year variation in corn stover availability will increase feedstock cost and reduce its potential for biofuel production.

      • https://doi.org/10.1016/j.rser.2015.12.075

  • Golecha, R. and Gan, J. (2016). Biomass transport cost from field to conversion facility when biomass yield density and road network vary with transport radius. Applied Energy 164:321-331. DOI: 10.1016/j.apenergy.2015.11.070

      • Abstract:

      • Biomass transport cost from field to a conversion facility is a major component of biofuel production cost. Several studies have provided a general framework, independent of location, for maximising cost competitiveness of bioenergy plants. The majority of these studies assume uniform spatial distribution of biomass and road network, independent of the size of the biorefinery. Although this assumption simplifies the theoretical derivation, it may not be suitable for practical cases. We develop a more generic biomass transport model that allows biomass yield density and road network vary with transport radius, and then derive a formula for determining biomass transport cost, which more accurately represents changes in biomass transport cost with conversion plant capacity. The formula can be used to evaluate locations and investment opportunities in large scale biofuel production.

      • https://doi.org/10.1016/j.apenergy.2015.11.070

  • Lal, P., Kebede, E., Wolde, B., Burli, P., Alavalapati, J., Gan, J. and Taylor, E. (2015). Assessing Socioeconomic Impacts of Forest Biomass Based Biofuel Development on Rural Communities in the Southern United States. In: J. Janick, A. Whipkey and V.M. Cruz (eds.), New Crops: Bioenergy, Biomaterials, and Sustainability, Proceedings of the Joint Annual Meeting of the Association for the Advancement of Industrial Crops and the USDA National Institute of Food and Agriculture, Washington, DC, October 12-16, 2013. pp. 382-398. https://hort.purdue.edu/newcrop/proceedings2015/382-lal.pdf

      • Abstract:

      • The thirteen southern states spanning from Texas to Virginia with around 5 million private landowners, 28 percent of total forestlands and 62 percent of the country's total growing stock removals in 2006 are expected to play a dominant role in woody biofuels market development. Woody biofuels markets can contribute to rural development benefiting local communities by generating additional revenues to nonindustrial private forest landowners and other economic agents, stimulate employment and diversify rural economies. However, delineation of economic impacts on rural communities in the region has not been systematically analyzed.

        In the project, we analyze the impact of woody biofuel development on rural communities in the Southern US. Specifically, we will: 1) assess key stakeholders' participation along the supply chains of loblolly pine (Pinus taeda L.) and slash pine (Pinus elliottii L.) based woody biofuel markets; 2) analyze potential direct economic and employment impacts on forestland owners and rural communities; and 3) estimate region-wide socioeconomic and distributional impacts of woody biofuel development. We will develop woody biofuel expansion scenarios based on market emergence in future and socio-economic acceptability considerations. Direct, indirect, and induced impacts on stakeholders will be estimated through Input Output Analysis and Social Accounting Matrix approach. Region-wide socio-economic and distributional impacts will be assessed using a Computable General Equilibrium model to identify winners and losers. We will discuss farm and regional impacts of woody biofuel expansion on non-metro (rural) counties in US South, including impacts on persistent poverty and minority dominated counties.

        Here we describe the current state of forest based bioenergy and summarizes some of the major challenges and prospect relating to its technology and markets; relevant federal, state and local levels policies; and benefits and concerns relating to its sustainability. It also presents roles of loggers and transporters both in the value chain and their relevance in the economic viability of woody biofuels. After presenting this context, we outline specific objectives that the project aims to address along with description of the methods that will be used to arrive at the said objectives. In doing so, we describe the geographic focus of the study and the role of private forest landowners in terms of their national relevance and as potential suppliers of biomass given their stake in the nation's forest resources. We also outline the preliminary results from the stakeholder meetings conducted in the three study states indicates that forestland owners were mostly aware of bioenergy production but were unsure about expressing their own price. The landowners who expressed their price preference tend to expect higher offers compared to pulpwood price to account for inconvenience and assumed risks. The information so generated is being used to develop a survey instrument that will be administered to randomly selected landowners in the three study states using Tailored Design Method. Our study will further understanding of the short and long-term impacts of woody biofuel expansion in US South and the ensuing socioeconomic impacts on rural landowners, minorities, and other rural groups.

      • https://hort.purdue.edu/newcrop/proceedings2015/382-lal.pdf

  • Lal, P., Wolde, B., Alavalapati, J., Burli, P. and Munsell, J. (2016). Forestland owners' willingness to plant pine on non-forested land for woody bioenergy in Virginia. Forest Policy and Economics 73:52-57. DOI: 10.1016/j.forpol.2016.09.003n

      • Abstract:

      • Woody bioenergy provides an opportunity for new source of revenue, which forestland owners can respond to either by supplying biomass from an existing stand or by establishing feedstock plantations on currently non-forested land. Using survey data sent out to 900 randomly selected participants in Virginia, we assess if forestland owners would allocate parts of their currently non-forested land, such as cropland and pasture/grazing land, to growing loblolly pine for bioenergy production purposes. Using recursive partitioning based logistic regression, we show that the decision to plant pine on non-forested land depends both on economic and non-economic factors, including price, demographic attributes of the forestland owner, mode of land acquisition and their respective threshold values, providing profile types policies encouraging biomass supply can use in tailoring their efforts. Using bid values, expected landowner revenue from growing pine, we also find a mean willingness to accept value of $1424/acre. Our results also show that the choice among land use types follows economies of scale while the choice among land covers for a given land use type follows species diversification.

      • https://doi.org/10.1016/j.forpol.2016.09.003

  • Withers, J., Quesada-Pineda, H.J. and Smith, R. (2015). Internal and external barriers impacting non-food cellulosic biofuel projects in the United States. BioResources 10(3):3874-3889. DOI: 10.15376/biores.10.3.3874-3889

      • Abstract:

      • Escalating demand, along with EPAct 2005, has led the United States government to assume a twofold leadership approach of energy security and environmental practices. This has initiated several important issues pertaining to cellulosic biofuel production. However, little is known about what is needed for the U.S. to lead long-term renewable energy security, how the US will develop and implement leading environmental energy practices, what supply capabilities and refining technologies are available to produce renewable fuels, and how funding can be used to adopt available technologies. This article examines geographical aspects, operational status, and barriers tending to prevent the successful commercialization of non-food cellulosic ethanol projects in the U.S. from secondary sources. Outcomes of this research can be used to further understand inhibitors that impact the production and commercialization of ethanol from non-food cellulosic sources.

      • https://doi.org/10.15376/biores.10.3.3874-3889

  • Wolde, B., Lal, P., Alavalapati, J., Burli P. and Iranah. P. (2016). Soil and water conservation using the socioeconomics, sustainability concerns, and policy preference for residual biomass harvest. Journal of Soil and Water Conservation 71(6):476-483. DOI: 10.2489/jswc.71.6.476

      • Abstract:

      • While woody bioenergy opens up a new market opportunity for residual biomass, overharvesting of residual biomass can adversely affect soil health, water quality, timber health and stand productivity, among others. As such, it is important to understand the proportion of residual biomass forestland owners are willing to leave unharvested for soil nutrient and other environmental benefit purposes, their sustainability concerns, and policy preferences. Toward this end, we conducted a mail survey on 900 randomly selected forestland owners in Virginia and used ordinal logistic regression, cluster analyses, and Cochran-Armitage trend tests to analyze the data. Our analyses of the 121 most complete responses suggest that factors such as ownership tenure, mode of land acquisition, size of forestland, and forestland ownership objectives, among other factors, affect decisions regarding the proportion of residual biomass forestland owners choose to leave unharvested. Analyses of landowners' sustainability concerns indicate a clustering pattern, where concerns about sufficiency of best management practices and the potential implications of harvest decision on soil and water quality are among the statistical representatives of their respective clusters. Respondents likely to engage in harvest practices that do not leave any residual biomass on the ground have a preference for policies that help cover management cost. Decision makers administering or considering such policy proposals should be aware of the inadvertent effect such cost sharing arrangements can have in encouraging unsustainable practices. These results also hint at the potential need for combining such cost sharing arrangements with extension and outreach programs. By accounting for landowners' concerns and preferences, this study complements previous studies that primarily adopt engineering based approaches and solutions.

      • https://doi.org/10.2489/jswc.71.6.476

  • Wolde, B., Lal, P., Alavalapati, J., Burli, P. and Munsell, J. (2016). Factors affecting forestland owners' allocation of non-forested land to pine plantation for bioenergy in Virginia. Biomass and Bioenergy 85:69-75. DOI: 10.1016/j.biombioe.2015.12.007

      • Abstract:

      • Studies have shown that woody bioenergy can have potential economic, social, and environmental benefits. One of the ways to meet the growing biomass demand for woody bioenergy is by allocating currently non-forested land for growing feedstocks such as pine. Towards this end, we conducted a survey on 900 randomly selected private forestland owners in Virginia and asked what proportion of their non-forested land they would allocate for loblolly pine at given bid prices. We then used recursive partitioning based Tobit regression to analyze data. Our results suggest that the experience of having supplied wood for chip-n-saw mills in the past five years, large land holding, prior experience with state/federal financial/technical support programs, among other factors, lead to smaller proportion of non-forested land being allocated for pine. However, a higher price offer, stronger preference for producing non-timber forest products such as evergreen boughs and grapevine, and lesser dependence on working the land for annual income lead to larger proportion of non-forested land being allocate for pine. Our results could assist policy makers in developing and improving land use and energy policies, certification programs, and extension and outreach services. Our contribution also includes the use of threshold analyses to delineate tipping points in variables associated with different response rates and showing the different effect of variables in terms of how they affect the supply of biomass and the supply of land for bioenergy purposes.

      • https://doi.org/10.1016/j.biombioe.2015.12.007

  • Wolde, B., Lal, P. and Burli, P. (2017). Forestland owners’ willingness to consider multiple ways of supplying biomass simultaneously: Implications for biofuel incentive policies. Energy Policy 105:183-190. DOI: 10.1016/j.enpol.2017.02.040

      • Abstract:

      • Because socioeconomic based approaches account for relevant limiting and motivating factors, they provide a more realistic measurement of forestland owners’ willingness to supply biomass for bioenergy production- information useful to policy makers in setting production targets and in designing relevant incentive programs. Although forestland owners can supply biomass using different means, including supplying biomass from existing stands and changing land use to establish feedstock plantation, among others, previous studies mostly focus only on a given way of supplying biomass at a time. This produces incomplete information that adversely affects its use. By presenting survey takers in Virginia and Texas three different ways of supplying biomass at the same time, we determine forestland owners’ willingness to consider multiple ways of supplying biomass simultaneously and identify the factors that predict such behavior, assess overlap in forestland owners across the different ways of supplying biomass, and assess if and how respondents’ forest management plans and sustainability concerns correspond with their supply decision. Our results show a higher and more articulated rate of willingness to supply biomass than reported in previous studies. The results also suggest that opportunities exist for synergizing programs that incentivize disparate ways of supplying biomass.

      • https://doi.org/10.1016/j.enpol.2017.02.040

  • Wolde, B., Lal, P., Gan, J., Alavalapati, J., Taylor, E. and Burli, P. (2016). Determinants of enrollment in public incentive programs for forest management and their effect on future programs for woody bioenergy: evidence from Virginia and Texas. Canadian Journal of Forest Research 46(6):775-782. DOI: 10.1139/cjfr-2015-0335

      • Abstract:

      • Several federal- and state-sponsored programs, including cost-sharing arrangements, tax incentives, and technical assistance programs, are available to forestland owners, aiming to encourage desired forest management practices and outcomes. However, enrollment rates in such programs are low, and trends of forestland parcelization hint at an even smaller enrollment rate in the future. Therefore, it is important to understand how socioeconomic attributes of forestland owners and past experience with such programs affect the likelihood of enrollment in public incentive programs. Among others, this will help us provide tailored information to forestland owners who are less likely to use these opportunities through extension and outreach programs. Towards this end, we conducted a survey of 1800 forestland owners in Virginia and Texas. Our recursive partitioning, logistic regression, and Cochran–Armitage trend test results suggest that forestland owners who are less likely to enroll in such programs have relatively smaller forestland acreage, a lower level of education, and shorter land ownership tenure. We also find that forestland owners with experience in public incentive programs tend to attach higher importance to potential programs, including those that do not directly benefit them. We also identify threshold values for explanatory variables such as acreage and tenure length.

      • https://doi.org/10.1139/cjfr-2015-0335