Planting Decision of Bio-Energy Feedstock under the Threat of Regulatory Taking

Abstract:

The world is facing energy crisis and the search for renewable bio-energy is currently one of the most important issues. Energy plant as a kind of bio-energy feedstock has attracted more and more attention, especially its planting issue. Short rotation coppice (SRC) is used as a proxy for other energy plants. This paper investigates farmers’ planting decisions of SRC under the threat of regulatory taking which is rarely mentioned in the previous relevant literatures. We use real options approach and especially take the risk of regulatory taking into account to analyze whether or not to grow SRC instead of traditional crops on farmland. It turned out that the threat of regulatory taking reduces the investment threshold and stimulates farmers to grow SRC. In other words, the threat has potential to improve the development of bio-energy.

• Periodical: Advanced Materials Research (Volumes 953-954)
• Pages: 330-333
• DOI: https://doi.org/10.4028/www.scientific.net/AMR.953-954.330
• Online since: June 2014
• Authors: Ming Gao Xue, Ming Gao Xue
• Keywords: Energy Plants, Real Options Approach, Regulatory Taking

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