The influence of feedstock supply risk on location of stover-based bio-gasoline plants

Abstract

This study models and quantifies spatially referenced probability distributions of corn residue cost and assesses their influence on comparative advantages of different areas of the Corn Belt to attract biofuel plants. Results suggest that irrigated areas of the Corn Belt, despite their relatively low planting density, may result more attractive than some of their rainfed counterparts in the eastern Corn Belt due to low risk in feedstock cost resulting from stability of yields. Therefore, agricultural districts in the Great Plains of the US may not need to pay high subsidies to compete with those in the eastern Corn Belt to attract biofuel firms. Policy restrictions on irrigation due to concerns over groundwater depletion may, however, diminish the relative comparative advantage of the irrigated Corn Belt for biofuel production.