IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v73y2012icp133-141.html
   My bibliography  Save this article

Which factors influence the expansion of bioenergy? An empirical study of the investment behaviours of German farmers

Author

Listed:
  • Reise, Christian
  • Musshoff, Oliver
  • Granoszewski, Karol
  • Spiller, Achim

Abstract

The German government is planning to increase the share of renewable energy sources. In this context, it is important to understand the decision-making behaviour of farmers regarding investments in renewable energy systems that generate energy from biomass and farmers' reactions to investment-support measures. To study this behaviour, we conduct a survey and confront farmers with a hypothetical opportunity to invest in a biogas plant. Our findings reveal that farmers have heterogeneous investment thresholds. Their investment decisions are mainly driven by capital costs and the subjective perception of the risk resulting from the investment. Other decision parameters like sustainability and non-monetary objectives that are also examined in this paper, play only minor roles. However, bounded rationality is an important factor. Moreover, the influence of an investment subsidy was analysed. Only about half of the amount of the subsidy — as expected according to normative forecast models — is reflected in an increased willingness to invest. Furthermore, farmers who have previously invested in bioenergy plants show lower investment thresholds and have stronger reactions to the subsidy. Regarding the expansion of renewable energies these findings are meaningful for policy impact analysis.

Suggested Citation

  • Reise, Christian & Musshoff, Oliver & Granoszewski, Karol & Spiller, Achim, 2012. "Which factors influence the expansion of bioenergy? An empirical study of the investment behaviours of German farmers," Ecological Economics, Elsevier, vol. 73(C), pages 133-141.
    • Handle: RePEc:eee:ecolec:v:73:y:2012:i:c:p:133-141
    DOI: 10.1016/j.ecolecon.2011.10.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800911004150
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2011.10.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Muradian, Roldan & Corbera, Esteve & Pascual, Unai & Kosoy, Nicolás & May, Peter H., 2010. "Reconciling theory and practice: An alternative conceptual framework for understanding payments for environmental services," Ecological Economics, Elsevier, vol. 69(6), pages 1202-1208, April.
    2. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6592, European Association of Agricultural Economists.
    3. Bard, Sharon K. & Barry, Peter J., 2000. "Developing A Scale For Assessing Risk Attitudes Of Agricultural Decision Makers," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 3(1), pages 1-17.
    4. Berger, Thomas, 2001. "Agent-based spatial models applied to agriculture: a simulation tool for technology diffusion, resource use changes and policy analysis," Agricultural Economics, Blackwell, vol. 25(2-3), pages 245-260, September.
    5. Brian E. Roe & David R. Just, 2009. "Internal and External Validity in Economics Research: Tradeoffs between Experiments, Field Experiments, Natural Experiments, and Field Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1266-1271.
    6. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-563, June.
    7. Starmer, Chris, 1999. "Experimental Economics: Hard Science or Wasteful Tinkering?," Economic Journal, Royal Economic Society, vol. 109(453), pages 5-15, February.
    8. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economic Reports 34081, United States Department of Agriculture, Economic Research Service.
    9. Faucheux, Sylvie & Froger, Geraldine, 1995. "Decision-making under environmental uncertainty," Ecological Economics, Elsevier, vol. 15(1), pages 29-42, October.
    10. Madlener, Reinhard & Stagl, Sigrid, 2005. "Sustainability-guided promotion of renewable electricity generation," Ecological Economics, Elsevier, vol. 53(2), pages 147-167, April.
    11. Bernhard Brümmer & Jens‐Peter Loy, 2000. "The Technical Efficiency Impact of Farm Credit Programmes: A Case Study of Northern Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(3), pages 405-418, September.
    12. Longo, Alberto & Markandya, Anil & Petrucci, Marta, 2008. "The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy," Ecological Economics, Elsevier, vol. 67(1), pages 140-152, August.
    13. Gebrezgabher, Solomie A. & Meuwissen, Miranda P.M. & Oude Lansink, Alfons G.J.M., 2010. "Costs of Producing Biogas at Dairy Farms in The Netherlands," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 1(1), pages 1-10.
    14. David R. Just & Steven Y. Wu, 2009. "Experimental Economics and the Economics of Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1382-1388.
    15. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    16. Oliver Musshoff & Norbert Hirschauer, 2011. "A behavioral economic analysis of bounded rationality in farm financing decisions," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 71(1), pages 62-83, May.
    17. Simona O. Negro & Marko P. Hekkert, 2008. "Explaining the success of emerging technologies by innovation system functioning: the case of biomass digestion in Germany," Innovation Studies Utrecht (ISU) working paper series 08-08, Utrecht University, Department of Innovation Studies, revised Feb 2008.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Romero-Castro, Noelia & Piñeiro-Chousa, Juan & Pérez-Pico, Ada, 2021. "Dealing with heterogeneity and complexity in the analysis of the willingness to invest in community renewable energy in rural areas," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    2. Chodkowska-Miszczuk, Justyna & Szymańska, Daniela, 2013. "Agricultural biogas plants—A chance for diversification of agriculture in Poland," Renewable and Sustainable Energy Reviews, Elsevier, vol. 20(C), pages 514-518.
    3. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(3).
    4. Reise, Christian & Liebe, Ulf & Musshoff, Oliver, 2012. "Design of substrate supply contracts for biogas plants," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124428, Australian Agricultural and Resource Economics Society.
    5. Steinhorst, M.P. & Bahrs, E., 2013. "Renditansprüche im Kontext gleichmäßiger Rückflüsse – Ergebnisse eines Experiments mit Stakeholdern des Agribusiness," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 48, March.
    6. Ryszard Kata & Kazimierz Cyran & Sławomir Dybka & Małgorzata Lechwar & Rafał Pitera, 2021. "Economic and Social Aspects of Using Energy from PV and Solar Installations in Farmers’ Households in the Podkarpackie Region," Energies, MDPI, vol. 14(11), pages 1-21, May.
    7. Steinhorst, Martin P. & Bahrs, Enno, 2012. "Renditeansprüche Im Kontext Gleichmäßiger Rückflüsse Ergebnisse Eines Experiments Mit Stakeholdern Des Agribusiness," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137390, German Association of Agricultural Economists (GEWISOLA).
    8. Chodkowska-Miszczuk Justyna & Kulla Marián & Novotný Ladislav, 2017. "The role of energy policy in agricultural biogas energy production in Visegrad countries," Bulletin of Geography. Socio-economic Series, Sciendo, vol. 35(35), pages 19-34, March.
    9. Rakotovao, Miravo & Godard, Lucile & Sauvée, Loïc, 2021. "Dynamique agricole d’une filière de valorisation de la biomasse : cas de la Centrale Biométhane en Vermandois," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 376(April-Jun).
    10. Syster C. Maart-Noelck & Oliver Musshoff & Moritz Maack, 2013. "The impact of price floors on farmland investments: a real options based experimental analysis," Applied Economics, Taylor & Francis Journals, vol. 45(35), pages 4872-4882, December.
    11. Masini, Andrea & Menichetti, Emanuela, 2013. "Investment decisions in the renewable energy sector: An analysis of non-financial drivers," Technological Forecasting and Social Change, Elsevier, vol. 80(3), pages 510-524.
    12. Menzel, Susanne, 2013. "Are emotions to blame? — The impact of non-analytical information processing on decision-making and implications for fostering sustainability," Ecological Economics, Elsevier, vol. 96(C), pages 71-78.
    13. Schaffer, Axel & Düvelmeyer, Claudia, 2016. "Regional drivers of on-farm energy production in Bavaria," Energy Policy, Elsevier, vol. 95(C), pages 361-369.
    14. Dahlin, Johannes & Nelles, Michael & Herbes, Carsten, 2017. "Biogas digestate management: Evaluating the attitudes and perceptions of German gardeners towards digestate-based soil amendments," Resources, Conservation & Recycling, Elsevier, vol. 118(C), pages 27-38.
    15. Bartosz Bartkowski & Stephan Bartke, 2018. "Leverage Points for Governing Agricultural Soils: A Review of Empirical Studies of European Farmers’ Decision-Making," Sustainability, MDPI, vol. 10(9), pages 1-27, September.
    16. Masayasu Asai & Takashi Hayashi & Mitasu Yamamoto, 2019. "Mental Model Analysis of Biogas Energy Perceptions and Policy Reveals Potential Constraints in a Japanese Farm Community," Sustainability, MDPI, vol. 11(1), pages 1-20, January.
    17. Stephan Vachon & Sara Hajmohammad, 2016. "Supply chain uncertainty and environmental management," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 1(1), pages 77-89, December.
    18. Sorda, G. & Sunak, Y. & Madlener, R., 2013. "An agent-based spatial simulation to evaluate the promotion of electricity from agricultural biogas plants in Germany," Ecological Economics, Elsevier, vol. 89(C), pages 43-60.
    19. Shuangjin Wang & Yuan Tian & Xiaowei Liu & Maggie Foley, 2019. "How Farmers Make Investment Decisions: Evidence from a Farmer Survey in China," Sustainability, MDPI, vol. 12(1), pages 1-19, December.
    20. Glithero, Neryssa J. & Wilson, Paul & Ramsden, Stephen J., 2013. "Prospects for arable farm uptake of Short Rotation Coppice willow and miscanthus in England," Applied Energy, Elsevier, vol. 107(C), pages 209-218.
    21. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(03), pages 1-16, August.
    22. Julio Pombo-Romero & Hans Langeveld & Marta Fernández-Redondo, 2023. "Diffusion of renewable energy technology on Spanish farms: drivers and barriers," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11769-11787, October.
    23. María J. Ruiz-Fuensanta & María-Jesús Gutiérrez-Pedrero & Miguel-Ángel Tarancón, 2019. "The Role of Regional Determinants in the Deployment of Renewable Energy in Farms. The Case of Spain," Sustainability, MDPI, vol. 11(21), pages 1-17, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(3).
    2. Reise, Christian & Liebe, Ulf & Mußhoff, Oliver, 2012. "Präferenzen von Landwirten bei der Gestaltung von Substratlieferverträgen für Biogasanlagen: Ein Choice-Experiment," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(03), pages 1-16, August.
    3. Marius Eisele & Christian Troost & Thomas Berger, 2021. "How Bayesian Are Farmers When Making Climate Adaptation Decisions? A Computer Laboratory Experiment for Parameterising Models of Expectation Formation," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(3), pages 805-828, September.
    4. Reise, Christian & Liebe, Ulf & Musshoff, Oliver, 2012. "Design of substrate supply contracts for biogas plants," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124428, Australian Agricultural and Resource Economics Society.
    5. Mußhoff, Oliver & Hirschauer, Norbert & Hengel, Philipp, 2011. "Sind Unternehmensplanspiele ein geeignetes Instrument zur Analyse begrenzter Rationalität und tatsächlichen Entscheidungsverhaltens?," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 60(3).
    6. Sorda, G. & Sunak, Y. & Madlener, R., 2013. "An agent-based spatial simulation to evaluate the promotion of electricity from agricultural biogas plants in Germany," Ecological Economics, Elsevier, vol. 89(C), pages 43-60.
    7. Mußhoff, Oliver & Hirschauer, Norbert & Hengel, Philipp, 2011. "Sind Unternehmensplanspiele ein geeignetes Instrument zur Analyse begrenzter Rationalität und tatsächlichen Entscheidungsverhaltens?," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 60(03), pages 1-16, August.
    8. Michaël Lainé, 2014. "Vers une alternative au paradigme de la rationalité ? Victoires et déboires du programme spinoziste en économie," Post-Print hal-01335618, HAL.
    9. L. Mundaca & H. Moncreiff, 2021. "New Perspectives on Green Energy Defaults," Journal of Consumer Policy, Springer, vol. 44(3), pages 357-383, September.
    10. Matteo M. Galizzi & Daniel Navarro-Martinez, 2019. "On the External Validity of Social Preference Games: A Systematic Lab-Field Study," Management Science, INFORMS, vol. 65(3), pages 976-1002, March.
    11. Noeldeke, Beatrice & Winter, Etti & Ntawuhiganayo, Elisée Bahati, 2022. "Representing human decision-making in agent-based simulation models: Agroforestry adoption in rural Rwanda," Ecological Economics, Elsevier, vol. 200(C).
    12. Robert Huber & Hang Xiong & Kevin Keller & Robert Finger, 2022. "Bridging behavioural factors and standard bio‐economic modelling in an agent‐based modelling framework," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 35-63, February.
    13. Michaël Lainé, 2014. "Vers une alternative au paradigme de la rationalité ? Victoires et déboires du programme spinoziste en économie," Post-Print hal-04264939, HAL.
    14. Maack, Moritz & Maart, Syster Christin & Musshoff, Oliver, 2012. "The Impact of Price Floors -A Real Options Based Experimental Approach-," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124328, Australian Agricultural and Resource Economics Society.
    15. Maart, Syster Christin & Musshoff, Oliver & Odening, Martin & Schade, Christian, 2011. "Closing down the Farm: An Experimental Analysis of Disinvestment Timing," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114375, European Association of Agricultural Economists.
    16. Liesbeth Colen & Sergio Gomez y Paloma & Uwe Latacz-Lohmann & Marianne Lefebvre & Raphaële Préget & Sophie S. Thoyer, 2015. "(How) can economic experiments inform EU agricultural policy?," Post-Print hal-02519194, HAL.
    17. Greiner, Romy & Patterson, Louisa & Miller, Owen, 2009. "Motivations, risk perceptions and adoption of conservation practices by farmers," Agricultural Systems, Elsevier, vol. 99(2-3), pages 86-104, February.
    18. Sachs, Julia & Meng, Yiming & Giarola, Sara & Hawkes, Adam, 2019. "An agent-based model for energy investment decisions in the residential sector," Energy, Elsevier, vol. 172(C), pages 752-768.
    19. Drakopoulos, Stavros A., 2023. "The Economics of Wellbeing and Psychology: An Historical and Methodological Viewpoint," MPRA Paper 117891, University Library of Munich, Germany.
    20. Olapeju Comfort Ogunmokun & Oluwasoye P. Mafimisebi & Demola Obembe, 2023. "Prospect theory and bank credit risk decision-making behaviour: a systematic literature review and future research agenda," SN Business & Economics, Springer, vol. 3(4), pages 1-25, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:73:y:2012:i:c:p:133-141. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.