Willingness to supply biomass for bioenergy production: A random parameter truncated analysis

- Results are presented on data from two biomass producer surveys collected from mid Missouri and southern Illinois.
- Price effects on willingness to supply are shown, while controlling for farmer, farm and organizational characteristics.
- A series of random parameter truncated regressions are analyze willingness to supply results under three price scenarios.
- Marginal effects show farms increase their WTS by 1.6 to 2.4 % per dollar increase in price. This implies elastic supply.
- Commercial developers and policy makers could expect modest supply responses for each dollar increase in price.

This paper presents research results based on data from two biomass producer surveys collected from mid Missouri and southern Illinois. A series of random parameter truncated regressions are utilized to analyze willingness to supply results under three price scenarios. Marginal effects suggest that producers will supply an additional 1.6 to 2.4% of their biomass production for each one dollar increase in price and that supply for three types of biomass (stover, straw and hay) is elastic. This means commercial developers that are interested in pricing biomass and policy makers considering subsidies could expect modest supply responses for each dollar increase in price.