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Incentives Matter: Assessing Biofuel Policies in the South

Published online by Cambridge University Press:  26 January 2015

J. Corey Miller  and
Keith H. Coble
J. Corey Miller
Affiliation:
Department of Agricultural Economics, Mississippi State University, Mississippi State, Mississippi
Keith H. Coble
Affiliation:
Department of Agricultural Economics, Mississippi State University, Mississippi State, Mississippi
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Abstract

As a result of the increase in the real cost of fossil fuel-based energy in recent years, federal and state governments have taken a more active role in energy policy by creating incentives to develop alternative sources of energy, including biofuels. However, policymakers often become focused on the specific type of energy and not the energy services consumers ultimately value. The lack of recognition of energy as a commodity results in policies that ignore the characteristics of the associated markets: easy entry and exit, no barriers to entry, and sensitivity to changes in supply and demand. Consequently, energy industries may fail to arise because entrepreneurs must be able to account for all costs and earn—at a minimum—a competitive return on the investment. This article evaluates the options available to policymakers related to biofuels, which are of particular concern to the South, and includes an assessment of the knowledge base on which policy decisions are made.

Keywords

alternative energybiofuelsenergy policyQ41Q42Q48
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 43 , Issue 3 , August 2011 , pp. 413 - 421
Copyright
Copyright © Southern Agricultural Economics Association 2011

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