Private and Public Benefits of Innovative Mix Crop Systems Intended for Biofuels Production in Eastern South Dakota

The overall objective of this research is to develop an economic analysis of different crop mix biofuels programs for meeting ethanol and sustainability demands. Primary data for this research come from South Dakota State University field experiments on_ farms located in east-central South Dakota. This includes 4 years of field data, each with three cropping systems (mixed grass, switchgrass, com), two residue treatments (no removal, removal of biomass), and three landscape positions (back slope, crest, foot slope). From these data a representative farm model and five scenarios are developed to conduct a full budget analysis over a 12 year period. Public benefits are evaluated by allocating a dollar value to three environmental variables; carbon sequestration, reduction of sedimentation, and pheasant production. Annualized net returns are determined and then simulation is used to run each budget though stochastic simulation, stochastic dominance with respect to a function, and stochastic efficiency with respect to a function. Two simulations are compared for each scenario, one with only the annualized net returns determined from the capital budget, and the second one including the environmental benefits. Results indicate that: (1) the conventional continuous corn scenario has the highest returns to management and labor over the four years of field plots, and also over the 12 years budget, (2) the difference in net returns is due to the differences in gross returns, and mainly to yields and output prices, (3) carbon sequestration represents 80% of the environmental benefits calculated over the 12 year period, and (4) the addition of ecosystem services values does not seem to provide enough incentives to convince farmers to convert their com production to grass production