Energy crop supply in France: a min-max regret approach

Abstract

This paper attempts to estimate energy crop supply using a linear programming (LP) model comprising hundreds of representative farms of the arable cropping sector in France. In order to enhance the predictive ability of such a model and to provide an analytical tool useful to policy makers, interval linear programming is used to formalize bounded rationality conditions. In the presence of uncertainty related to yields and prices, it is assumed that the farmer may adopt a min-max regret (MMR) criterion as an alternative to the classic profit maximization criterion. Recent advances in operational research are exploited, permitting an efficient implementation of the min-max criterion within an LP model. Model validation based on observed activity levels suggests that about 40% of the farms adopt the MMR criterion. Energy crop supply curves generated by the MMR model prove to be upward-sloped, like classic LP supply curves.

Keywords:

• interval linear programming
• min-max regret
• energy crops
• France

Acknowledgements

We thank the editor and two anonymous referees for valuable comments, John Stedman for proofreading the paper as well as the participants of the August 2005 European Association of Agricultural Economists Congress in Copenhagen for useful remarks.