Triggering collective action for bio-energy supply chain through contract schemes

Abstract

This paper discusses contractual features to manage and coordinate a hypothetical bio-energy supply chain. The present study focuses on farmers operating in two Regions of Italy, namely Sicily and Campania, somewhat representative of areas with high potential of investments in new bioenergy supply value chain. Farmers were asked to choose whether to participate or not in a collective investment regulated by contract schemes. Monetary trade-offs were then computed among contract attributes. A specific questionnaire was submitted to a sample of farmers selected on the basis of their potential capability of investments. A stated preference modelling approach was implemented so that farmers could make a choice between alternative contracts reporting varying attribute levels. If energy-producing companies are paying attention to biofuel production aiming at a diversification of their activities, results show that farmers' participation needs to be managed through contracts that take care of investment length, warranty on investment return, and risk management.