| dc.description.abstract | This dissertation consists of three stand-alone studies concerning applications of optimization modeling in agricultural policy evaluation and applications of copula when considering the tail risk in the energy commodity markets. The first study (Chapter II) extends a mathematical optimization model, FASOMGHG, in evaluating economic and environmental effects from fulfilling the renewable fuel standard (RFS), which mandates increasing amounts of ethanol produced from biomass. As the increase in ethanol production from biomass may lead to land competition between traditional food crops and energy feedstocks, one potential solution to relieve the competition on land resources is to grow cellulosic feedstocks on marginal land. The results from this study suggest that growing energy crops on marginal land could help alleviate some of the pressure on land competition between traditional and energy crops, but could potentially lead to higher GHG emission, soil erosion, and nutrient runoffs. The second study (Chapter III) examines the usefulness of energy commodity exchange-traded funds (ETFs) in dealing with tail risk in crude oil, gasoline, heating oil, and natural gas markets by analyzing the out-of-sample hedging effectiveness of ETFs and comparing their performance with those of the futures counterparts.
The empirical distribution method and kernel copula method are applied to estimate the minimum-Value at Risk (VaR) and minimum-Expected Shortfall (ES) hedge ratios for both long and short hedgers. The empirical results indicate that the futures contract is a better hedging instrument for hedging tail risk in the crude oil and heating oil markets whereas the ETF provides better downside risk protection in the gasoline and natural gas markets. The third study (Chapter IV) analyzes the welfare and land uses associated with an implementation of a Thai crop-zoning policy by constructing a Thai agricultural sector model. The results indicate that the crop-zoning policy has the potential to reduce the government spending incurred from the ongoing price-support program and could lead to increases in production for primary rice, maize, and cassava. Furthermore, the results suggest that the policy would reduce secondary rice and sugarcane production. This coincides with the government’s objective of discouraging farmers from growing too much rice that was a result of the government’s rice price-support program. | |
