Three essays on the impact of evolving agricultural policy and climate change on long-run grain market projections and U.S. bio-diesel market
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[EMBARGOED UNTIL 12/01/2025] This first essay investigates the complex price relationships among soybean oil, biodiesel, diesel, and highway diesel, incorporating the impact of D4 RINs. Soybean oil is the primary feedstock for U.S. biomass-based diesel production, accounting for 48 percent of total output in 2021, with its use as a biodiesel feedstock increasing eightfold since 2010. We employ a cointegration model and a vector error correction model (VECM) to examine a long-run and short-run dynamics, estimating the size of the interactions utilizing weekly data from 2007 to 2022. Our findings reveal a cointegrating relationship between soybean oil and consumer fuel (diesel, biodiesel, and highway diesel) prices, consistent with expected input-output expectation. However, the lack of a cointegrating relationship between biodiesel and diesel prices underscore the complex of market interactions. Short- run analysis shows that highway diesel prices are primarily influenced by their own past prices and diesel prices, with limited impact from biodiesel-related factors. Furthermore, we find evidence of a complementary relationship between biodiesel and diesel. These results provide valuable insights for understanding market dynamics, informing policy decisions, and managing price volatility within the energy and agricultural sectors. The second essay argues that long-run projections are crucial for understanding climate change, food security, and agricultural productivity. However, these projections often overlook recently identified patterns in how agricultural policies evolve as countries develop. The grain market projections presented here take these policy patterns into account, as well as the risks of more significant trade policy disruptions. The results demonstrate that evolving agricultural policies affect long-run price and quantity levels and influence market impacts when key assumptions are changed. Results show the importance of consistently evolving agricultural policy in long-run market projection and assessment. The third essay examines the impact of long-run climate trends and short-run weather variability on U.S. grain yields, with a particular focus on corn, to highlight how each factor uniquely affects yield stability and market resilience. Using a partial equilibrium model and IPCC AR5 projections, we assess how gradual climate shifts offer some predictability for adaptation, while rising unexpected weather shocks introduce significant uncertainty, challenging year-to-year grain supply stability. The results indicate that yield improvements due to a time trend may offset declines resulting from long-run climate trends. However, these gains are moderated under high-emission scenarios, where extreme weather events become increasingly frequent. This underscores the need for integrated adaptation strategies--incorporating both immediate responses to short-run variability and longer-term agricultural innovation aimed at enhancing climate resilience. By distinguishing between persistent climate trends and unpredictable shocks, this study addresses a gap in the literature, contributing to more reliable yield projections and informing strategies for agricultural resilience.
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Ph. D.