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3. Appropriate studies may not be published and are hard to access;
4. Reporting in the studies found may not give one enough information to allow
transferring the information with appropriate adjustments;
5. Quality of the other studies may be difficult to assess;
6. Extrapolation beyond what is covered in the initial study is questionable;
7. The accuracy of the transferred item is limited by that of the item itself; and
8. Estimates may be out of date.
5.2.8 Induced Innovation
New technologies are likely to evolve as input or product prices change. This
involves induced innovation. The theory indicates that when the price of a particular input used in production increases or falls significantly relative to the price of
other inputs, society will innovate by developing technologies that reduce or
increases usage of that particular factor.
In a Nexus setting, an example is that when labor prices dramatically increase
due to scarcity, society will invent ways of substituting other factors for labor, like
going to the more capital-intensive harvesting practices. Similarly, if a fee is charged
for GHG emissions, this will induce industry and others to develop strategies that
produce goods with less emissions.
Induced innovation has also been observed in corn to ethanol conversions. In
particular, when processing corn into ethanol, a by-product called distillers dry
grains (DDGS) is produced. The rise in biofuel production resulted in a large
increase in DDGS production and a fall in price. DDGS were initially only used
in wet form (up to 70% moisture) and, due to transport costs, usage was limited to
cattle feeding near the refinery. Eventually, innovation was induced, which transformed the wet DDGS into more valuable forms. Today high valued oil is extracted
from DDGS, and the remainder is mixed with low-value corn stalks for animal
feed. This product can now be processed into dry pellets, allowing long-distance
shipping.
5.2.9 Adding Consideration of Limits
All strategies have factors which can limit their adoption. Such limits involve the
following:
1. Financial capital availability, such as capital constraints and lending practices.
2. Human education and abilities, including sheer labor availability, labor skill,
leadership capabilities, and educational attainment.
3. Resources available, including regional land, water, equipment, and infrastructure
resources.
B. A. McCarl and Y. Yang
3. Appropriate studies may not be published and are hard to access;
4. Reporting in the studies found may not give one enough information to allow
transferring the information with appropriate adjustments;
5. Quality of the other studies may be difficult to assess;
6. Extrapolation beyond what is covered in the initial study is questionable;
7. The accuracy of the transferred item is limited by that of the item itself; and
8. Estimates may be out of date.
5.2.8 Induced Innovation
New technologies are likely to evolve as input or product prices change. This
involves induced innovation. The theory indicates that when the price of a particular input used in production increases or falls significantly relative to the price of
other inputs, society will innovate by developing technologies that reduce or
increases usage of that particular factor.
In a Nexus setting, an example is that when labor prices dramatically increase
due to scarcity, society will invent ways of substituting other factors for labor, like
going to the more capital-intensive harvesting practices. Similarly, if a fee is charged
for GHG emissions, this will induce industry and others to develop strategies that
produce goods with less emissions.
Induced innovation has also been observed in corn to ethanol conversions. In
particular, when processing corn into ethanol, a by-product called distillers dry
grains (DDGS) is produced. The rise in biofuel production resulted in a large
increase in DDGS production and a fall in price. DDGS were initially only used
in wet form (up to 70% moisture) and, due to transport costs, usage was limited to
cattle feeding near the refinery. Eventually, innovation was induced, which transformed the wet DDGS into more valuable forms. Today high valued oil is extracted
from DDGS, and the remainder is mixed with low-value corn stalks for animal
feed. This product can now be processed into dry pellets, allowing long-distance
shipping.
5.2.9 Adding Consideration of Limits
All strategies have factors which can limit their adoption. Such limits involve the
following:
1. Financial capital availability, such as capital constraints and lending practices.
2. Human education and abilities, including sheer labor availability, labor skill,
leadership capabilities, and educational attainment.
3. Resources available, including regional land, water, equipment, and infrastructure
resources.
B. A. McCarl and Y. Yang