Risk Assessment in Economic Feasibility Analysis: The Case of Ethanol Production in Texas

Abstract

The objective of this study is to demonstrate the benefits of quantifying the economic viability of a proposed agribusiness under risk relative to a feasibility study which ignores risk. To achieve this objective, the economic viability of a 50 MMGPY ethanol facility in Texas is analyzed over a 10-year period in two ways: with no risk and with historical risk for prices and costs.