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Economic Impacts of Establishing Short Rotation Woody Crops to Support Energy Production in Minnesota

William Lazarus and Douglas G. Tiffany

No 46869, Staff Papers from University of Minnesota, Department of Applied Economics

Abstract: The utilization of short rotation woody crops (SRWC) to produce wood on marginal crop and pasture land could greatly enhance the production of wood for various uses in Minnesota with utilization for energy being of current interest. SRWC involves the more intensive application of inputs on more valuable land than naturally regenerated forests that currently supply the bulk of the forest products industry in Minnesota. Breeding efforts to improve productivity and disease resistance in hybrid poplar species are making the technology of SRWC competitive with agricultural uses of marginal land. This study models the economic impact of a potential shift in use of the land resource by replacing production of hay and pasture that provides feed for cow-calf beef operations in northwest and west central Minnesota with SRWC. Regional economic impacts of such a shift are measured with established input-output techniques, using the software tool IMPLAN. To complete this analysis, the magnitudes and sectors of expenditures needed to produce either beef calves or hybrid poplar plantations were compared using farm records and hybrid poplar budgets. Construction of a $175 million energy conversion facility capable of making 44 million gallons of ethanol and 7.6 million gallons of mixed alcohols by catalytic means following gasification would result in creation of 2,412 jobs during the construction period, with $158 million in value-added (mainly employee compensation and business taxes). Operation of the facility after the end of construction, if supported by 200,000 acres of hybrid poplar production, would not change the number of jobs very much compared with using the land for cow-calf operations. However, the SRWC-related jobs would likely be at higher average salary levels and business tax collections would be higher, for a value-added increase of $80 million annually. In addition to greater wood supplies to support the forest products industry, logging pressures may be reduced on public forest land as a consequence of greater deployment of technology and methods that can result in production per acre that is eight to ten-fold greater than naturally regenerated forests.

Keywords: Resource; /Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 26
Date: 2009-01
New Economics Papers: this item is included in nep-agr and nep-ene
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DOI: 10.22004/ag.econ.46869

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