Economic impacts of woody biomass utilization for bioenergy in Mississippi

This study examined the economic impacts of woody biomass utilization for bioenergy conversion in Mississippi. Analysis of economic impacts was organized around three groups of events: (1) recovery of logging and thinning residues, (2) electricity generation from cofiring systems, and (3) construction and operation of biofuel facilities. Input–output analysis was used to simulate economic impacts in terms of gross output, value-added, and employment. Cost information and woody biomass inventories were obtained from the literature, a statewide forest inventory, and Impact Analysis for Planning (IMPLAN) database. Results showed that the single activity of recovery of all available logging and thinning residues would create a considerable number of jobs and stimulate the rural economy with more resources coming to local industries and households. Due to construction and operation costs, economic impacts of biofuels were higher than biopower. However, biofuels reported the lowest employment and value-added multipliers of all three groups. This may be due, in part, to equipment and materials manufactured outside of the state. It is expected that as technology, equipment, and human capital were gradually attracted to the area, the multiplicative effect and expenditure retention should increase. These results can help decision-makers evaluate Mississippi’s potential for future bioenergy development. Concerns over energy security, environmental health, and economic development have generated increasing interest in the search for alternative sources of fuel supplies (Bartuska 2006). Woody biomass, the fibrous and generally inedible portions of stems and branches of plants, is one alternative energy supply source because it is renewable, abundant, and can reduce greenhouse gas emissions (Hamelinck et al. 2005, USDE 2006, Solomon et al. 2007). Cellulose and hemicellulose, the main compounds of woody biomass, are made of energy-rich sugars that can be converted to ethanol through hydrolysis and fermentation procedures (USDE 2006). Alternatively, biomass can be used as a feedstock to produce electricity replacing fossil fuel-fired power plants. Woody biomass for bioenergy conversion is obtained from a diverse and widespread resource base which includes lowvalue forest products such as logging residues and thinning of overstocked stands, among other sources (Perlack et al. 2005). Frequently, this material is left on-site, piled, and burned at additional cost, or left on-site for decomposition and incorporation into soil nutrients. As pressure for green energy develops, there has been a strong interest in utilizing this material for bioenergy conversion. A significant number of studies have evaluated the potential of woody biomass for fuels, electricity, and heat generation (e.g., Giampietro et al. 1997, Graf and Koehler 2000, CEC 2001, Solomon et al. 2007). A The authors are, respectively, Postdoctoral Research Associate, Associate Professor, Professor, Assistant Professor, and Professor, College of Forest Resources, Mississippi State Univ., Mississippi State, Mississippi ([email protected], [email protected]. edu, [email protected], [email protected], sgrado@cfr. msstate.edu). The authors would like to thank the Sustainable Energy Research Center and Forest and Wildlife Research Center (FWRC) at Mississippi State Univ. for funding this project. We are grateful to Dr. Anwar Hussain for his invaluable help in manuscript review and IMPLAN simulations. Preliminary results were presented at the 2008 SOFEW conference at Savannah, Georgia. We thank attendees for insightful comments. This manuscript has been registered as FO370 by the FWRC, Mississippi State Univ. This paper was received for publication in May 2008. Article No. 10487. ©Forest Products Society 2008. Forest Prod. J. 58(11):75–83. FOREST PRODUCTS JOURNAL VOL. 58, NO. 11 75 question remains about the economic impacts that recovery of logging residues for use as a feedstock to bioenergy would have on a state’s economy. These impacts, generally estimated in terms of expenditures, taxes, and employment, have not been well-documented due to the incipient market development and low-scale commercial production (CEC 2001, REMI 2006, Gan and Smith 2007). The study objectives were to describe the main economic impacts of developing bioenergy and to specifically quantify the economic impacts on Mississippi’s economy of logging residue recovery, electricity generation from woody biomass, and construction and operation of a biofuel facility. The paper begins with a brief review of basic concepts of bioenergy and input-output models, which are the basis for economic impacts simulations. It then presents a case study using data for the state of Mississippi to analyze preliminary economic impacts and closes with a summary and conclusions.