Regional Economic Impacts of Biochemical and Pyrolysis Biofuel Production in the Southeastern US: A Systems Modeling Approach

Abstract

This research developed a regional economic model to estimate the ex-ante impacts of biofuel production on the economy of the southeastern United States. The analysis focuses on biofuels produced using biochemical and pyrolysis technologies. The primary feedstocks considered include switchgrass ( Panicum virgatum ) and poplar ( Populus spp.). The economic analysis modifies the Impact Analysis for Planning (IMPLAN) input-output model to determine the macroeconomic impacts of a mature industry producing biofuels using these technologies and feedstocks. Optimal facility locations are determined using a site locator model that minimizes the costs of procuring feedstock. Given a change in the land use caused by industry demand for feedstock, shocks to the farm economy are forward-linked to sectors supporting biofuel production. Key economic indicators analyzed include changes in employment and value added to the economy. System output is analyzed using a nonparametric bootstrap procedure to simulate the distributions of the impacts. The null hypothesis is that the economic impacts following the introduction of the industries are not different from baseline economic activity. Findings suggest that the net changes in employment and value added to the regional economy are positive, but modest. For example, job increases attributed to the advancement of the industries analyzed range between 0.18% and 0.95%. Total value added to the regional economy ranged between 0.15% and 0.83%.