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Economic Effects of Biofuel Production on States and Rural Communities

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  • Parcell, Joe L.
  • Westhoff, Patrick

Abstract

This study summarizes research on farm-, local-, regional-, and macro-level economic effects of ethanol production. Given current production levels, the ethanol production industry annually employees approximately 3,500 workers, pays out nearly $132 million in worker salaries, generates over $110 million in local taxes, and takes in some $2 billion in government incentive payments. Projections for a 60 million gallon per year ethanol plant indicate an annual increase in corn usage of 21 million bushels, a one-time capitalization of $75 million, an increase in local corn prices of between $0.06/bushel and $0.12/bushel, a 54 direct and a 210 indirect jobs created, an increase in local tax revenues of $1.2 million, a decrease in federal commodity program outlays of $30 million, and an increase in ethanol production incentives (federal only) of around $30.5 million.

Suggested Citation

  • Parcell, Joe L. & Westhoff, Patrick, 2006. "Economic Effects of Biofuel Production on States and Rural Communities," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(2), pages 377-387, August.
    • Handle: RePEc:cup:jagaec:v:38:y:2006:i:02:p:377-387_02
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    References listed on IDEAS

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    1. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
    2. Swenson, David A., 2005. "Model Economic Analyses: An Economic Impact Assessment of an Ethanol Production Facility in Iowa," Staff General Research Papers Archive 12226, Iowa State University, Department of Economics.
    3. Gardner, Bruce L., 2003. "Fuel Ethanol Subsidies And Farm Price Support: Boon Or Boondoggle?," Working Papers 28599, University of Maryland, Department of Agricultural and Resource Economics.
    4. Fort, Christian & Parcell, Joe, 2006. "A Case Study on the Impact of an Ethanol Plant on Corn Price," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2006, pages 1-5.
    5. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
    6. Outlaw, Joe L. & Anderson, David P. & Klose, Steven L. & Richardson, James W. & Herbst, Brian K. & Waller, Mark L. & Raulston, J. Marc & Sneary, Shannon L. & Gill, Robert Chope, II, 2003. "An Economic Examination of Potential Ethanol Production in Texas," Working Papers 42707, Texas A&M University, Agricultural and Food Policy Center.
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    Cited by:

    1. Kelly Nelson & Peter Motavalli & Randall Smoot, 2009. "Utility of Dried Distillers Grain as a Fertilizer Source for Corn," Journal of Agricultural Science, Canadian Center of Science and Education, vol. 1(1), pages 1-3, May.
    2. Kalim Shah & Jorge Rivera, 2013. "Do industry associations influence corporate environmentalism in developing countries? Evidence from Trinidad and Tobago," Policy Sciences, Springer;Society of Policy Sciences, vol. 46(1), pages 39-62, March.
    3. Lambert, Dayton M. & Wilcox, Michael D. & English, Alicia & Stewart, Lance A., 2008. "Ethanol Plant Location Determinants and County Comparative Advantage," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), pages 1-19, April.
    4. Guerrero, Bridget L. & Johnson, Jeffrey W. & Amosson, Stephen H. & Johnson, Phillip N. & Segarra, Eduardo & Surles, James, 2011. "Ethanol Production in the Southern High Plains of Texas: Impacts on the Economy and Scarce Water Resources," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 41(01), pages 1-11.
    5. Anil Rupasingha, 2009. "Value-Added Agricultural Enterprises and Local Economic Performance," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 511-534.
    6. Ji, Xi & Long, Xianling, 2016. "A review of the ecological and socioeconomic effects of biofuel and energy policy recommendations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 41-52.
    7. Henderson, Jason R. & Gloy, Brent A., 2008. "The Impact of Ethanol Plants on Land Values in the Great Plains," 2007 Agricultural and Rural Finance Markets in Transition, October 4-5, 2007, St. Louis, Missouri 48148, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    8. Westbrook, Jessica & Barter, Garrett E. & Manley, Dawn K. & West, Todd H., 2014. "A parametric analysis of future ethanol use in the light-duty transportation sector: Can the US meet its Renewable Fuel Standard goals without an enforcement mechanism?," Energy Policy, Elsevier, vol. 65(C), pages 419-431.
    9. Brent A. Gloy & Jason Henderson, 2008. "The impact of ethanol plants on cropland values in the Great Plains," Regional Research Working Paper RRWP 08-01, Federal Reserve Bank of Kansas City.

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