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A Discounted Cash Flow Analysis of Financial Returns from Biomass Crops in Ireland

Author

Listed:
  • Darragh Clancy

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • James Breen

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • A.M Butler

    (School of Agriculture, Food Science and Veterinary Medicine, University College Dublin)

  • Fiona Thorne

    (Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland)

  • M. Wallace

    (School of Agriculture, Food Science and Veterinary Medicine, University College Dublin)

Abstract

The economic case for the production of biomass crops can only be established through a comprehensive analysis of the potential costs and returns of these crops. Using data from Ireland, this paper provides a Discounted Cash Flow (DCF) investment analysis for two of the most common biomass crops, willow and miscanthus. We find that miscanthus consistently generates investment returns greater than willow. Sensitivity analysis is used to examine the effects on the estimates of variation in key physical and financial parameters. The superseded enterprise, establishment grant level, yield level, price level, and length of production lifespan are shown to significantly influence the returns generated by investments in willow and miscanthus.

Suggested Citation

  • Darragh Clancy & James Breen & A.M Butler & Fiona Thorne & M. Wallace, 2008. "A Discounted Cash Flow Analysis of Financial Returns from Biomass Crops in Ireland," Working Papers 0808, Rural Economy and Development Programme,Teagasc.
    • Handle: RePEc:tea:wpaper:0808
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    References listed on IDEAS

    as
    1. Ingersoll, Jonathan E, Jr & Ross, Stephen A, 1992. "Waiting to Invest: Investment and Uncertainty," The Journal of Business, University of Chicago Press, vol. 65(1), pages 1-29, January.
    2. Isabelle Huault & V. Perret & S. Charreire-Petit, 2007. "Management," Post-Print halshs-00337676, HAL.
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    Cited by:

    1. Clancy, D. & Breen, J.P. & Thorne, F. & Wallace, M., 2012. "The influence of a Renewable Energy Feed in Tariff on the decision to produce biomass crops in Ireland," Energy Policy, Elsevier, vol. 41(C), pages 412-421.
    2. Darragh Clancy & A. Kazukauskas & C. Newman & Fiona Thorne, 2009. "An investigation of the level of structural change in the agrifood sector of Ireland, Denmark and the Netherlands," Working Papers 0915, Rural Economy and Development Programme,Teagasc.

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