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Economics Research International
Volume 2013 (2013), Article ID 138485, 14 pages
http://dx.doi.org/10.1155/2013/138485
Research Article

Economic Impacts of Using Switchgrass as a Feedstock for Ethanol Production: A Case Study Located in East Tennessee

1Department of Agricultural & Resource Economics, University of Tennessee, Knoxville, TN 37996-4518, USA
2Emerging Market Division, Strategy, Policy and Review Department, International Monetary Fund, Washington, DC, USA

Received 8 September 2012; Revised 8 December 2012; Accepted 31 December 2012

Academic Editor: Silvia Secchi

Copyright © 2013 Burton C. English et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

One of the major motivations to establish a biobased energy sector in the United States is to promote economic development in the rural areas of the nation. This study estimated the economic impact of investing and operating a switchgrass-based ethanol plant in East Tennessee. Applying a spatially oriented mixed-integer mathematical programming model, we first determined the location of biorefinery, feedstock draw area, and the resources used in various feedstock supply systems by minimizing the total plant gate cost of feedstock. Based on the model output, an input-output model was utilized to determine the total economic impact, including direct, indirect, and induced effects of feedstock investment and annual production in the study region. Moreover, the economic impact of ethanol plant investment and annual conversion operation was analyzed. Results suggest that the total annual expenditures in an unprotected large round bale system generated a total $92.5 million in economic output within the 13 counties of East Tennessee. In addition, an estimated $234 million in overall economic output was generated through the operation of the biorefinery. This research showed that the least-cost configuration of the feedstock supply chain influenced the levels and types of economic impact of biorefinery.