Potential Economic Impacts of Allocating More Land for Bioenergy Biomass Production in Virginia

Abstract

The growing attention to renewable energy and rural development has created greater demand for production of biomass feedstock for bioenergy. However, forest growth rates and the amount of land in most existing forests may not be sufficient to sustainably supply the forest biomass required to support existing forest products industries and the expanding bioenergy industry. Additionally, concerns about agricultural land use competition have dampened expansion of biomass production on agricultural land base. One of the ways to meet the growing forest biomass feedstock demand for bioenergy production is by allocating currently marginal non-forested land for growing bioenergy feedstocks. In Virginia, about 80% of forestland is under nonindustrial private forest ownership. The land use allocation decisions of these private owners are critical for the supply of the forest biomass feedstock to support bioenergy production. We apply a computable general equilibrium model to assess the economy-wide impacts of forestland owners’ willingness to plant pine on non-forested land for woody bioenergy in Virginia. We consider three counterfactual scenarios of biomass feedstock supply increase as intermediate demand for bioenergy production based on forestland owners’ willingness to accept biomass bid prices to set aside more non-forested land for biomass production in Virginia under general equilibrium conditions. Overall, the results show an increase in social welfare and household utility but a marginal decline in GDP. However, increased demand of biomass from logging sector depressed the manufacturing sector (the wood manufacturing sub-sector particularly), which also relies on the logging sector for its intermediate inputs. Results from this study provide insights into the bioenergy land use competition debate, and pathways towards sustainable bioenergy feedstock supply.