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

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Author Info

  • 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 The superseded enterprise, establishment grant level, yield level, price level, and length of production lifespan are shown to significantly influence the returns generated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.

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File URL: http://www.agresearch.teagasc.ie/rerc/downloads/workingpapers/08wpre08.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by Rural Economy and Development Programme,Teagasc in its series Working Papers with number 0808.

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Length: 22 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:tea:wpaper:0808

Contact details of provider:
Postal: Athenry, Co Galway
Phone: +353 91 845845
Fax: +353 91 845847
Web page: http://www.agresearch.teagasc.ie/rerc/
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Related research

Keywords: Willow; Miscanthus; Discounted Cash Flow; Sensitivity Analysis;

References

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  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.
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Cited by:
  1. 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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