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The Economics of Anaerobic Digester Operation on a Minnesota Dairy Farm

Author

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  • William F. Lazarus
  • Margaretha Rudstrom

Abstract

Anaerobic digesters for livestock operations are receiving attention for energy production and odor control. A farm-based digester went into operation in September 1999, on an 800-cow dairy farm in Minnesota. The goals of this paper are to analyze the contribution that a digester system can make to dairy farm profitability, and to demonstrate the impact of government and utility subsidies on profitability. Results indicate that the current selling price of electricity is not sufficient to justify building an anaerobic digester in most cases unless there is a subsidy or significant nonenergy market benefits. Copyright 2007, Oxford University Press.

Suggested Citation

  • William F. Lazarus & Margaretha Rudstrom, 2007. "The Economics of Anaerobic Digester Operation on a Minnesota Dairy Farm," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 349-364.
  • Handle: RePEc:oup:revage:v:29:y:2007:i:2:p:349-364
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    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2007.00347.x
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    Cited by:

    1. Di Corato, Luca & Moretto, Michele, 2011. "Investing in biogas: Timing, technological choice and the value of flexibility from input mix," Energy Economics, Elsevier, vol. 33(6), pages 1186-1193.
    2. Thompson, Ethan & Wang, Qingbin & Li, Minghao, 2013. "Anaerobic digester systems (ADS) for multiple dairy farms: A GIS analysis for optimal site selection," Energy Policy, Elsevier, vol. 61(C), pages 114-124.
    3. Gloy, Brent A., 2010. "Carbon Dioxide Offsets from Anaerobic Digestion of Dairy Waste," Working Papers 126750, Cornell University, Department of Applied Economics and Management.
    4. Megan Swindal & Gilbert Gillespie & Rick Welsh, 2010. "Community digester operations and dairy farmer perspectives," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 27(4), pages 461-474, December.
    5. repec:eee:agisys:v:153:y:2017:i:c:p:157-171 is not listed on IDEAS
    6. DeVuyst, Eric A. & Pryor, Scott W. & Lardy, Greg & Eide, Wallace & Wiederholt, Ron, 2011. "Cattle, ethanol, and biogas: Does closing the loop make economic sense?," Agricultural Systems, Elsevier, vol. 104(8), pages 609-614, October.
    7. Willeghems, Gwen & Buysse, Jeroen, 2016. "Changing old habits: The case of feeding patterns in anaerobic digesters," Renewable Energy, Elsevier, vol. 92(C), pages 212-221.
    8. Eidman, Vernon R., 2005. "Agriculture's Role in Energy Production: Current Levels and Future Prospects," Energy from Agriculture, Energy from Agriculture: New Technologies, Innovative Programs and Success Stories, December 14-15, 2005, St. Louis, Missouri 7628, Farm Foundation.
    9. Anderson, Robert C. & Hilborn, Don & Weersink, Alfons, 2013. "An economic and functional tool for assessing the financial feasibility of farm-based anaerobic digesters," Renewable Energy, Elsevier, vol. 51(C), pages 85-92.
    10. Cowley, Cortney & Brorsen, B. Wade & Hamilton, Doug, 2014. "Economic Feasibility of Anaerobic Digesters with Swine Operations," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170621, Agricultural and Applied Economics Association.
    11. Namuli, R. & Pillay, P. & Jaumard, B. & Laflamme, C.B., 2013. "Threshold herd size for commercial viability of biomass waste to energy conversion systems on rural farms," Applied Energy, Elsevier, vol. 108(C), pages 308-322.
    12. Key, Nigel & Sneeringer, Stacy, 2012. "Carbon Emissions, Renewable Electricity, and Profits: Comparing Policies to Promote Anaerobic Digesters on Dairies," Agricultural and Resource Economics Review, Cambridge University Press, vol. 41(02), pages 139-157, August.
    13. Kay Camarillo, Mary & Stringfellow, William T. & Jue, Michael B. & Hanlon, Jeremy S., 2012. "Economic sustainability of a biomass energy project located at a dairy in California, USA," Energy Policy, Elsevier, vol. 48(C), pages 790-798.
    14. White, Andrew J. & Kirk, Donald W. & Graydon, John W., 2011. "Analysis of small-scale biogas utilization systems on Ontario cattle farms," Renewable Energy, Elsevier, vol. 36(3), pages 1019-1025.
    15. Denley, Jonathan & Herndon, Cary W., Jr., 2008. "Financial Analysis of Implementing an Anaerobic Digester and Free Stall Barn System on a Mississippi Dairy Farm," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6786, Southern Agricultural Economics Association.
    16. Siegmeier, Torsten & Blumenstein, Benjamin & Möller, Detlev, 2015. "Farm biogas production in organic agriculture: System implications," Agricultural Systems, Elsevier, vol. 139(C), pages 196-209.
    17. Ciliberti, Carlo & Jordaan, Sarah M. & Smith, Stephen V. & Spatari, Sabrina, 2016. "A life cycle perspective on land use and project economics of electricity from wind and anaerobic digestion," Energy Policy, Elsevier, vol. 89(C), pages 52-63.
    18. Robert C. Anderson & Alfons Weersink, 2014. "A Real Options Approach for the Investment Decisions of a Farm-Based Anaerobic Digester," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(1), pages 69-87, March.
    19. Bachewe, Fantu & Lazarus, William F. & Goodrich, Philip & Drewitz, Matt & Balk, Becky, 2008. "Review of the Literature on the Economics of Central Anaerobic Digesters," Staff Papers 44116, University of Minnesota, Department of Applied Economics.

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