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The Economics of Dairy Anaerobic Digestion with Coproduct Marketing

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  • Clark P. Bishop
  • C. Richard Shumway

Abstract

Increasing national focus on renewable energy has prompted a reappearance of anaerobic digestion technology installations on dairy farms. The focus of this study is on an operational digester in Washington State. Using the first two years of physical and financial data from the operational digester, a base scenario is constructed. The analysis focuses on the impact of developing various coproduct markets on the digestion system’s feasibility. The coproduct markets analyzed include electricity, digested fiber, tipping fees, and carbon credits. The results of the economic analysis show that tipping fees and electricity are key revenue sources for the digester.

Suggested Citation

  • Clark P. Bishop & C. Richard Shumway, 2009. "The Economics of Dairy Anaerobic Digestion with Coproduct Marketing," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 394-410.
    • Handle: RePEc:oup:revage:v:31:y:2009:i:3:p:394-410.
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    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2009.01445.x
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    1. 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.
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    Cited by:

    1. Njuki, Eric & Bravo-Ureta, Boris, 2014. "A Bayesian Approach to Analyzing the Economic Costs of Environmental Regulation in U.S. Dairy Farming," Working Papers 33, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    2. Benavidez, Justin & Thayer, Anastasia W., 2018. "Poo Power: Revisiting Energy Generation from Biogas on Dairies in Texas," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266636, Southern Agricultural Economics Association.
    3. Usack, J.G. & Gerber Van Doren, L. & Posmanik, R. & Labatut, R.A. & Tester, J.W. & Angenent, L.T., 2018. "An evaluation of anaerobic co-digestion implementation on New York State dairy farms using an environmental and economic life-cycle framework," Applied Energy, Elsevier, vol. 211(C), pages 28-40.
    4. Kabyanga, Moris & Balana, Bedru B. & Mugisha, Johnny & Walekhwa, Peter N. & Smith, Jo & Glenk, Klaus, 2018. "Economic potential of flexible balloon biogas digester among smallholder farmers: A case study from Uganda," Renewable Energy, Elsevier, vol. 120(C), pages 392-400.
    5. Li, Xue & Mupondwa, Edmund, 2018. "Commercial feasibility of an integrated closed-loop ethanol-feedlot-biodigester system based on triticale feedstock in Canadian Prairies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 401-413.
    6. Dalke, Rachel & Demro, Delaney & Khalid, Yusra & Wu, Haoran & Urgun-Demirtas, Meltem, 2021. "Current status of anaerobic digestion of food waste in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    7. Rojas-Downing, M. Melissa & Harrigan, Timothy & Nejadhashemi, A. Pouyan, 2017. "Resource use and economic impacts in the transition from small confinement to pasture-based dairies," Agricultural Systems, Elsevier, vol. 153(C), pages 157-171.
    8. 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.
    9. 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.
    10. Sean O’Connor & Ehiaze Ehimen & Suresh C. Pillai & Gary Lyons & John Bartlett, 2020. "Economic and Environmental Analysis of Small-Scale Anaerobic Digestion Plants on Irish Dairy Farms," Energies, MDPI, vol. 13(3), pages 1-20, February.
    11. Cowley, Cortney & Brorsen, B. Wade, 2018. "Anaerobic Digester Production and Cost Functions," Ecological Economics, Elsevier, vol. 152(C), pages 347-357.
    12. 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.
    13. 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.
    14. 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(2), pages 139-157, August.
    15. 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.
    16. Qingbin Wang & Laurel Valchuis & Ethan Thompson & David Conner & Robert Parsons, 2019. "Consumer Support and Willingness to Pay for Electricity from Solar, Wind, and Cow Manure in the United States: Evidence from a Survey in Vermont," Energies, MDPI, vol. 12(23), pages 1-13, November.
    17. 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.
    18. Brent A. Gloy & Jonathan B. Dressler, 2010. "Financial barriers to the adoption of anaerobic digestion on US livestock operations," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(2), pages 157-168, August.

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