Bioenergy development can generate a variety of socioeconomic impacts ranging from income and job creation to tax revenue and to community coherence. Of these impacts, the creation of jobs and income is probably the most significant. In addition, bioenergy has the greatest potential for employment creation among alternative energy sources (Domac and others 2005).

This section explains the types and importance of community impacts and illustrates these points by highlighting a series of case studies. These case studies cover different bioenergy production systems in several states in the United States, with emphasis on the U.S. South. The case studies reiterate the potential role that forest bioenergy can play in rural economic development. While the impact varies from case to case, forest bioenergy development demonstrates strong ripple effects on income and employment.

• Types and Importance of Community Impacts
• Case Study: East Texas
• Case Study: Georgia
• Case Study: Oregon
• Case Study: South Carolina

Socioeconomic impacts of bioenergy development are ample and varied. Domac and others (2005) categorized these impacts into four groups: social aspects, macro level, supply side, and demand side. Among these impacts are employment, income, tax revenues, economic diversification, social coherence, and community stability.

The most significant socioeconomic impact is probably the creation of jobs and income. The importance of bioenergy development in job creation has been recognized in both developing and developed countries. A compilation of case studies (Borsboom and others 2002) reiterated this evidence. Studies in Asia, Africa, Canada, and Western Europe all concluded that bioenergy projects created jobs and income in their specific areas. In fact, Domac and others (2005) found that bioenergy had the greatest potential in employment creation among other renewable energy sources. This is partly because biomass harvesting, transporting, and processing are labor intensive. In addition, high transport costs limit the economic transport distance for biomass feedstock, keeping jobs in the local areas. For instance, biomass-based electriticy production, because of relatively high initial investment and the use of locally-produced feedstocks, tends to have a greater ripple effect on local income than power generation using coal and other energy sources.

Along with job creation, biomass and bioenergy development will infuse income to local households and tax revenues to local communities. The increase in household income will raise the standard of living. The tax revenues will help improve local infrastructures, public services or systems including utility supplies, roads, and public transportation, telecommunications, schools, etc. Providing job opportunities for individuals, particularly younger residents, will allow them to remain in the community rather than migrate out in search of quality employment elsewhere, thus preventing aging of the community. All these will enhance social coherence, community stability, and the quality of life (IEA Task 29 2005).

Furthermore, the establishment of a forest biomass and bioenergy industry will contribute to the diversification of local economies. Such diversification is directly linked to the sustainable development of rural communities, particularly those that traditionally depend on timber production (Bliss and Bailey 2005).

These socioeconomic benefits associated with biomass and bioenergy development are extremely important to southern rural communities. A large portion of the forest biomass in the South is concentrated in areas considered rural in nature. Due to overcapacity of the forest products industry, industry adjustments, and globalization, many of these communities are facing an increasing challenge to sustain their economies which have been based on traditional timber harvesting and processing. Production of feedstock, bioenergy, and bio-based products could help maintain the prosperity of these communities, though to become a successful rural development tool such new ventures must be interrelated with community political and socioeconomic systems (Kennedy and others 2001).  By creating value-added products from forest resources, the bioenergy and bio-based products industries could serve as a catalyst for moving southern rural communities into a brighter economic future.

East Texas Study Area 1

Gan and Smith (2006) studied 43 counties in East Texas to determine the socioeconomic effects that logging residue procurement and electricity production would have on the region. The study area (at right) consists of 11.9 million acres of timberland, the majority (93%) of which is controlled by private owners including non-industrial private landowners, the forest products industry, and institutions.

Forestry and the forest products industry have traditionally played a significant role in the regions economy, providing $4.5 billion in output and a total of approximately 100,000 jobs in the region in 1996 (Dreesen and others 2000). Yet, recently the industry has suffered from mill closures and decreases in stumpage prices. Another important industry in the region is the energy sector, which accounts for approximately 22% of the regions total output (IMPLAN 2002). The combination of the forest products and energy industries makes the area a good candidate for producing bioenergy from forest biomass resources. The chart below depicts the importance of the logging and energy sectors to the regions economy.

Logging and Power Generation in East Texas

Using the Input-Output modeling approach, the study revealed that logging residue procurement would generate 568 new jobs, and that electricity production using the residues would generate an additional 769 jobs. The total jobs created, which reflected direct, indirect, and induced impacts, would count for approximately 32.5% of the total current logging employment in the region. The estimated employment multiplier was 3.26. This suggests a strong ripple effect caused by biomass and bioenergy development in the region.

Impact of Bioenergy Development in East Texas

In addition to job creation, bioenergy development would generate $215 million in value-added, with $169.3 million from electricity production and $45.8 million from residue procurement. This is approximately 60% of the current value-added from the logging industry. Moreover, the total impact on output was estimated at $352 million of which $105 million was attributed to logging residue procurement. This total is 38.5% of the current total output from the logging sector. The output and value-added multipliers are smaller than the employment multiplier, suggesting that bioenergy development would have a stronger ripple on employment than on output or value-added. Employment and income affects are shown in the figure to the right.

While this study indicated a positive socioeconomic effect of bioenergy development on the regions economy, it is important to remember that this cannot be generalized for all areas. The impact of biomass and bioenergy development is closely related to such factors as the nature of technology, local economic structures, social profiles, and production processes. Thus, it is important to perform a region-specific assessment before proceeding with any development project.

In Georgia, the supply of diverse biomass sources is widely distributed throughout the state. This supply distribution would allow for the creation of biorefineries thoughout the rural areas of the state. Using IMPLAN data, an economic analysis was conducted that evaluated the impact of a biorefinery that used 440 dry tons of biomass daily. The study results indicated that $32.7 million in direct and indirect impacts would be generated from the goods and services produced by one plant. Each plant would directly employ 19 individuals with another 76 indirect jobs created, for a total of 95 jobs. The state tax revenue generated from one facility would equal $991,000 per year.

Again, these figures are for one biorefinery facility in the state of Georgia. Based on resource availability, researchers indicate that 17 facilities with a 440 dry ton/day requirement could be constructed and only 10% of the biomass resource would be utilized.

In early 2000, researchers conducted a feasibility study for the constructin of a biomass-to-ethanol processing facility for the state of Oregon. The study results indicated that this tpe of facility would be feasible in Oregon (Aden and others 2000). Several feedstocks were analyzed and the most economically feasible feedstock was forest residues. Using forest residues in a natural gas boiler facility produced an internal rate of return of 19% for the facility. This rate of return was calculated based on several assumptions: 1) the marketability of lignin-rich residues; 2) feedstock costs; 3) project financing; and 4) the selling price of ethanol. The study revealed that the internal rate of return would be sensitive to changes in these assumptions.

Using a natural gas boiler system requires that the lignin-rich residue produced be sold to an outside buyer. If a biomass boiler were used, the residue could be used to create process steam, but the capital cost required for the biomass boiler is significantly higher than the natural gas boiler. Yet, if no buyer can be found for the lignin-rich residue, the rate of return on the natural gas boiler would drop significantly making the biomass bioler more attractive.

Overall, the conclusions indicated that a biomass-to-ethanol processing facility using forest residues would be feasible in Oregon.

Co-firing forest biomass with coal is one way to utilize the resource without building new infrastructure. In South Carolina, power company Santee-Cooper is doing just that. Santee-Cooper announced in August 2005 that they would spend several million dollars to retrofit a coal burning plant to also burn wood chips (Stock 2005). The facility will use forest biomass from thinnings of the Francis Marion National Forest. The U.S. Forest Service has begun a massive project to thin young, dense stands in the forest that have sprouted since Hurricane Hugo in 1989. The trees to be removed have made the forest cover too dense for endangered species such as red-cockaded woodpeckers, and also pose a severe wildfire threat. The trees are also too small for the pulpwood and lumber markets. Using this material from thinnings will offset the thinning cost for the Forest Service and will also allow Santee-Cooper to reduce electricity generation costs. The amount of pollution released will also be less than that emitted by a coal-fired plant.