Nonmarket cobenefits and economic feasibility of on-farm biogas energy production

Standard analysis of the economic feasibility of on-farm biogas energy production tend to emphasize primarily on direct financial benefits to farmers, and abstracts from the nonmarket cobenefits associated with anaerobic digestion of livestock manure and other biomass feedstock. This shortcoming of the standard feasibility analysis raises a fundamental question: How is the economic feasibility of on-farm anaerobic biogas energy production affected by the associated nonpecuniary cobenefits? Incorporating key nonmarket cobenefits from biogas energy production extends the standard economic feasibility analysis, and provides important insights. When nonmarket cobenefits were excluded, on-farm biogas energy production was generally not financially feasible for the dairy and swine farm size ranges studied (except for 600- and 800-sow farms). Overall, results of the financial feasibility analysis did not change compared to a base scenario (without nonmarket cobenefits) when an estimated annual total nonmarket cobenefits of CND$5000 was incorporated into the analysis, for both dairy and swine farms. Biogas energy production was generally financially viable for small-size dairy (i.e., 50-cow) and swine (i.e., 200-sow) farms when the nonmarket cobenefits were valued at CND$15,000 (or higher). Improvements in financial feasibility were more dramatic for dairy than for swine farms.