Local ownership of ethanol plants: What are the effects on communities?

The rapid expansion of ethanol plants across the U.S. state of Iowa has fueled debate about the burdens and benefits of local (in-state investors) versus non-local ownership of biorefineries. Central to these concerns is the extent to which non-local, absentee owners might reap the benefits of the ethanol industry at the expense of local communities. A key argument within the rural development literature is that local ownership of firms has a positive effect on the long-term well-being and sustainability of the communities in which they are situated. This literature asserts that firms operate at different scales, with local firms embedded within local supply chains and institutions, and non-local firms embedded within national and international networks and institutions. Conversely, there is a growing body of work within the alternative agrifood systems literature that cautions against the ‘local trap’; the assumption that the local scale is inherently good and therefore advantageous. Despite this broader debate, the literature on local ownership and renewable energy remains limited. This paper addresses this gap by drawing on case study research of the community effects of ethanol plant ownership structure from the perspective of community leaders. My findings suggest that differences between the structure and effects of local versus non-local ownership of firms on communities are rather more ambiguous than the literature asserts. Therefore, assumptions about the benefits of local ownership may be overstated and concepts of ‘local’ and ‘non-local’ may be inadequate for considering firm outcomes on the civic welfare and socioeconomic well-being of a community.