Impacts of Supplyshed-Level Differences in Productivity and Land Costs on the Economics of Hybrid Poplar Production in M
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Impacts of Supplyshed-Level Differences in Productivity and Land Costs on the Economics of Hybrid Poplar Production in Minnesota, USA William Lazarus & William L. Headlee & Ronald S. Zalesny
Published online: 20 August 2014 # Springer Science+Business Media New York 2014
Abstract The joint effects of poplar biomass productivity and land costs on poplar production economics were compared for 12 Minnesota counties and two genetic groups, using a processbased model (3-PG) to estimate aboveground biomass productivity. The counties represent three levels of productivity which, due to spatial stratification, were analogous to three biomass supplysheds. An optimal rotation age (ORA) was calculated that minimizes the annualized, discounted per-dry megagrams biomass cost for each county, genetic group and land cover, and for two discount rates (5 and 10 %). The ORA for the lowest-cost county (Todd) with specialist genotypes and a 5 % discount rate is 14 years and the breakeven price at that age is US$71 dry Mg−1, while for the highest-cost county (McLeod), the generalist genotype and a 10 % discount rate, the ORA is 10 years and the breakeven price at that age is US$175 dry Mg−1. Planting after a previous poplar stand increased breakeven prices and increased the ORAs by 1 to 2 years relative to planting after a previous annual crop. An ANOVA analysis showed a significant genetic group effect and significant productivity class×land rent interactions. All other factors being equal, an increase in the discount rate from 5 to 10 % is expected to reduce ORAs by 2 to 3 years. High-productivity supplysheds can also be expected to have ORAs that are 2 to 3 years shorter than low-productivity ones. Land costs were not as closely correlated to productivity as we expected. W. Lazarus (*) Department of Applied Economics, University of Minnesota, 249 Ruttan Hall, 1994 Buford Avenue, St. Paul, MN 55108, USA e-mail: [email protected] W. L. Headlee Department of Natural Resource Ecology and Management, Iowa State University, 339 Sci 2, Ames, IA 50011-3221, USA R. S. Zalesny Northern Research Station, USDA Forest Service, Rhinelander, Wisconsin, USA
Keywords Poplar . Economics . Land rent . Discount rate . Biomass . 3-PG
Introduction Uncertain profitability across the landscape is a concern that hinders broad-scale deployment of short-rotation woody crops such as species and hybrids within the genus Populus (e.g., hybrid poplars; hereafter referred to as poplars). However, there may be specific locations throughout the USA where these purpose-grown trees are the best crop choice because of unique soil, climatic, or market conditions that limit the alternatives [1], thereby creating opportunities for inclusion of these woody feedstocks into national bioenergy portfolios. The Physiological Principles Predicting Growth (3-PG) processbased model was recently used to predict poplar biomass productivity for Minnesota and Wisconsin, USA and to evaluate areas that are most suitable for poplar production within these states [2, 1]. Physical product
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