FAIR-CT96-1389 Socio-economic multiplier model for rural diversification through biomass energy deployment - BIOSEM model

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Agricultural Residues : Biological Conversion : Chemical Conversion : FAIR Area 4.3 - Diversification : Liquid Biofuels and Biogas : Solid Biofuels : Thermochemical Conversion : Vegetable Oil/Fat : Wood (Lignocellulose)

	Proposal No:	FAIR-CT96-1389
	Date Prepared:	September 1999
	Source:	Final report February 1999

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Final report February 1999

Summary

Introduction The aim of this project was to apply a quantitative model to analysis of the socio-economic impacts of bio-energy deployment through rural diversification and to measure the distribution of benefits and costs of policy packages, particularly the CAP. The BIOSEM technique allows the organisation and analysis of existing project and regional economic data so that the employment and income benefits from the complete bio-energy development and deployment chain in rural areas can be measured. This enables diversification opportunities to be analysed and quantified and investment in biomass projects to be targeted at areas with the greatest multiplier effect. A range of biomass fuels have been considered, as identified by the participants.

Objectives The main aims were:

• the estimation of the direct and indirect knock-on effects on employment, income, local services and government revenue created by various phases of the deployment of bio-energy schemes through rural diversification in the participating European countries
• the identification of depressed rural areas that would benefit from bio-energy deployment, andrecommendations for CAP policy reform to assist and promote rural diversification through bio-energy schemes

Activities To meet the above aims and objectives, the project has completed the following work programme.

• Project meetings were held in the UK, Italy, Sweden, Greece and Belgium.
• All Partners chose a rural region within their country, which was considered likely to benefit from the capital investment in a bio-energy scheme.
• Data was collected for the chosen regions covering economy, the type and size of the proposed bio-energy plant, and details of the biomass feedstock supply and a report prepared, giving nine case study sites across the EU.
• A literature review was used to determine the most suitable technique to quantify the multiplier (knock-on effects) of bioenergy schemes. It was decided a technique based on general Keynesian Multiplier Theory would be most appropriate for small, regionally based bio-energy schemes.
• Suitable software was purchased and modified to an initial that was applied to all projects, enabling an initial assessment and discussions of the technique to take place. This resulted in recommendations for future software development.
• The standard application or approach known as BIOSEM (Biomass Socio-Economic Multiplier) technique was finalised.
• The final BIOSEM technique was applied to each of the nine country case studies and employment and income effects were quantified.
• In addition to the quantitative results, partners undertook qualitative assessments of the impacts from the proposed bio-energy scheme on local communities and social aspects.
• Using the BIOSEM results, Partners have given advice on how the CAP (and other measures) may be focused to promote bio-energy deployment through rural diversification.

Progress The project is now complete except for the publication of the final report and the launch of an associated web site. The BIOSEM technique has been developed and a user manual has been produced to help future users. The BIOSEM technique and the user manual and an associated worked example will be available on a web site for internet users.

Achievements The project has succeeded in producing a straightforward technique, the BIOSEM technique, to analyse and capture the socio-economic (employment and economic) impacts of bioenergy developments in regional economies. The user supplies information on the bio-energy project itself and economic data on the region in which it is to be installed. The BIOSEM technique uses normal cashflow analysis and investment techniques to determine the profitability of both fuel production and use activities. The same cashflow data is also used with regional economic data, to establish the Net Impact of the project on the chosen region.

In the agricultural sector, full displacement effects are calculated (and displayed) for the displaced activity and any downstream processing activity (e.g. suckler cow production and meat processing, cereal production and milling, etc.). In the energy sector displacement effects are not calculated as the effects of individual bio-energy projects are assumed to be small compared to the overall size of the energy sector.

The BIOSEM technique is available in 3 forms to cover energy crops having a 3-year rotation such as short rotation coppice, annual crops and perennial crops (and residues).

Conclusions The BIOSEM technique will calculate the direct, indirect and induced employment and income effects arising from the increased demand for goods and services supplying the whole bio-energy chain. This means that the BIOSEM technique will be useful to project developers and regional economic development officers as well as agencies and policy makers in regions where bio-energy development is a possibility.

Future actions There are no outstanding items under the present programme of work. However, there would be merit in taking the BIOSEM process further with the following aims:

• increase the Flexibility of the Current Technique
• improve the transparency of the present technique
• produce a complementary technique based on input/output analysis for investigation of the impacts of bioenergy development at larger (e.g. national and EU-wide) scales