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Research on the impacts of ethanol plants is something of a moving target, given the rapid developments in the industry in recent months. However, BioEconomy Working Group coordinator Jill Euken said it’s been very helpful to have results from a recent study funded by the Value Chain Partnerships for a Sustainable Agriculture (VCPSA) project led by the Leopold Center.

The study, “Determining the Regional Economic Values of Ethanol Production in Iowa Considering Different Levels of Local Investment,” was conducted by Dave Swenson, an associate scientist and lecturer in economics and community and regional planning at Iowa State. Euken and Swenson presented results of the study at the Leopold Center’s Marketing and Food Systems Workshop Nov. 6.

“What happens when a county board of supervisors has an industrial site that would make a good place for an ethanol plant? Who do they give the option to develop the project?” asked Euken, who is an industrial specialist in bio-based products for ISU Extension. “The findings of this study send a clear message to decision makers: ownership matters.”

The study showed that with no local ownership, a 50-million gallon/year ethanol plant would either create directly or otherwise stimulate a total of 133 jobs in the regional economy. For every 25 percent increase in local ownership of the plant, 29 more jobs would be created.

“What that means is that we have local owners receiving dividends and they’re turning around and spending some portions of those dividends back in the local economy,” Swenson explained. “They’re buying consumer goods, and also doing some business spending. Any dollar that leaves our community has a hard time coming back, but a dollar that stays in our community has a multiplier effect.”

Swenson joined with Liesl Eathington, assistant scientist and staff researcher in economics, to conduct the study. He also used ethanol plant costs and returns data from ISU Extension professor of economics Robert Jolly.

The researchers created a modeling system that considered the job growth potential to a rural area of Iowa for an ethanol plant producing 50 million gallons per year, given different levels of local ownership or investment. The model is based on a three-county area, and did not include the impact on returns to farmers for corn, or other factors.

Currently, Iowa has 56 ethanol plants being planned or operating, and 11 others are located just across state lines. Euken said development of new technologies to make fuel and fluctuating oil prices have added to the uncertainty in the ethanol industry.