Estimated Economic Effects for the
December
2006
Prepared by:
Donis N. Petersan, Ph.D., CEcD
Economist
Economic Development
Department
Nebraska Public Power
District
Telephone: (402) 563-5304
or (800) 282-6773
E-mail: dnpeter@nppd.com
Executive
Summary
This report presents an analysis of the
positive employment, income, and other economic effects expected to be
associated with the St. Paul Central Bio-Energy, LLC ethanol production
facility to be located in Howard County, Nebraska. The methodology used to
estimate the economic impacts associated with this facility utilized a Micro
IMPLAN input-output model constructed for an eight-county area in central
The positive employment and other
economic effects associated with the St. Paul Central Bio-Energy, LLC ethanol
production facility are summarized in the continuing
part of this Executive Summary. The economic effects considered in the analysis
include the direct employment and other direct economic effects associated with
the ethanol plant as well as the secondary economic effects. The first component of the secondary economic effects include the
indirect effects which occur as a result of the additional employment and
economic activity associated with “local” businesses supplying inputs to the
planned ethanol production facility. The other component of the secondary
effects captures the additional economic activity associated with the increased
household income and the increased purchases by households as a result of the increased
disposable income.
Employment Effects: The annual employment directly related to
the operation of the Central Bio-Energy, LLC ethanol production facility is
reported to be 50 employees (FTEs). When the secondary employment effects in
other economic sectors are added, the total employment effects for the Howard
County multi-county study area are estimated to be 182 jobs, including the 50
direct jobs in the ethanol plant and 132 secondary (83 indirect and 49 induced)
jobs in other economic sectors. 5050838349490306090120150180Ethanol
(Direct) Emp. Other Sectors Total
Employment Induced Jobs Indirect Jobs Direct Jobs 50 132182Source: Computed
from IMPLAN I-O Model for the Central Bio-Energy, LLC (Howard County) ethanol
project study area. Central Bio-Energy, LLC Ethanol Project Employment
Impacts 5050838349490306090120150180 Ethanol (Direct) Emp.
Other Sectors Total Employment Induced Jobs Indirect Jobs Direct Jobs 50 132182Source:
Computed from IMPLAN I-O Model for the Central Bio-Energy, LLC (Howard County)
ethanol project study area. Central Bio-Energy, LLC Ethanol Project
Employment Impacts
Labor Income and Other Income Effects: The direct employment by the St. Paul
Central Bio-Energy, LLC ethanol project will result in the direct addition of
$2,520,000 in labor income (including benefits and other adders) for the plant
employees and to the economy of the project study area, along with an estimated
$9,389,000 in other property-type income. Other property-type income consists
of payments for rents, royalties, and
dividends. The total income effects are derived using the
multiplier values from the IMPLAN input-output model, and are estimated to be
$19,698,900. This represents the estimate of the total annual income effects in
the study area, including the direct and secondary labor and other
property-type income. $11.909 $11.909 $5.792 $5.792 $1.998
$1.998048121620 Ethanol (Direct) Inc. Other Sectors Total
Income(Million $)Induced Income Indirect Income Direct Income$11.909
Million$7.790 Million$19.699 Million(Labor and Other Property Income
Effects)Central Bio-Energy, LLC Ethanol Project Income Impacts Source:
Computed from IMPLAN I-O Model for the Central Bio-Energy, LLC (Howard County)
ethanol project study area.
Indirect Business Taxes: It is estimated the Central Bio-Energy, LLC ethanol
production facility will pay an estimated $3,351,000 in direct property taxes
on the plant and equipment. There is an additional $200,000 of indirect
business taxes estimated for this project. The indirect business taxes, in
addition to the property taxes on the real estate, plant and equipment, include
taxes on other property, excise taxes, fees, licenses, sales tax, and other
taxes that occur during the normal operation of the business, but do not
include taxes on profits or income. When the secondary (indirect and induced)
effects are considered, the total indirect business taxes related to the
operation of the Central Bio-Energy, LLC ethanol production facility are
estimated to be $4,431,300 ($3,551,000 direct and $880,300 secondary [indirect
and induced] business taxes).
Total Output Effects: The total value of output directly associated with
the St. Paul Central Bio-Energy, LLC ethanol production facility is reported to
be $257,400,000 annually. When the secondary output effects are added to the
direct output component, the total output effects associated with the facility
are estimated to be $275,778,400.
Retail Sales Effects: The increased employment and income associated with
the St. Paul Central Bio-Energy, LLC ethanol production facility will result in
additional disposable personal income and consumer purchasing power which will
positively impact retail sales in the study area. Given the estimated increase
in personal income estimated to be associated with the operation of the
facility, the expected increase in retail sales for the multi-county study area
is estimated to be $5,759,100 annually.
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Estimated Economic Effects for the
Introduction
This report presents an analysis of the estimated
employment and other economic impacts expected to be associated with operation
of the St. Paul Central Bio-Energy, LLC ethanol processing facility to be
located in Howard County, Nebraska. The methodology employed to estimate the
economic effects of the project utilizes a computerized input-output (I-O)
model constructed for an eight-county area in central Nebraska, including
Howard County along with the surrounding counties (Buffalo, Greeley, Hall,
Merrick, Nance, Sherman, and Valley - see Figure One). This model was developed
with the 2004 Micro IMPLAN database and input-output modeling software. The
IMPLAN database consists of 21 economic and demographic variables for 509 industrial
sectors for each of the 3,000 counties in the
The IMPLAN database has been used to build an I-O
model for the multi-county study area that identifies inter-industry linkages
within the area economy. From this model, multipliers are developed
(employment, labor income, other property income, indirect business taxes, and
output) which can be applied to assess the anticipated economic and employment
effects associated with the operation of the planned ethanol production
facility.
The IMPLAN I-O modeling software and database
contains an industrial sector in which ethyl alcohol is included as a
component. IMPLAN Sector 151, “Other Basic Organic Chemical Manufacturing”
includes the NAICS classification 32519 that, in turn, includes NAICS 325193,
“Ethyl Alcohol Manufacturing.”
Although the planned ethanol project for which this
impact analysis is undertaken will be located in Howard County, Nebraska, it is
expected that the primary inputs (corn, labor, and other inputs) for the
project will be obtained from a significant area surrounding the plant location
and
4
Direct Economic Effects
The analysis provided in this report assumes the St.
Paul Central Bio-Energy, LLC ethanol production facility will have the capacity
to produce 113.4 million gallons of ethanol along with distillers grains as a
complementary product. It is expected the ethanol production facility will use
a dry milling process to prepare the feedstock for conversion to ethanol and
other products. Estimates of the direct economic effects associated with the
operation of the ethanol production facility are presented in Table One. 50
Employee Payroll with Benefits$2,520,000 Other Property
Income(a)$9,389,000$11,909,000Value of Plant Output Ethanol (113,400,000 Gal. @
$2.00)$226,800,000$30,600,000Total Value of Output$257,400,000 Indirect
Business Taxes(b)$3,551,000 Local Property Taxes on Plant &
Equipment$3,351,000Total Labor & Other Property Income(a) Other Property
Income consists of payments for rents, royalties, and dividends. Source: Basic
data on the operation of the facility provided by the project sponsor. Selected
other data derived from the IMPLAN Model and Database, where noted.(b) Indirect Business Taxes include property and other
taxes and fees, except taxes on profits or income. Estimated from information
obtained from the project sponsors and from the IMPLAN Model and Database (see
text). DDGS (360,000 Tons @ $85.00 ) Estimated
Direct Effects Associated with the Operation Table One Employees (F.T.E.
Number)of the Central Bio-Energy, LLC Ethanol Production Facility
As the data presented in Table One indicate, the
total value of the annual output for the facility is estimated at $257,400,000,
including $226,800,000 for the ethanol and $30,600,000 for the distiller grains
(DDGS). The direct addition to “Other Property Income” presented in Table One
is estimated to be $9,389,000. Other Property Income is defined as payments for
rents, royalties, and dividends. Payments to individuals in the form of rents
received on property, royalties from contracts, and dividends paid by
corporations are included here as well as profits earned by corporations. The
estimate for Other Property Income used in this analysis was derived from the
estimated returns to investors and from the IMPLAN I-O model and database for
IMPLAN Sector 151, which includes ethyl alcohol production.
5
Annual property taxes for the St. Paul Central
Bio-Energy, LLC ethanol project are estimated at $3,351,000, based on an
estimated assessed valuation of $140,000,000 and an applicable tax rate of
$2.394 per $100 of assessed valuation. The estimated indirect business taxes
($3,551,000) shown in Table One include the $3,351,000 in property taxes, in
addition to $200,000 for other indirect business taxes, including excise, other
property taxes, fees, licenses and sales, and other taxes paid during the
course of the normal operation of a business. It is important to recognize,
however, that these indirect business taxes do not include taxes on profits or
income.
Economic Impact Analysis As previously noted, in order to analyze the
potential economic effects associated with the operation of the Central
Bio-Energy, LLC ethanol production facility, an I-O model was developed for the
An estimate of the secondary (indirect and induced)
economic effects results from an evaluation of the capacity of the study area
economy to supply the increased demand for goods and services created by the
operation of the St. Paul Central Bio-Energy, LLC ethanol production facility.
The economic effects addressed in this analysis include the direct employment
and other economic effects directly associated with the operation of the model
plant as well as the secondary economic effects. The first component
of the secondary economic effects include the indirect effects which
occur as a result of the additional employment and economic activity associated
with the “local” businesses supplying inputs to the ethanol production
facility. The other component of the secondary effects captures the additional
economic activity associated with the increased household income and the
increased purchases by households as a result of the increased disposable
income.
In the case of the St. Paul Central Bio-Energy, LLC
project study area economy (
Table Two presents
multipliers estimated from the IMPLAN I-O model for the
6 Multipliers*Direct Indirect Induced Total Type I(b)Type SAM(c) Employment 0.19430.32220.19150.70792.65893.6445Labor
Income0.00980.01420.00450.02862.44912.9124Other Property
Income0.03650.00830.00320.04801.22801.3164Indirect Business
Taxes0.01380.00250.00090.01721.18241.2479Output1.00000.05620.01521.07141.05621.0714
(b) Type I = (Direct + Indirect) / Direct (c) Type SAM = (Direct + Indirect +
Induced) / Direct database and computer software. Source: Calculated for the
Howard County study area economy using the Micro IMPLAN Multipliers(a)(a)The
multipliers for IMPLAN Sector 151, "Other Basic Organic Chemical
Manufacturing," are used for the Central Bio-Energy, LLC ethanol
production facility. Table Two Input-Output Multipliers for the Howard
County Study Area Economy Defined for the St. Paul Central Bio-Energy, LLC
Ethanol Production Facility*Direct, Indirect, Induced and Total effects are
per million dollars of output
impacts associated with the operation of the planned Central
Bio-Energy, LLC ethanol production facility.
Estimated Economic Effects for the Central
Bio-Energy, LLC Ethanol Facility
As the data provided in Table One suggest, the
analysis of the economic effects associated with the operation of the Central
Bio-Energy, LLC ethanol production facility begins with the direct employment,
output, labor income, and other payments to the factors of production
associated with this facility. The data presented in Table One provided basic
data on the direct employment, labor and other property income, the value of
output, and indirect business taxes associated with the operation of the
subject ethanol facility. Using these estimates, in conjunction with the
multiplier values derived from the IMPLAN input/output model for the study area
economy, estimates of the indirect and total employment and other economic
effects associated with the operation of the prospective Central Bio-Energy,
LLC ethanol production facility have been derived. The estimates of the
secondary (indirect and induced) and total economic and employment effects
associated with the ethanol facility are presented in Table Three.
- Employment Effects As previously stated, the annual employment directly
related to the operation of the prospective ethanol production facility is
expected to be 50 employees (FTEs). The direct, secondary (indirect and
induced), and total employment effects resulting from the increase in economic
activity associated with the operation of the facility are presented in Table
Three. As these data indicate, the total employment effects for the Central
Bio-Energy ethanol project multi-county impact area are estimated to be 182
jobs (50 direct F.T.E.S and 132 secondary, or 83 indirect and 49 induced jobs).
7 Employment Effects Direct Employment (FTE)50 Indirect (1.6600 of Direct)83 Induced (0.9800 of
Direct)49 Total Employment (FTE)182Labor Income & Other Property Income
Effects Direct Labor & Other Property Income$11,909,000 Indir. Labor & Other Prop. Inc. (0.4864 of Direct)$5,792,400 Induced Labor & Other Prop. Inc. (0.1677 of
Direct)$1,997,500 Total Labor & Other Property
Income$19,698,900Indirect Business Taxes Effects [Direct] Indirect
Business Taxes$3,551,000 [Indirect] Indirect Bus. Taxes
(0.1824 of Dir.)$647,700 [Induced] Indirect Bus. Taxes
(0.0655 of Dir.)$232,600 Total Indirect Business Taxes$4,431,300Output
Effects Direct Output$257,400,000 Indirect Output (0.0562 of
Direct)$14,465,900 Induced Output (0.0152 of Direct)$3,912,500 Total
Output$275,778,400 Source: Computed from the data presented in Tables One and
Two and from the IMPLAN input-output model constructed for the Howard County
Study Area economy. Table Three Estimated Employment, Income, Output, and
Related Tax Effects Associated with the
- Labor Income and Other Income Effects
The employment and other economic activity resulting
from the operation of the St. Paul Central Bio-Energy, LLC ethanol production
facility will add a significant amount of labor and other property-type income
to the economy of the project study area. The estimate of the direct effects on
total employment and labor income were obtained from the project sponsors and,
in the case of the other property-type income, from the Micro IMPLAN database
(see Table One). As the data presented in Table One indicated, the direct
employment in the prospective ethanol facility will result an estimated direct
addition of $2,520,000 in labor income and $9,389,000 in other property-type
income to the economy of the
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- Total Output Effects
Total economic output (value of production or sales)
directly associated with the operation of the St. Paul Central Bio-Energy, LLC
ethanol production facility is reported to be $257,400,000 annually (see Table
One). Using this as the direct output component, the total output effects
associated with the ethanol production facility shown in Table Three, including
the direct and secondary effects, are estimated to be $275,778,400.
- Indirect Business Taxes Effect
Indirect Business Taxes (IBT) expected to be paid by
the planned ethanol facility are estimated to be $3,551,000 (see Table One),
and include an estimated $3,351,000 of direct property taxes on the plant and
equipment. The indirect business taxes, in addition to the property taxes on
the plant and equipment, include taxes on other property, excise taxes, fees,
licenses, sales tax, and other taxes that occur during the normal operation of
businesses, but do not include taxes on profits or income. As the data
presented in Table Three indicate, the total indirect taxes for the St. Paul
Central Bio-Energy, LLC ethanol project are estimated at $4,431,300 annually,
including the direct and secondary indirect business taxes effects.
- Retail Sales Effects
Among the significant economic impacts the operation
of the St. Paul Central Bio-Energy, LLC ethanol production facility will have
on the study area economy are positive effects on assessed property valuation,
growth in property tax revenues, and an increase in sales tax revenues and
retail sales. While this analysis has captured a portion of these positive tax
effects, in terms of the property and indirect business taxes, this section
considers the probable positive effects of the facility on retail sales in the
multi-county project study area.
Table Four presents data on
total personal income and retail sales for the project study area (
Given these data, the derivation of an estimate of
the retail sales impact associated with the operation of the St. Paul Central
Bio-Energy, LLC ethanol production facility is made by assuming retail sales
resulting from the increased economic activity would equal 42.6 percent of the
increase in personal income associated with the subject facility. For the
purposes of this analysis, we assume the increase in personal income associated
with the operation of the ethanol facility will equal the total (direct,
indirect, and induced) labor income associated with the facility of $7,339,200
and 50 percent of the total (direct, indirect, and induced) other property-type
income (.5 x $12,359,700 = $6,179,850) for a total of $13,519,050. Given this
estimated addition to personal income in the study area, the retail sales
associated with the Central Bio-Energy, LLC ethanol facility are estimated to
be $5,759,100 annually (42.6% x $13,519,050).
9 Year Total Personal Income Total Retail Sales Retail
Sales as % of T.P.I.($1,000)($1,000)(%)19942,228,922980,75544.019952,309,7751,009,77243.719962,534,5081,042,47341.119972,576,9341,097,21542.619982,747,0981,166,81742.19992,799,077,201,16642.920002,918,0761,257,88043.120013,098,5621,292,39741.720023,134,4541,345,91942.920033,385,5901,399,7634.342.6
Sources: Total personal income: U.S. Dept. of Commerce, Bureau of Economic
Analysis. Retail sales data:
(a) Project Primary Impact Area includes
If further
information about this analysis is desired or if the reader has questions about
any aspect of this report, please contact:
Donis N. Petersan, CEcD, Ph.D.
Economist
Nebraska Public
Power District
Telephone: (402)
563-5304 or (800) 282-6773
E-mail:
dnpeter@nppd.com
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