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The Economic Impact of an Anaerobic Digestive SystemOn Plymouth County Iowa, 2016-2035

EcoEngineersMay 30 , 2016

Goss & Associates Economic SolutionsThe Goss InstituteErnest Goss, Principal Investigator600 17th Street, Suite 2800 SouthDenver, Colorado [email protected]

Ernest Goss, Ph.D.Scott Strain, M.S.Jeffrey Milewski, M.S.

Table of Contents

THE ECONOMIC IMPACT OF AN ANAEROBIC DIGESTIVE SYSTEM ON PLYMOUTH COUNTY IOWA, 2016-2035

The Economic Impact of an Anaerobic Digestive System on Plymouth County Iowa, 2016-2035

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Summary of Impacts . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Construction Phase . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 11

Operations Phase. . . .. . . .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Appendix A: Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Appendix B: Schematic of ADS Impacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Appendix C: References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Appendix D: Researchers’ Biographies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Preface

THE ECONOMIC IMPACT OF AN ANAEROBIC DIGESTIVE SYSTEM ON PLYMOUTH COUNTY IOWA, 2016-2035 Page i


This analysis was prepared for EcoEngineers, an Iowa engineering consulting firm focusing on environment energy projects. Findings remain the sole property of EcoEngineers and may not be used without prior approval of this organization. The overall goal of this study is to estimate the economic impact of an anaerobic digestion system on Plymouth County, Iowa.

An anaerobic digestive system is a “…series of biological processes in which microorganisms break down biodegradable material in the absence of oxygen. One of the end products is biogas, which is combusted to generate electricity and heat, or can be processed into renewable natural gas and transportation fuels.”1

Goals of the study Specific goals of the study are to:

1. Measure the direct, indirect and induced impacts of construction and operations of an anaerobic digestive system on Plymouth County, Iowa.• Estimte overall, jobs, earnings and state and

local tax impacts.

• Estimate Linkages and impacts across county industries.

• Profile the Plymouth County economy.

1American Biogas Council, https://www.americanbiogascoun-cil.org/biogas_what.asp accessed on April 17, 2016.

This is not a feasibility study in that it does not estimate the costs and benefits of the ADS in Plymouth County. This study focuses on the benefits of the ADS. Cost and net benefits will depend on tax incentives received, as well as the ability of the ADS to earn revenues in excess of cost incurred.

Any errors or misstatements contained in this study are solely the responsibility of the author. Please address all correspondence to:2

2This study was completed independent of Creighton University. As such, Creighton University bears no responsibility for findings or statements by Ernie Goss, or Goss & Associates, Economic Solutions.

THE ECONOMIC IMPACT OF AN ANAEROBIC DIGESTIVE SYSTEM ON PLYMOUTH COUNTY IOWA, 2016-2035 Page ii

Glossary

Term DefinitionDiscounted Unless stated otherwise, all financial data in this report are stated in

2015 dollars.Direct effects The set of expenditures, or initial spending, applied to the predictive

model for impact analysis.IMPLAN Using classic input-output analysis in combination with regional

specific Social Accounting Matrices and Multiplier Models, IMPLAN provides a highly accurate and adaptable model for its users. The IMPLAN database contains county, state, zip code, and federal economic statistics which are specialized by region.

Input-output analysis A type of applied economic analysis used in IMPLAN that tracks the interdependence among various producing and consuming sectors of an economy. More particularly, it measures the relationship between a given set of demands for final goods and services and the inputs required to satisfy those demands (U.S. Bureau of Economic Analysis).

Jobs supported A job in IMPLAN = the annual average of monthly jobs in an industry. Thus, 1 job lasting 12 months = 2 jobs lasting 6 months or = 3 jobs lasting 4 months each. A job can be either full-time or part-time.

Labor income Wages & salaries plus self-employment income.Overall or sales impacts Amount of additional sales, including insurance premiums, retail sales,

wholesale expenditures, construction sales, etc. It is analogous to gross domestic product (GDP), but will include some double counting and will thus exceed GDP.

Payroll All forms of compensation, such as salaries, wages, commissions, dismissal pay, bonuses, vacation allowances, sick-leave pay, and employee contributions to qualified pension plans paid during the year to all employees.

Private workers All those working excluding government workers, state, local and federal.

Productivity Growth in Gross Domestic Product (GDP) per worker.Self-employment income Income of proprietors of non-incorporated companies including

attorneys, accountants and consultants.Wages and salaries The total payroll cost of the employee paid by the employer. This

includes wage and salary, all benefits (e.g. health, retirement, etc.) and employer paid payroll taxes (e.g. employer side of social security, unemployment taxes, etc.).

THE ECONOMIC IMPACT OF AN ANAEROBIC DIGESTIVE SYSTEM ON PLYMOUTH COUNTY IOWA, 2016-2035 Page 1

Executive Summary

By applying investment data for the construction and operations of an anaerobic digestive system to Input-Output models,3 it is estimated that the Plymouth County project produces the following direct, indirect and induced contributions to Plymouth County, Iowa:

I. To Plymouth County economy for 2016-2035. Construction Phase (18 months)

• EcoEngineers’ operations will make a $21,712,167 investment in Plymouth County.

• The cost of land development will exceed $4.8 million.

• The cost of building construction for the ADS will be $990,000; the cost of construction for the fueling station will be $1,000,000.

• The cost of installation will result in increased expenditures on engineering services of nearly $9 million.

• EcoEngineers’ project will increase revenue in the wholesale sector by nearly $6 million.

• The project will drive spillover impacts of $6,879,128, resulting in a total increase in output for Plymouth County of $28,591,295.4

• Earnings (labor income) will increase by $9.3 million.

• The project will support the activities of 232 jobs.

Operations Phase (annual impact 2016 to 2035)

• EcoEngineers’ operations (natural gas sales and feedstock) will increase local economic output by $1.7 million in the first year of operation.

• During the first year, the project’s operations will increase local earnings by over $300,000.

• The project’s operations will support the activities of 5.4 jobs.

• During the 20 years covered in this study, sales activity (output) will increase by $45.7 million in the local economy.

• During the same time period, earnings (labor income) will increase by $8.1 million.

3This study was completed using IMPLAN’s new I-RIMS methodology. I-RIMS is a modification of the RIMS Input-Output methodology used by the Bureau of Economic Analysis. The results generated in the I-RIMS model are consistent with IMPLAN’s previous regional models. An explanation of this methodology is contained in Appendix A. 4Spillover impacts represent ‘ripple’ impacts in related businesses as the initial contract dollars are re-spent in the community. For ex-ample, EcoEngineers’ and construction contractor workers will spend a portion of their earnings in local grocery stores. This spending creates sales, earnings and jobs, termed spillover impacts, for businesses in the retail trade sector.



Executive Summary

State and Local Tax Collections (2016 to 2035)

• It is estimated that EcoEngineers’ operations will generate $2.5 million in state and local tax collections during the 2016 to 2035 time period.

• We estimate a $1.8 million increase in commercial property tax collections

• Residential property tax collections will increase by approximately $239,110.

• State and local sales tax will increase by an estimated $198,130.

• Personal income tax collected will increase by nearly $275,000.

Utilization of energy products and renewable fertilizer

Energy crop cultivation

• Shashi data or biofuels atlas

Indirect Impacts

• Shashi data or biofuels atlas

• CNG utilization and clean air:

• Economic development: waste water infrastructure:

• Nutrient leaching mitigation:

• The conversion of a dedicated-fuel fleet (73 truck conversions over a three year period) would result in a $5.2 million increase in annual sales activity in Plymouth County, supporting 20.6 workers and $1.1 million in labor income.

• With potential annual receipts of nearly $3.0 million, a fueling station in Plymouth County would increase annual local sales by approximately $4.1 million and increase labor income by over $1.5 million, supporting 59.6 workers.

Net return on investment

Conclusions

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Summary of Annual Impacts

Table 1 provides a summary of EcoEngineers potential investment and annual revenue generated from annual sales at its Plymouth County facility. Table 2 provides a summary of the economic impacts of both the construction and operational components of EcoEngineers’ project. The assumptions and methodology used o produce these estimates are contained in the accompanying appendices.

Table 1: Directs (final demand) of EcoEngineers project in Plymouth County

Type of impact Amount Sector Code

Cost of land development (sewage, rail, highways, etc.)

$4,804,000 233293

Cost of building construction $990,000 233230Cost of engineering (installa-tion)

$8,950,900 541300

Wholesale trade (durable goods)

$5,967,267 420000

Cost of fueling station $1,000,000 2332A0Total $21,712,167 Operations (annual): Additional natural gas sales $492,750 211111 & 325190Feedstock (cattle farming) $1,001,782 1121A0Total $1,494,532

Source: Goss & Associates based on IMPLAN’s I-RIMS Model

Table 2: Projected total impacts of EcoEngineers project in Plymouth County

Project construction (18 months)

Annual operations (per year impacts)

Output (sales) $28,591,295 $1,734,018 Earnings (labor income) $9,322,805 $307,134 Employment 231.8 5.4


SUMMARY OF ANNUAL IMPACTS


EcoEngineers’ Plymouth project has the potential to boost state and local tax revenue. As hown in Table 3, real property tax for the project’s building could lift property taxes by over $61,000 during the first year of operation. Adding in taxes collected on residential property, retail sales and personal income results in almost $26,000 in additional revenue flowing into state and local tax coffers.

Table 3: Projected impacts of EcoEngineers project in Plymouth County on state and local taxes

Sector 2016 2017-2035 TotalCommercial Property Tax $61,077 $1,757,688 $1,818,766 Residential Property Tax $8,028 $231,082 $239,110 Sales Tax (households) $7,525 $190,605 $198,130 Personal Income Tax $10,443 $264,514 $274,956 Total $87,072 $2,443,889 $2,530,962


Introduction


Introduction Goss & Associates was asked by EcoEngineers to estimate the economic impact of construction and annual operations of the planned anaerobic digestive system (hereafter ADS) on Plymouth County and LeMars, Iowa.5

Estimates that follow were produced using initial business and area conditions listed in Table 4 and the methodology described in Appendix A.

Figure 1.1 presents a simplified schematic of an anaerobic biomass system.

Tables 5 and 6 provide detailed estimated impacts. Both the construction and operations phases impact all 20 industry sectors present in Plymouth County.

5Principal investigator’s biography is in Appendix D of this study

Figure 1.1: Sample operation of Anaerobic Digestive System (ADS)


The economic impacts identified in this study are short-run in nature and represent annual, recurring events. Long run, but intangible factors, such as work force development, and knowledge enhancement are acknowledged, but no attempt is made to assign dollar values to them. The next section of this report provides detailed economic impacts of EcoEngineers’ operations based on the assumptions listed in Table 4.

Table 4: Economies at a glance, Plymouth County, Iowa and U.S. comparedPopulation July 1, 2015

Plymouth County 24,800 Iowa 3,123,899 U.S. 321,418,820

Population growth, 2010-15 Plymouth County -0.7% Iowa 2.5% U.S. 4.1%

Percent white, 2014 Plymouth County 97.2% Iowa 92.1% U.S. 77.4%

Percent of population over 16 in labor force Plymouth County Iowa 67.9% U.S. 63.5%

Retail sales per capita, 2012 Plymouth County $10,842 Iowa $14,607 U.S. $13,443

Percent of population over 25 with high school diploma Plymouth County 92.3% Iowa 91.3% U.S. 86.3%

Percent of population over age 25 with bachelor’s degree Plymouth County 20.0% Iowa 26.4% U.S. 29.3%

Median household income, 2014 Plymouth County $57,583 Iowa $52,716 U.S. $53,482

Percent of population in poverty, 2014 Plymouth County 7.6% Iowa 12.2% U.S. 14.8%

Percent of population in poverty, 2014

INTRODUCTION


Area Description and Assumptions The construction phase of EcoEngineers’ Plymouth County project will impact all 20 sectors in the I-RIMS model. The top 3 impacted sectors, outside of construction and wholesale trade, will likely be the Professional, Scientific and Technical Services ($9.7 million); Real Estate and Rental and Leasing Services ($1.4 million) and Finance and Insurance ($643,130) sectors. Table 5 provides the detailed impacts from the construction phase.

Construction Phase

Table 5: Impact of project construction in Plymouth County (18 months)

Sector Output Earnings EmploymentProfessional, scientific, and technical services

$9,666,673 $3,301,231 0.0

Construction $6,950,746 $1,839,820 0.6Wholesale trade $6,436,750 $2,522,662 0.2Real estate and rental and leasing

$1,352,889 $128,279 50.5

Finance and insurance $643,130 $211,596 0.2Transportation and warehousing $560,148 $216,115 28.8Retail trade $401,997 $173,376 6.6Food services and drinking places

$398,564 $121,869 4.9

Health care and social assistance

$335,201 $176,964 0.9

Management of companies and en-terprises

$320,426 $175,680 4.2

Administrative and waste management services

$314,855 $153,970 5.0

Information $264,986 $52,363 98.3Utilities $224,126 $20,184 1.4Mining $111,971 $23,020 6.9Manufacturing $93,299 $64,330 0.8Arts, entertainment, and recreation

$55,486 $12,231 5.4

Educational services $37,942 $21,214 1.9Agriculture, forestry, fishing, and hunting

$3,415 $911 0.0

Accommodation $2,323 $560 8.9Other services $416,368 $238,602 6.0Total $28,591,295 $9,454,975 231.8



Output (sales) The annual operations of EcoEngineers’ Plymouth County project will impact all 20 sectors in the I-RIMS model. The top 3 impacted sectors, outside of agriculture and mining (gas extraction), will be the Manufacturing ($247,961); Real Estate and Rental and Leasing Services ($35,640) and Finance and Insurance ($26,055) sectors. Table 6 provides the detailed impacts from the operations phase.

Operations Phase

Table 6: Impact of operations in Plymouth County (annual)

Sector Output Earnings EmploymentAgriculture, forestry, fishing, and hunting

$1,019,267 $203,051 2.1

Mining $263,087 $3,029 1.6Manufacturing $247,961 $36,078 0.1Real estate and rental and leasing $35,640 $3,026 0.1Transportation and warehousing $26,055 $9,327 0.2Wholesale trade $23,309 $9,135 0.1Construction $21,068 $5,623 0.2Finance and insurance $16,727 $5,500 0.1Management of companies and en-terprises

$16,295 $8,934 0.1

Retail trade $12,671 $5,470 0.2Health care and social assistance $10,456 $5,524 0.2Utilities $10,455 $1,040 0Food services and drinking places $7,251 $2,150 0.2Professional, scientific, and techni-cal services

$5,613 $1,980 0.1

Administrative and waste manage-ment services

$4,288 $1,413 0.1

Information $3,997 $721 0Educational services $1,269 $708 0Arts, entertainment, and recreation $904 $176 0Accommodation $45 $11 0Other services $7,661 $4,237 0.1Total $307,134 5.4



Sales Growth While the construction phase will have an impact on the local economy for approximately 18 months, the operations phase will have an ongoing impact on the local economy.

Table 7 provides a summary of the anticipated growth in output (sales) activity for Plymouth County. We estimate that sales activity will grow by $45.7 million during the 20 years covered in this study.

Manufacturing output is estimated to increase by approximately $6.5 million from 2016 to 2035. Over the same time period, sales in the Transportation and Warehousing sector will see experience activity grow by nearly $690,000; retail trade will grow by approximately $333,626.

Table 7: Projected sales growth in Plymouth County

Sector 2016 2017-2035 TotalAgriculture, forestry, fishing, and hunting

$1,019,267 $25,818,390 $26,837,657

Mining $263,087 $6,664,084 $6,927,170 Manufacturing $247,961 $6,280,927 $6,528,888 Real estate and rental and leasing $35,640 $902,768 $938,408 Transportation and warehousing $26,055 $659,994 $686,050 Wholesale trade $23,309 $590,436 $613,745 Construction $21,068 $533,655 $554,723 Finance and insurance $16,727 $423,713 $440,441 Management of companies and en-terprises

$16,295 $412,746 $429,041

Retail trade $12,671 $320,955 $333,626 Health care and social assistance $10,456 $264,852 $275,308 Utilities $10,455 $264,828 $275,283 Food services and drinking places $7,251 $183,678 $190,930 Professional, scientific, and techni-cal services

$5,613 $142,185 $147,798


$4,288 $108,617 $112,905

Information $3,997 $101,237 $105,234 Educational services $1,269 $32,155 $33,424 Arts, entertainment, and recreation $904 $22,902 $23,807 Accommodation $45 $1,130 $1,174 Other services $7,661 $194,047 $201,707 Total $1,736,034 $43,923,300 $45,659,335


OPERATIONS PHASE


Earnings Growth Table 8 provides a summary of the anticipated growth in earnings (labor income) for Plymouth County. We estimate that earnings will grow by $8.1 million during the 20 years covered in this study.

Manufacturing earnings are expected to increase by approximately $949,943 from 2016 to 2035. Over the same time period, the Transportation and Warehousing sector will experience earnings growth of more than $245,000;, and management of companies and enterprises will grow by approximately $235,230.

Table 8: Projected earnings growth in Plymouth County

Sector Output Earnings EmploymentAgriculture, forestry, fishing, and hunting

$203,051 $5,143,364 $5,346,416

Manufacturing $36,078 $913,865 $949,943 Transportation and warehousing $9,327 $236,247 $245,574 Wholesale trade $9,135 $231,401 $240,537 Management of companies and en-terprises

$8,934 $226,297 $235,230

Construction $5,623 $142,439 $148,062 Health care and social assistance $5,524 $139,930 $145,454 Finance and insurance $5,500 $139,315 $144,814 Retail trade $5,470 $138,565 $144,035 Mining $3,029 $76,728 $79,757 Real estate and rental and leasing $3,026 $76,657 $79,683 Food services and drinking places $2,150 $54,454 $56,604 Professional, scientific, and techni-cal services

$1,980 $50,154 $52,134


$1,413 $35,788 $37,200

Utilities $1,040 $26,346 $27,386 Information $721 $18,253 $18,974 Educational services $708 $17,934 $18,642 Arts, entertainment, and recreation $176 $4,457 $4,633 Accommodation $11 $272 $283 Other services $4,237 $107,337 $111,575 Total $307,134 $7,779,802 $8,086,936


OPERATIONS PHASE


Fiscal Impacts

EcoEngineers Plymouth Project will grow the local tax base. Table 9 lists assumption for fiscal impacts:

Table 9: Fiscal impact assumptions

Mill levy (per $1,000 of assessed value) 30.6921

Initial median home value $130,888Home ownership rate 71.8%

Growth rate in property tax rates 4.0%Sales tax 7.0%Effective income tax rate 3.4%Percent of earnings spent on taxable sales 35.0%

Sources: Plymouth County Tax Assessor; Iowa Department of Revenue; U.S. Census

Table 10 provides a summary of projected state and local tax collections resulting from EcoEngineers’ Plymouth County project. As estimated, the project will add more than $2.5 million to state and local tax coffers during the first 20 years of the project. Commercial property taxes on the project’s facilities are projected to add over $1.8 million to the property tax base. Residential property taxes are expected to increase in excess of $239,000 and personal income tax is estimated to rise by nearly $275,000.

Table 10: Projected state and local tax collections, 2016—2035

Sector 2016 2017-2035 TotalCommercial Property Tax $61,077 $1,757,688 $1,818,766 Residential Property Tax $8,028 $231,082 $239,110 Sales Tax (households) $7,525 $190,605 $198,130 Personal Income Tax $10,443 $264,514 $274,956 Total $87,072 $2,443,889 $2,530,962


OPERATIONS PHASE


OPERATIONS PHASE

Utilization of energy products and renewable fertilizer

Energy crop cultivation

• Shahsi data or Biofuels atlas

•

Indirect Impacts

• CNG utilization and clean air:

• Economic development: waste water infrastructure:

• Nutrient leaching mitigation:

In addition to the ADS facility, the project has the potential to positively impact Plymouth County with the growth of related business operations. A truck conversion operation located in Plymouth County would have a direct impact of between $1.5 million to $4.4 million; this does not include facility real estate and building construction costs. Table X1, below, provides a summary of the cost of conversion.

The conversion of a dedicated-fuel fleet (73 trucks) will result in a total increase of $5.2 million in annual sales activity in Plymouth County, with spillover spending accounting for $805,394 of the total. The conversion operations will support 20.6 workers and $1.1 million of earnings (labor income). Dual-fuel conversion operations (146 trucks) will increase Plymouth County sales by $1.7 million, increasing earnings by $391,598 and supporting 6.9 workers.

A CNG fueling station with sales receipts consistent with annual production of CNG at the Plymouth County ADS facility would have a direct impact of at least $2,952,278 (1,250,965 diesel gallon equivalent per year X $2.36 per DGE).6 With potential annual receipts of nearly $3.0 million, a fueling station in Plymouth County has the potential to increase total sales by approximately $4.1 million, increasing labor income by over $1.5 million and supporting 59.6 workers. Table 12 summarizes the impact of related operations.

6 DGE estimate, EcoEngineers; DGE price, The Alternative Fuel Price Report (January 2016), U.S. Department of Energy. The Alterna-tive Fuel Price Report is a snapshot in time of retail fuel prices. Alternative fuel truck fleets can obtain significantly lower fuel prices than those reported in the AFPR by entering into contracts directly with local fuel suppliers. Contract prices will vary, depending on fleet size and amount of fuel to be purchased, distance from the supplier, region of the country and other factors (from Alternative Fuel Data Center).

Table 11: Truck Fleet Conversion Costs Type of Truck Conversion

Number of Trucks

Cost per Truck

Total Cost of Conversion

Annual Cost of Conversion*

Dedicated-Fuel Conversion 73 $180,000 $13,135,135 $4,378,378Dual-Fuel Conversion 146 $30,000 $4,378,378 $1,459,459

Source: Goss & Associates based on IMPLAN’s I-RIMS Model*Fleet conversion spread over a 3 year time period

Table 12: Impact of related operations in Plymouth CountyCategory Sales (output) Earnings Employment Dedicated-Fuel Conversion $5,183,772 $1,174,794 20.6Dual-Fuel Conversion $1,727,924 $391,598 6.9CNG Fueling Station $4,081,422 $1,509,065 59.6



OPERATIONS PHASE

Table 13 summarizes the sales and earnings impact of the dedicated-fuel conversion operation from 2016 through 2035. Sales will see an increase of $136,490,548 and earnings (labor income) will increase by $30,932,741.

Table 14 provides a summary of sales and earnings increases associated with the dual-fuel conversion operation through 2035. The conversion operation will boost sales activity in Plymouth County by $45,496,849 and will boost earnings by $10,310,914.

Table 15 summarizes the sales and earnings impact of the CNG fueling station operation from 2016 through 2035. Sales will increase by $107,465,283 and earnings (labor income) will increase by $39,734,215.

Table 16 provides a summary of the fiscal impact of worker income and spending directly and indirectly related to the dedicated-fuel conversion operation. In 2016, the state and local impact is $98,830; the impact through 2035 is approximately $2.7 million. The estimates do not include commercial property taxes or taxes associated with business operations.

Table 13: Impact of Dedicated-Fuel Conversion Operation, 2016-2035Category 2016 2017-2035 TotalDedicated-Fuel Conversion Sales $5,183,772 $131,306,776 $136,490,548Dedicated-Fuel Conversion Earnings $1,174,794 $29,757,947 $30,932,741


Table 14: Impact of Dual-Fuel Conversion Operation, 2016-203Category 2016 2017-2035 TotalDual-Fuel Conversion Sales $1,727,924 $43,768,925 $45,496,849Dual-Fuel Conversion Earnings $391,598 $9,919,316 $10,310,914


Table 15: Impact of CNG Fueling Station Operation, 2016-2035Category 2016 2017-2035 TotalCNG Fueling Station Sales $4,081,422 $103,383,861 $107,465,283CNG Fueling Station Earnings $1,509,065 $38,225,150 $39,734,215


Table 16: State and Local Tax Collections, Dedicated-Fuel Conversion OperationsSector 2016 2017-2035 TotalResidential Property Tax $30,105 $866,558 $896,663 Sales Tax (households) $28,782 $729,070 $757,852 Personal Income Tax $39,943 $1,011,770 $1,051,713 Total $98,830 $2,607,398 $2,706,228



OPERATIONS PHASE

Table 17 provides a summary of the fiscal impact of worker income and spending directly and indirectly related to the dual-fuel conversion operation. In 2016, the state and local impact is $32,943; the impact through 2035 is nearly $902,076. The estimates do not include commercial property taxes or taxes associated with business operations.

Table 18 provides a summary of the fiscal impact of worker income and spending directly and indirectly related to the fueling station operation. In 2016, the state and local impact is $174,581; the impact through 2035 is nearly $4.9 million. The estimates do not include commercial property taxes or taxes associated with business operations.

Table 17: State and Local Tax Collections, Dual-Fuel Conversion Operations Sector 2016 2017-2035 TotalResidential Property Tax $10,035 $288,853 $298,888 Sales Tax (households) $9,594 $243,023 $252,617 Personal Income Tax $13,314 $337,257 $350,571 Total $32,943 $869,133 $902,076


Table 18: State and Local Tax Collections, Fueling Station Operations Sector 2016 2017-2035 TotalResidential Property Tax $86,301 $2,484,133 $2,570,434 Sales Tax (households) $36,972 $936,516 $973,488 Personal Income Tax $51,308 $1,299,655 $1,350,963 Total $174,581 $4,720,304 $4,894,885



Economic impacts can be divided into direct, indirect and induced. The most obvious direct impact of the construction and operation of an anaerobic digestive system on the economy comes in the form of salaries to EcoEngineers workers residing in the area. Indirect impacts come from expenditures by EcoEngineers vendors to their suppliers.

Employees of the supplying firms then spend their wages and salaries primarily in Plymouth County. This re-spending, or second round multiplying, is referred to as an induced impact. From an economic perspective, the dollars that remain and are re-circulated in the area’s economy are very powerful in generating jobs and income for the area.

Direct Economic Impacts. Operating revenues from the anaerobic digestive system flowing into the area have direct economic effects on the local economy by making expenditures for goods and services and by paying employee salaries. In addition, expenditures by employees from other areas of the country visiting Plymouth County produce direct impacts on the region affecting, for example, the area’s lodging industry.

Indirect Economic Impacts. Anaerobic digestive system operations will also produce indirect economic effects on the area economy. For example, hotels and lodging establishments that house remote employees and guests buy merchandise from area wholesalers. Furthermore, EcoEngineer expenditures encourage the startup and expansion of other businesses related to the contract. Anaerobic digestive system operations generate indirect effects by increasing: (a) the number of firms drawn to a community, (b) the volume of deposits in local financial institutions and, (c) economic development. This is particularly important due to Iowa’s leadership role in alternative energy production.

Induced Economic Impacts. Induced impacts in the county and region occur as the initial spending feeds back to industries in the region when workers in the area purchase additional output from local firms in a second round of spending. That is, anaerobic digestive system operations increase

overall income and population, which produces another round of increased spending adding to sales, earnings and jobs for the area. Spending is re-circulated creating overall spending that is a multiple of the initial expenditure. This is termed the multiplier effect and is discussed in the next section.

The Multiplier Effect When employees directly linked to the digestive system spend their salaries within the community, the spending filters through the local economy and causes increased overall spending greater than the initial spending. The impact of this re-spending is known as the multiplier effect.

Economic impacts that take place outside the local economy, for example purchasing from Omaha firms, are called leakages and reduce the multiplier and overall impacts. They are excluded when estimating regional economic impacts.

While the direct effects of expenditures can be measured by a straightforward methodology, the indirect and induced effects of anaerobic digestive spending must be estimated using regional multipliers.Community characteristics that affect leakages, and consequently the multiplier include:

Location. Distance to suppliers affects the willingness to purchase locally. For example, if Plymouth County firms are unable to provide supplies to service anaerobic digestive system demands and there are businesses outside Plymouth County that can furnish the needed products and/or services, then vendors will be encouraged to spend in the¬¬¬ area. This results in greater leakages, lower multipliers and smaller impacts.

Population size. A larger population provides more opportunities for companies and workers to purchase locally. Larger population areas are associated with fewer leakages and larger multipliers. Thus, in general, spending flowing into Plymouth County will have larger impacts than the same level of spending flowing into more rural portions of the state.

Appendix A - Methodology


Type of industry. A community will gain more if the inputs required by local industries for production match local resources and are purchased locally. Thus, over time, as new firms are created to match the requirements of the ADS system, leakages will be fewer, resulting in larger multipliers and impacts. For example, wholesale firms in Plymouth County will expand to meet the increasing demands of anaerobic digestive system operations.7

The next section discusses the selection of an estimation technique to measure the direct, indirect and induced impacts of the anaerobic digestive system in Plymouth County.

Choosing a Technique to Measure Impacts Many types of public and private sector decisions require an evaluation of probable regional effects. Since important impacts are often economic, this requirement has created a need for regional economic impact models.

The three most common types of impact models are economic base, econometric, and input-output (I-O). Two of the three impact models have inherent disadvantages that markedly reduce their viability for estimating the impact of increased spending in the Plymouth County economy.

Economic Base Models. Economic base models divide the economy into two sectors – the local/service sector and the export sector. The economic base multiplier is an average for all the economy making it impossible to distinguish, for example, the impact of an anaerobic digestive system operations from that of a new manufacturing plant.

Econometric Models. Econometric models use past data to statistically link sectors of the economy. These models have two major weaknesses. First, the time series data used in constructing econometric models are often unavailable at the county and metropolitan area level, thus precluding county-level analysis. This is

7Bartik (1991) estimated that 75% of the net new jobs result-ing from a business expansion or business re- location go to in-migrants.

especially true for rural counties and for counties with small populations. Second, econometric models are costly to build and maintain.

Input-Output (I-O) Models. I-O models are the most frequently used types of analysis tools for economic impact assessment. Input-output is a simple general equilibrium approach based on an accounting system of injections and leakages. Input-Output analysis assumes that each sector purchases supplies from other sectors and then sells its output to other sectors and/or final consumers.

Historically, high costs precluded the extensive use of I-O models in regional impact analysis. For example, approximately $250,000, in 1987 dollars, was expended over a five-year period for the collection and processing of data for a 500-industry Philadelphia I-O study.

However, with the advent of “ready-made” multipliers produced by third parties, such as the U.S. Forestry Service, I-O multipliers became a much more viable option for performing impact analysis.

All purely non-survey techniques or “ready- made” multipliers take a national I-O table as a first approximation of regional inter-industry relationships. The national table is then made region-specific by removing those input requirements that are not produced in the region. This study will use input-output models to estimate the impact of construction and operations of the anaerobic digestive system on the area economy.

Input-Output Models: A Preferred Methodology Input-Output systems were originally developed by Wassily Leontief (1941) to assist in planning a national economy. Input-Output represents an effective method for depicting and investigating the underlying processes that bind industries of a region. It provides a technique to project into the future the magnitude of important additions or injections into the local economy.

Input-Output models are composed of three basic tables. The first, the Transactions Table, traces inter-industry sales and purchases

APPENDIX A - METHODOLOGY


within a defined region. The next table, the Direct Requirements Table, answers the question, “If a certain dollar value of intermediate requirements is present for a total dollar value of gross output, what are the intermediate requirements for each industry per dollar of gross output?” The manipulation of these two tables results in the final and most important of the tables, the Industrial Multiplier Table. This table is then used to calculate overall impacts.

Chief problems involved in the use of multipliers are:

Selection of industries. For which industries will impacts be estimated? The selection is generally dictated by definitions used by government agencies that collect the data. For example, most government data do not distinguish employment in a cardiac center or clinic from that in a hospital.

Selection of a region. Again, government agencies collect aggregate data by county, thus requiring the analysis to take place at the county level, or combination of counties. Most developers of “ready-made” multipliers use the County Business Patterns as the primary data source. For this study, Plymouth County is the area of analysis.

Major Assumptions of the I-O Model• Constant production coefficients. For example,

it is assumed that “x” dollars of new revenues flowing to Plymouth County will produce “y” dollars of output regardless of the scale of operations. In other words, the I-O model assumes constant returns to scale.

• Constant technological relationships between inputs and outputs. Thus I-O multipliers assume that technology remains the same between the time the multipliers are calculated and the period for which impacts are estimated.

• Old purchasing patterns are the same as new purchasing patterns. Thus, it is assumed that purchasing patterns between anaerobic digestive system operation and its suppliers in Plymouth County will be the same as other firms

in the industry in the area.

• No supply constraints. I-O models do not take into consideration the problem of finding an adequate supply of workers to fill new jobs brought about by the relay services contract.

Despite their weaknesses and somewhat restrictive assumptions, I-O multipliers are the tools most often used for impact analysis. Due to their documented effectiveness and relatively low cost, the I-O multipliers used in this study are those produced by the U.S. Forestry Service and marketed by the Minnesota IMPLAN Group Inc. (www.implan.com). The next section describes these multipliers—Regional Input-Output Modeling System (RIMS).

I-RIMS Multipliers Used in this Study The U.S. Bureau of Economic Analysis (BEA), a division of the U.S. Commerce Department created RIMS (regional input-output modeling system) in the 1970s. Recently, IMPLAN updated the RIMS approach and for this study we use their I-RIMS I-O modeling methodology.

I-RIMS Multipliers are created from IMPLAN input-output models for local and regional economies. These models use data collected for individual regions, not national averages. I-RIMS uses IMPLAN’S proprietary Trade Flow Model which tracks the flows of goods and services between every county in the nation.

I-RIMS produces four final-demand multipliers. Final-demand multipliers for output, for earnings, for employment and value-added. These multipliers measure the economic impact of a change in final demand, in earnings, or in employment on a region’s economy.

To effectively use the I-RIMS multipliers for impact analysis, users must provide geographically and industrially detailed information on the initial changes in output, earnings, or employment that are associated with the project or program under study. To provide this information, the user must answer five questions about the project or program.



• What is the affected region?• Which industries are initially affected?• Is there more than one phase of the project or program?• What are the initial changes in output, earnings, or employment?• Should the initial changes be separated into production costs, transportation costs, and trade margins? This study uses all four of I-RIMS four final-demand multipliers. Descriptions of the four multipliers are presented in Table A.1.

Table A.1: Multipliers provided by I-RIMS and used in this study

Type of Multiplier Description

Output Multipliers Total industry output per $1 change in final demandEarnings (labor income) Multipliers Total household earnings per $1 change in final demand

Employment Multipliers Total number of jobs per $1 million change in final demandValue-added Multipliers Total value-added per $1 change in final demand

Source:



Figure 3.1: Schematic of Impacts

Source: Goss & Associates 2016

Appendix B - Schematic of Sample ADS Impacts


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Appendix C - References


Ernie Goss is the Jack MacAllister Chair in Regional Economics at Creighton University and is the initial director for Creighton’s Institute for Economic Inquiry. He is also principal of the Goss Institute in Denver, Colo. Goss received his Ph.D. in economics from The University of Tennessee in 1983 and is a former faculty research fellow at NASA’s Marshall Space Flight Center. He was a visiting scholar with the Congressional Budget Office for 2003-2004, and has testified before the U.S. Congress, the Kansas Legislature, and the Nebraska Legislature. In the fall of 2005, the Nebraska Attorney General appointed Goss to head a published by Praeger Press in 2003, and his book Governing Fortune: Casino Gambling in America was published by the University of Michigan Press in March 2007.

He is editor of Economic Trends, an economics newsletter published monthly with more than 11,000 subscribers, produces a monthly business conditions index for the nine-state Mid-American region, and conducts a survey of bank CEOs in 10 U.S. states. Survey and index results are cited each month in approximately 100 newspapers; citations have included the New York Times, Wall Street Journal, Investors Business Daily, The Christian Science Monitor, Chicago Sun Times, and other national and regional newspapers and magazines. Each month 75-100 radio stations carry his Regional Economic Report.

Scott Strain is a senior research economist at Goss & Associates. He has worked as an economist and statistician for more than 20 years providing forecasts and analysis across a wide-range of industries. Scott served as an industry economist, working in new product development regarding both quantitative and qualitative research.Scott was Senior Director of Research for an economic development agency, providing economic impact and tax incentive analysis to both private businesses and government entities. He served on the business advisory committee that worked with Nebraska state senators and the director of the state’s Economic Development Department

to develop the Nebraska Advantage Act – a comprehensive package of business incentives that has helped to add more than $6 billion in new capital investment and over 13,000 new jobs in the state of Nebraska since the Act’s inception in 2006.

Jeffrey Milewski is a senior research economist at Goss & Associates. He received his master’s degree in political economy from the London School of Economics and Political Science in 2013. He completed his bachelor’s degree at Creighton University in 2007, having studied economics and finance. Milewski also has experience working in finance and as an entrepreneur. Recently, he has co-authored impact studies on a range of topics such as property-casualty insurance, highway expansion, cost/benefit analysis, and national sporting events.

Appendix D - Researchers’ Biographies


SECTION 4 - THE IMPACT OF HIGHWAY 81 WIDENING ON ACCIDENTS


SECTION 5 - THE IMPACT OF HIGHWAY 81 WIDENING ON COMMUTE TIMES


SECTION 6 - ALTERNATIVE HIGHWAY FUNDING STRATEGIES

NEBRASKA’S HIGHWAY 81 4-LANE EXPANSION: DRIVING ECONOMIC GROWTH, 2017-2018 AND BEYOND Page 46

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