Environmental effects of energy crop cultivation in Sweden—II: Economic valuation

In this paper, environmental benefits of the cultivation of perennial energy crops in Sweden, which have been identified and quantified in an earlier paper, are evaluated economically. Several different benefits, ranging from global to site-specific, could be achieved by replacing annual food crops with perennial energy crops. The economic value of these environmental benefits, including reductions in costs to farmers (direct costs) and to society as a whole (external costs), has been estimated to be from US$ 0.1 up to US$ 5/GJ biomass. For comparison, the production costs (excluding transport) of Salix and reed canary grass are about 4.4 and US$ 5.0/GJ, respectively. Purification of waste water in energy crop cultivation has the highest economic value, followed by reduced nutrient leaching through riparian buffer strips, recirculation of sewage sludge, and reduced wind erosion through shelter belts consisting of Salix. The value of other environmental benefits is estimated to be less than US$ 0.7/GJ. If 200,000 ha of Sweden’s totally available arable land of 2.8 Mha were available for energy crop cultivation, around 45 PJ biomass could theoretically be produced per year, at an average cost of about US$ 0.7/GJ, including the value of environmental benefits. It is assumed that priority is given to cultivations with the highest total value, as several different environmental effects could be achieved on the same cultivation site. If 800,000 ha were to be available, the corresponding cost of some 150 GJ biomass per year would be around US$ 2.8/GJ.