Hybrid input-output analysis to evaluate economic impacts of biomass energy

ABSTRACT

The introduction of the new biomass industry exerts influences that change the interactions among economic sectors by drawing the resources for generating electricity, pricing alterations from the existing market and competitively selling electricity to the power grid. These influences should be described and identified to ensure the benefits to the local economy. In this article, we deem to test the potential of hybrid I-O analysis to analyze the economic impacts and address the change in characteristics of the economic impacts of the biomass power plant. The resource utilization data from the existing biomass power plant located in Kochi Prefecture (Japan) is collected and then analyzed by a hybrid input-output (I-O) analysis. We found that (1) the use of cutoff function could determine the new economy’s structure included the biomass power plant where the allocation of resource in the economy is changed according to the consumption and production of the biomass power plant, (2) The power plant increases the total production of Kochi prefecture’s economy, and this benefit overthrows the negative effect of the loss of resource demand of the existing economic sectors. The use of the hybrid I-O to forecast the economic impacts on the local economy could enhance the decision made by the policymaker.