Ecosystem service benefits to water users from perennial biomass production

Abstract

Although many agree that a transition to renewable energy sources is needed to avoid the climate consequences of continued reliance on fossil sources, price is a barrier. For renewable energy sources, including bioenergy, penetrating energy markets depends on lowering prices to compete with the price of fossil sources, but the tools used in decision making, such as supply curves, exclude non-market benefits from ecosystem services. Here, we extend the economic concept of an economic supply curve to account for ecosystem services co-produced with perennial biomass. We developed three new types of supply curves to visualize the increased supply of biomass ('sustainable supply') with sufficient water-quality benefits to offset biomass production costs. Using these tools, we show that the value of water-quality improvements could significantly reduce the break-even price of perennial feedstocks if it were available to farmers. In the most optimistic case, nearly half of potential biomass supply in a large tributary of the Mississippi river basin carried water purification value exceeding the cost of biomass production. Furthermore, adding the value to swimmers and waders offset production cost for over 90% of potential supply. Simulated benefits were context specific. For example, total value for water drinkers peaked at an intermediate level of fertilizer application. Geographically, benefits were highest in the eastern portion of the river basin. This research shows where the sustainable supply is needed and can generate value; the next step is to match this supply with credit buyers. Efforts to internalize the values of ecosystem services into biomass prices could help to meet Biden administration targets to meet 100% of sustainable aviation fuels.

Keywords: Bioenergy; Break-even price; Ecosystem services; Perennial biomass; Supply curves; Water quality.