Financial Perspectives on the Use of Vegetative Environmental Buffers for Swine Odor Management

Abstract

<p>This multi-scale financial analysis begins at the farm level using discounted cash-flow methods to examine the costs of establishing and managing Vegetative Environmental Buffer (VEB) systems for swine odor mitigation in Iowa. Using a random sample of existing hog confinements throughout Iowa (n=60), site specific VEB systems were designed for each production site. Assuming each VEB was designed as a retrofit system, the full costs of establishing and managing VEBs were calculated for each facility. The effects of the cost share program, Environmental Quality Incentive Program (EQIP), were then examined.</p> <p>On average for the state of Iowa, excluding all potential land rent costs, the present value of VEB costs comes to just under $4,200 over a 20-year period. This cost assumes that the VEB was planted with relatively low-cost seedling stock. If the operator chose to plant a VEB with older, larger (but more expensive) planting stock in an effort to “buy time”, the present value cost more than doubles to almost $9,100 over a 20-year period. Across Iowa, upfront costs (costs associated with tree stock, site preparation and VEB establishment) ranges from 37% to 45% of total costs; the remainder costs are in the form of long-term maintenance of these tree systems. Across all of Iowa, the total costs per pig produced (over 20 years) comes to $0.04 per pig for the lower cost seedling options and $0.08/pig for the higher cost plant stock options. The cost share program, EQIP, can reduce total costs between 18% and 54% (low cost option and high cost option, respectively). The overall effects of EQIP are more pronounced when upfront costs are higher. For analytical purposes the effects of land rent (@ $177 per acre; 2008 state average) was factored in. On average, factoring in annual land rent for the area under trees on each site, total 20-year costs increase by 60% for the low cost position and by 23% for the high cost position.</p>