The objective of this dissertation is to analyze the economic impact of newly operational ethanol biorefineries on rural counties in the U.S. Midwest region for the period 2001 to 2015 using a quasi-experimental approach. Rapid growth in the ethanol industry expanded the number of ethanol plants located in the U.S. Midwest from 54 in 2001 to 173 in 2015. Out of the counties with 119 new ethanol biorefineries, 97 counties met the general treatment criteria defined in this dissertation, but only 56 of those counties qualified for the rural treatment criteria. Counties with ethanol biorefineries that qualified for treatment were organized into a treated group based on county level data. Six counterfactual control groups (or control counties without ethanol biorefineries) were contemporaneously matched to the treated counties based on the Mahalanobis distance metric evaluated on a set of 29 selection variables. Matching occurred on two levels. In the first level, matching was performed both for the in-state level and over the entire Midwest region. In the second level, three criteria were used to select the final control groups: Mahalanobis distance metric best match, population best match, and rural-urban continuum codes (RUCC) best match.
Economic impact is evaluated based on the growth rate in real per capita earnings for the treated group over a period from one to five years after treatment relative to the control group. A difference-in-differences (DID) model is used to assess the significance of results where the dependent variable is the natural log of real per capita earnings and a set of control variables is used to capture state fixed effects, time fixed effects and spillover effects. Empirical results evaluated against a representative Midwest control group and over six regression models adjusting for various fixed effects produced, on average, one-sided significant results for average treatment on the treated (ATOT) with a (min, max) range of growth rates as (5.53%-7.63%), (10.0%-12.0%), (14.7%-19.6%), (14.5%-18.3%), and (13.3%-18.9%) from one to five years after treatment, respectively. The minimum value of these estimates can be represented as an uncorrected average annual growth rate as 2.75%, 3.33%, 3.68%, 2.90%, and 2.22% over the respective period from one to five years after treatment. Employment levels for the treated group increased on average by 211 at the county level five years after treatment. A comparative Midwest control group lost, on average, 169 jobs over the five year period after treatment. A treated county employment multiplier calculated using the direct, indirect and induced employment impacts varied from 1.46 during the year of treatment to 7.6 five years after treatment relative to the control group. Five years after treatment, the treated group employment rate gradually increased, on average, by 2.2% which was better than either of the two counterfactual control groups used in this comparison.
Overall, the analysis presented in this dissertation does show statistically significant positive economic impacts, on average, for rural U.S. Midwest counties with newly operational ethanol biorefineries relative to control counties without an ethanol biorefinery. These results demonstrate that the Renewable Fuel Standard (RFS) contributed to positive rural economic development impacts in treated counties with the possibility of spillover effects positively affecting contiguous counties.
| Identifer | oai:union.ndltd.org:uky.edu/oai:uknowledge.uky.edu:agecon_etds-1083 |
| Date | 01 January 2019 |
| Creators | Hall, Scott W. |
| Publisher | UKnowledge |
| Source Sets | University of Kentucky |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Theses and Dissertations--Agricultural Economics |
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