Utilization of Excess Manure Within the Chesapeake Bay Watershed: A Cost Minimization Approach

As livestock production has become spatially concentrated, the amount of manure nutrients that need to be managed off-farm have expanded. Chesapeake Bay Watershed has been particularly impacted by trend. Kellogg (2000) reports that this watershed is among the highest ranked priority watersheds in the U.S. that is in need of protection from manure nutrients. This study focuses evaluating cost-effective ways of utilizing excess manure from poultry, dairy and swine production in Chesapeake Bay region. Alternatives examined are crop and forest land application, composting, pelletization, and electricity generation. A capacitated mixed linear integer programming is used in this study. This model is used to solve for cost-effective manure transport and to determine facility locations for processing manure at the least-cost within the CBW. The model is designed to allocate excess manure to land application or processing in order to minimize the costs of appropriately utilizing all excess manure. In this study, model scenarios are created to assess the optimal mixture and least cost solutions for utilizing manure by examining the impact of farmer's willingness to accept manure, implicit values of manure use in land application and processing, and policies such as manure transport subsidies, energy tax credits and cost-sharing of composting facility construction on the A base model and 13 different scenarios are considered in this study. Under the base model, the total cost of utilizing excess manure to society is slightly under $200 million. 84% and 16% of total cost is spent on land application option of manure and processing options, respectively. Even when agricultural land available for manure application was limited with landowners' willingness to accept manure, land application is still the most preferred manure utilization option. The results show that when a manure transport subsidy program is implemented, the total cost of the objective function decreases between 78% and 80% depending on the other components of each scenario. However, about an average of $1.65 transport subsidy is needed to reduce the total cost of the objective function by $1. This implies that the cost of the transport program to society is greater than the benefits in terms of cost reduction. High-capacity litter composting facilities are the most economically viable processing option and are built in every model scenario. Only a $0.54 cost-share for composting facilities was needed to reduce the total cost of the objective function by $1. Unlike the transport subsidy program, there are substantial cost-savings provided by a cost-share program. Processing poultry litter for energy production, however, is the least economically viable processing option. In the model, the current renewable energy tax credit has no impact on building energy facilities that transform manure into electricity. Unless a state or federal program subsides at least 50% of total capital cost, the energy production option will remain economically not competitive with land application and other processing options.