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Land Competition & the Multiplier Effect

February 6, 2022
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WRITTEN BY Dr. Eleni Bickell

Executive Summary 

The transition to renewable sources of energy, such as large-scale solar panels, can intensify the competition for land between energy production  and agricultural uses. One common approach to gauge the differences in final income between the two opposing uses of agricultural land is estimating the multiplier effect by measuring the change in final income. 

Highlights 

  • The multiplier effect from the use of land for soybean production is reflected as the producer buys inputs and supply chain workers purchase local goods and services. 
  • Soybean farming has a final income multiplier effect of 1.32, meaning $100 in income to a Missouri soybean farmer generates an additional $32 in income for others in the state (e.g., suppliers).

Limitations 

  • Detailed information of farming and solar farm operations, along with analysis, would be needed to provide more precise estimates between the two alternative uses of land (raising soybeans vs. leasing for solar panels).
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