Economic Impact Evaluation of a Biomass Power Plant Using a Technical Coefficient Pre-Adjustment in Hybrid Input-Output Analysis

This paper presents a new and improved method of hybrid input-output (I-O) to evaluate the economic impact of a biomass power plant’s resource production and consumption. The effect of resource consumption induces a change in an economy’s production structure and alters the technical coefficient of the hybrid I-O table, which should not be changed. Our study examines this problem based on two cases: a small cut-off ratio from the existing industry, in which the change in the technical coefficient can be ignored, and a large cut-off ratio from the existing industry, in which the technical coefficient is amended using the pre-adjustment method. Consequently, the biomass power plant using the large cut-off ratio from the existing industry case contributes about 1114 million yen to the local economy. A comparison of these two cases shows that the error caused by ignorance of the technical coefficient adjustment could result in 291.78 million yen less in total economic production, which is about 36% of the total additional production using the small cut-off ratio from the existing industry case. The losses in total economic production clearly increase in economic sectors that are related to the resource consumption of the biomass power plant