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

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. 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