Using Land for Solar Projects vs. Agricultural Crops: What's the Economic Impact?

The K-Junction Solar Facility will bring $130 million to the local economy, provide $27 million to the McCool schools and $43 million in tax revenue to York County. The investment and economic impact is significant. Still, some have raised an important question - “what is the actual economic impact knowing that the property will no longer be producing agricultural products?” We turned to the bright economists at the University of Nebraska to answer that question. 

The University of Nebraska completed an economic impact study on the project. They assessed the net economic impact of the K-Junction Solar Facility, taking into consideration what the land could generate in soy and corn products, should they produce the highest yield crop in the same ratios as other Central Nebraska farms. They found that the net economic impact would still be over $127 million during the construction phase of the project. 

“Payments to leaseholders who live in the region and wages to local construction workers further support regional businesses as these households spend some of their income locally,” wrote Dr. Eric Thompason. “In addition, out of state construction workers also pay rent or lodging and have restaurants and miscellaneous spending.” 

It is estimated that 90 percent of leaseholders and over 50 percent of workers would come from Central Nebraska, meaning that most of the funds generated from the project will go back into the local economy. After discounting for the lost crop production, Dr. Thompson found that “the net multiplier impact on other Central Nebraska businesses is $53.8 million during the development period.” As a result of these millions going to other local businesses, they will need to hire employees and are estimated to generate $16.4 million in wage revenue as 337 additional people are put to work. 

“With millions being poured into York County, we have an opportunity for further growth in other areas like healthcare and the service sector. Plus, as construction workers become part of this project we have the opportunity to recruit their families, bringing additional workers to our businesses and children to our schools,” said Lisa Hurley, Executive Director of York County Development Corporation (YCDC).

But, what about the long-term economic impact after the construction phase is complete? Will the K-Junction Solar Facility still benefit York County? Dr. Thompson says, “yes.” When calculated per 100 acres, Dr. Thompson found that the net economic impact will be $7.3 million after discounting for lost crop production. $2.2 million of that is due to the multiplier effect, meaning that other local businesses will continue to benefit from the project, generating additional income and creating more jobs outside of the solar project itself. Breaking it down to the job level, for every 100 acres that are put in production for solar, 13.5 jobs are created by other local businesses. 

Thanks to Dr. Thompson and the University of Nebraska, we can break it down even further and make a comparison between agricultural crops and solar production per acre. $7,393 is generated per acre put into use for solar as compared to $879 per acre for crop production. “Agricultural land is incredibly important to our economy and to our culture. It’s core to who we are in York County,” said Hurley. “Still, there are a lot of farmers who don’t have someone to take over when they retire, or simply don’t want to farm any more. They need options for ways to continue generating income from their land. The K-Junction Solar Facility gives them a good alternative that also generates additional income for our local economy and McCool Junction school. With the economic impact study complete we now have a better understanding of the number of jobs and tax revenue that will be created during the construction and maintenance phases of this project.” There is a lot of work to do, including zoning, environmental and many other steps before K-Junction would become a reality. It is beneficial to have the understanding of the overall economic impact as those discussions happen. 

We encourage everyone to read the full Economic Impact Study completed by the University of Nebraska.

If you are looking for more information, make sure to read the articles "Are Renewable Energy Projects Good For Nebraska?" and "A Farmer’s Perspective on the McCool Solar Project".