Online Tool Helps Swine Producers Weigh the Economics of Switching Manure Management Systems

by Jerome Dumortier, Molly Burress, John Crespi, Dermot Hayes, Adriana Valcu-Lisman, and Sara Scott

When manure decomposes under oxygen-free (anaerobic) conditions, it produces methane emissions, a potent greenhouse gas (GHG). Many livestock producers can use an anaerobic digester (AD) to capture the methane and generate biogas, thus reducing GHG emissions in a way that also can produce energy. The producers can either use the resulting biogas or energy—electricity, renewable natural gas or compressed natural gas—on farm or sell it for off-farm uses. Furthermore, producers may also receive a payment through a carbon market to avoid emissions. However, for any livestock producer, the decision to invest in an anaerobic digester must first make financial sense.

In a recent collaborative project between USDA Economic Research Service, Iowa State University (ISU), and Indiana University Indianapolis, researchers looked at the costs and benefits to swine producers from switching manure management systems by installing anaerobic digester (ADs). The researchers created an online tool called “Swine Farm Anaerobic Digestion and Carbon Markets” that helps stakeholders evaluate potential rates of return of investing in an AD system. This cost-benefit analysis was conducted by considering a variety of scenarios including varying energy prices, investment levels, initial manure management systems, as well as swine farm size and type. 

ADs are more expensive than other manure management systems such as deep pits or anaerobic lagoons, but financial incentives can help offset their costs. When switching to an AD, the avoided emissions could be eligible for a payment through a carbon market. Carbon markets are voluntary programs that pay farmers to reduce emissions and sell the generated credits to entities interested in offsetting their own emissions. The carbon markets payments can substantially increase the AD’s profitability compared to profits from the sale of biogas alone. Whether biogas is converted to renewable natural gas, electricity, or compressed natural gas, and whether it is sold or used on farm, will depend on prevailing energy prices. To date, however, energy prices have not been high enough to encourage widespread AD adoption. 

Producer payments through carbon markets are also shown to improve the profitability for smaller farms that invest in ADs. Researchers estimated the smallest size operation that would find it profitable to install an AD over a range of energy prices and for two types of swine farms—breeding and market. As shown in figure 1, they found that higher carbon payments lead to large reductions in the minimum profitable farm size (number of swine head). For example, with no carbon payments and average energy prices, a market swine farm would need to have at least 8,000 head to find it profitable to adopt an AD. However, with carbon payments of $50 per ton, a farm with at least 4,000 head would find it profitable to install an AD. The minimum profitable farm size also varied with end use of the biogas. For example, for market swine farms and average energy prices, renewable natural gas was the most profitable end use, followed by compressed natural gas and electricity. 

While the researchers looked at a number of variables to determine potential profitability of investment in ADs, they wanted to provide individual users the flexibility to conduct a customized profitability study with an online decision and visualization tool. The tool lets users explore a variety of situations based on individual farm characteristics for a particular operation. Users enter the financial incentives potentially available for ADs, including the carbon payment price and the share of construction costs subsidized by government programs. Even if the producer is bearing the entire investment of the AD, they are able to see how carbon payments may help determine annual profits and the internal rate of return. As seen in the right panels of the online decision and visualization tool in figure 2, users can choose from a range of possible values to inform their customized cost-benefit analysis.

Producers can also enter other farm-specific information into the tool. Information about the current manure management systems establishes the GHG emission baseline to which the emissions from the construction of an AD are compared. The difference in these emissions form the basis for the carbon payments to the producer. The farm type and inventory determine the amount of emissions (with and without the AD) as well as the biogas produced. The producer can also select corn stover or wheat straw, depending upon what they use along with manure to obtain an optimal mix between liquids and solids in the AD. Users are also prompted to select the state to match prevailing energy prices to the profitability of an AD and the sale of biogas.

Figure 2 shows the estimated profits and internal rates of return for constructing a AD on a 5,000 head swine farm in Iowa with an existing anaerobic lagoon manure storage system. In this example, the operation would earn $75 per ton of carbon emissions avoided but would not receive any investment cost share assistance. The estimates show that for this farm, renewable natural gas would be the most profitable biogas end use under average or high energy prices. Over a five-year investment period, producers could expect to yield about $650,000 per year under average energy prices. The bottom panel of figure 2 shows the internal rate of return for the AD project depending on the number of years used in the calculation. The internal rate of return is always positive but varies depending on the biogas end use and energy prices. Renewable natural gas has the lowest rate of return, despite earning the highest average profits because this end use is the most expensive to construct.

For further information, users can consult the methods and models used to perform the calculations behind the online tool, which are discussed in the scientific publication, “Regional economic aspects of carbon markets and anaerobic digesters in the USA: the case of swine production" and in Technical Report 25-TR 51, Center for Agricultural and Rural Development, Iowa State University, available at https://www.card.iastate.edu/products/publications/synopsis/?p=1410.

Acknowledgements

This research was supported, in part, by the US Department of Agriculture (USDA) Economic Research Service (ERS) Cooperative Agreement Number 58-3000-1-0089. The findings and conclusions in this publication are those of the authors and should not be construed to represent any official USDA or US government determination or policy. The views expressed herein are those of the authors and do not necessarily reflect the views of the USDA.

This article is drawn from “Swine Farm Anaerobic Digestion and Carbon Markets,” an online visualization tool, available at https://www.card.iastate.edu/tools/ad-carbon-markets/ and Dumortier, J., Crespi, J., Hayes, D., Burress, M., Valcu-Lisman, A., Lewandrowski, J. "Regional Economic Aspects of Carbon Markets and Anaerobic Digesters in the United States: The Case of Swine Production" in Biofuels, Bioproducts and Biorefining, available at https://doi.org/10.1002/bbb.2615.

Suggested citation

Dumortier, J., M. Buress, J.M. Crespi, D. Hayes, A. Valcu-Lisman, and S. Scott. 2025. "Online Tool Helps Swine Producers Weigh the Economics of Switching Manure Management Systems." Agricultural Policy Review Fall 2025. Center for Agricultural and Rural Development, Iowa State University. https://agpolicyreview.card.iastate.edu/fall-2025/online-tool-helps-swine-producers-weigh-economics-switching-manure-management-systems