Despite the wide array of benefits associated with willow biomass crops, expansion and rapid deployment of this system has been restricted by high production costs and, in some situations, a lack of market acceptance. The economics of willow biomass crops has been analyzed using a cash flow model (EcoWillow) that is publically available from SUNY — ESF (State University of New York-College of Environmental Science and Forestry) [34]. The model incorporates all the stages of willow crop production from site preparation and planting through to harvesting over multiple rotations, and transportation of harvested chips to an end user. The removal of the stools once the crop has expired at the end of seven rotations is also included in the model. The cash flow model is based on experience establishing and maintaining willow biomass crops in New York State. The model is flexible enough that it can be applied across the range of sites where shrub willow might be grown. Users can vary input variables and calculate cash flow and profits throughout the entire production chain from site preparation and crop establishment to the delivery of wood chips to an end user.

For the base case scenario in EcoWillow, a productivity of 12 odt ha-1 and a biomass price of $60 odt-1 showed an internal rate of return (IRR) over seven, three-year harvest cycles (i. e., 22 years) of 5.5% [35] with profits of $101 ha-1 yr-1 or $10 odt-1. The model shows that payback is reached in the thirteenth year with revenues from the third harvest neutralizing the project’s expenses. Harvesting, establishment, and land rent are the main expenses associated with willow biomass crops over their entire lifespan making up 32%, 23%, and 16% of the total undiscounted costs. The remaining costs including crop removal, administrative costs and fertilizer applications account for about 29% of the total costs.

For willow biomass crops, harvesting is the largest single cost factor, accounting for just under one-third of the final delivered cost. Harvesting, handling, and transportation account for 45-60% of the delivered cost [34]. Harvesting operations have a significant impact on the final cost of production because it is the operation that occurs most frequently during the life span of the willow crop. If seven, three-year rotations are run for this system, harvesting operations need to be conducted seven times. Each of those operations requires a harvester and system of collection wagons or trucks. Since this part of the production system makes up such a large portion of the final delivered cost and the harvesting systems being used are relatively new, opportunities for cost savings are significant. Improving harvesting efficiency by 25% could reduce the delivered cost of willow by approximately $0.50/MMBtu ($7.50/ton). Research and development work is underway to reach these targets using a cut-and-chip harvesting system that is based on a New Holland forage harvester and cutting head (Figure 12.4) specifically designed for short rotation woody crops like willow and poplar. Recent field trials of this harvesting system have generated throughput rates exceeding 50 green tons h-1 [35].

Harvest costs are also significantly influenced by the field design. Missing or inadequate headlands can create costly delays when handling harvesting equipment. Furthermore, maximizing row length and, thus, reducing unproductive turn-around time is crucial. For instance, increasing row length from 200 to 400 m, ceteris paribus, increases the IRR by 11% [34].

Another approach for decreasing harvest cost is to reduce the number of harvests over the crop’s lifespan. Increasing the production cycle to four years would result in five, four-year harvests instead of seven, three-year harvests, thus decreasing harvest costs per ton by about 14% and increasing the IRR for the entire system by about 11% [34]. This improvement in return is primarily associated with an increase in biomass at the time of harvest. However, this also assumes that mean annual willow growth does not decrease as rotation length increases and that the harvester can efficiently and effectively handle larger diameter stems.

Another alternative to reduce harvest costs is to use a smaller harvesting system that has lower capital and operating costs. One example is the NyVarra harvester, which could be used to harvest willow on a two-year rotation. This system is particularly appealing when biosolids are being land applied to willow fields and the producers are also generating some revenue from this operation. This has become more common in Europe in recent years. The limitations of a shorter harvest cycle and smaller harvesting system are that fewer tons are harvested in each rotation, so the fixed costs associated with both the harvester and chip collection system are spread over fewer tons and the rate of production of these systems is typically lower. Whether or not a smaller harvesting system and a more frequent harvest cycle is more economically attractive than a larger harvesting system is being explored further.

Willow biomass crop establishment is the second largest cost category in the production system, accounting for almost one quarter of the final delivered biomass cost [34]. The high upfront establishment costs are a barrier to the deployment of willow, especially since any return on these investments is not realized until the first harvest, which typically occurs four or five years after planting. Costs for planting stock typically account for over three quarters of the establishment expense for willow biomass crops. Current planting stock costs are in the range of $0.12 to $0.15 per cutting and with the current recommended planting density of 14 600 plants ha-1, the cost of planting material alone is $1752 to $2190 ha-1. There are two approaches to reduce costs associated with planting stock. One is to reduce the planting density and the second is to reduce planting material cost. As noted above, recent studies have suggested that the planting density could be reduced to 8800 plants ha-1 [27]. Furthermore, as willow biomass crops are expanded and demand for planting material increases, improvements in production of planting material in the nursery are anticipated to lower costs about $0.10 per cutting. If both a lower planting density and lower stock cost were implemented, costs of planting stock could be reduced by 50-60%. This would have a significant impact on both establishment costs and overall returns from the system.

Improving yields will increase revenues from willow biomass crops and will improve returns. Yield improvement is a key focus of research efforts to overcome the economic barrier to commercialization of this system [16]. Increasing yields by 50% from 11.3 odt ha-1 yr-1 would improve the IRR from 5.5 to 14.6% [34]. As noted above, significant improvements in yield have already been made with the production of new willow varieties and additional improvements will occur with new genotypes and improvements in the management of willow biomass crops.

Willow biomass cropping systems are in their infancy in North America and there is potential for large gains in yield by optimizing production practices and through breeding. By addressing system components that have the greatest influence on costs, the overall economics of these systems can be improved so that they can be deployed across the landscape. As the knowledge base about how willow grows and the roles it plays expands, it will be deployed more effectively so that in addition to biomass, other landscape benefits derived from this system can be optimized.