The Location Decisions of Biodiesel Refineries

Abstract

We examine the community characteristics that lead to locating a biodiesel plant. Utilizing data that includes all biodiesel plants in the United States, we employ spatial econometrics to evaluate those characteristics that lead to a plant siting. While public policies associated with biofuels may be endogenous to location decisions, we find them unimportant except in the case of consumption mandates. Despite evidence of plant clusters, it does not appear that operating plants are critical to the siting of a new plant. Results provide insights for community leaders relative to actions that can increase the probability a plant will be built. (JEL O18, Q42)