An Economic Surplus Assessment of Biogas Technology in Ghana

Abstract

Underinvestment undermines profitable innovation and dissemination of bio-energy. The study used the economic surplus approach which employs Cost Benefit Analysis (CBA) route. The general objective was to explore profitability of biogas research to attract investment broadly. Specific objectives were to evaluate direct consumer surplus (CS), producer surplus (PS) and social benefit, and also to value indirect benefits and sustainable flow of benefits from bio gas operations. Disaggregated profit allows public or private investors, to identify benefit that informs narrowed investment decision. Social benefit under perfect competition (PC) was GHC2,401,425.00. The CS and PS amounted to GHC719,550.00 and GHC1,681,875.00 respectively, for the 15 years period and the flow of benefit per annum was GHC196,595.00. In redistributing income, inefficiency of monopoly caused a loss of 43.7% and 4.98% in consumer surplus and net social benefit respectively and a dead weight loss, for a monopoly gain of 11.6% in producer surplus. The Net Present Values (NPVs) and Internal Rate of Return (IRR) for PC were US$89,152.75 and 77.80% respectively. Discount rates variations of 22%, 12% and 24% predicted sustainable outcomes. The economic study sufficiently symbolises biogas profitability, a direction most likely to be maintained by all-inclusive technical and environmental study.