Full Text
(92 K)

Effect of Cotton Gin Plant Compliance with Air Pollution Regulations on Financial Stability

Stephen Fuller, Melanie Gillis, Calvin Parnell, Anantha Ramaiyer, Roy Childers


Simulation analysis of representative gin plant firms in Texas was carried out to determine the effect of required investments in air pollution controls on firms financial performance. The simulation analysis facilitated the measure-ment of the representative firms financial performance ex ante and ex post the required investment in pollution controls. The research shows many of the smaller, low-volume gin plant firms in Texas are likely to fail over a ten year period before (ex ante) any required investment in pollution controls. For those representative firms projected to be successful before ex ante the required investment in control systems, failure rates were calculated as controls were introduced that increasingly lowered emission rates. Nine percent of the representative firms processing stripped cotton (with and without debt) are projected to fail when introducing best available control technology (BACT), a baseline or minimum emissions system (2.24 lbs/bale) specified for Texas gin plants, while 11 and 20 percent fail when upgrading to systems with emission rates of 1.8 and 0.9 lbs/bale, respectively. The analysis show firm failure rates are sensitive to plant volume over the repayment cycle on the required investment in controls, stringency of the controls, plant size, indebtedness of plant at time of the required investment and whether the plant processes picked or stripped cotton.

Reprinted from Proceedings of the 1996 Beltwide Cotton Conferences pp. 496 - 502
©National Cotton Council, Memphis TN

[Main TOC] | [TOC] | [TOC by Section] | [Search] | [Help]
Previous Page [Previous] [Next] Next Page
Document last modified Sunday, Dec 6 1998