This paper estimates the economic and environmental impacts of introducing woody biomass processing (WBP) into a rural area in central Appalachia. WBP is among the most promising additions to energy generation portfolios for reducing import dependency while at the same time providing economic opportunity to stimulate regional economies, especially in rural regions where economic development options are often limited. We use an input-output framework to assess WBP under three different pathways, fast pyrolysis, ethanol and coal biomass to liquids. We find that the proposed WBP will increase regional output by 0.5-1.3% of gross regional product; it will increase income by $17.32 to $51.31 million dollars each year, and regional employment by 218.1-1127.8 jobs, depending on the chosen pathway. Of these impacts, the direct portions are 63-77% of the total impact, depending on the chosen pathway. The economic analysis and the results from the accompanying environmental assessment show that only the ethanol pathway has both economic and environmental benefits. We conclude that because long-run economic development strategies in rural regions are limited and negative impacts do not alter dramatically the regional environmental profile, regional policymakers should include WBP among their development portfolio options.