With the increase in size of the plant, the capital cost per unit of capacity decreases and the cost of transportation increases. [...] Hence, there is a capacity at which the total cost of production is minimum and in the case of bio- ethanol there is a wide range in capacity within which the cost of production is at a minimum. [...] In this study, the cost of bio-ethanol production from a plant using 2,100 dry tonnes of MPB infested pine wood per day is in the range of $0.37 – $0.40 per liter and is competitive with the grain based ethanol production. [...] The economic viability of alternative uses of bio-oil such as the use of bio-oil for the production of high value chemicals should be explored and evaluated. [...] The extent of infestation is difficult to estimate because of the variability in the rate of infestation and the increase in infestation every year.