To be commercially viable as a bioenergy feedstock, switchgrass must be cost-competitive. Switchgrass production and delivery costs are calculated for the Chariton Valley Switchgrass Biomass Project located in the Chariton Valley, Iowa. Sensitivity analyses are performed to determine which variables have the greatest impact on cost. Switchgrass production costs would require higher than expected market prices, and therefore various incentive payment options are considered. The incentive payments attempt to encapsulate the positive environmental attributes from the production of switchgrass as well as using switchgrass as a clean energy coal substitute. A modified CRP payment, carbon payment, and green tag payment are all considered, and their relative advantages and disadvantages are discussed. The modified CRP payment and the green tag payment are shown to have significant potential for offsetting high switchgrass costs of production.