Anaerobic digestion (AD) systems can reduce methane emissions and ground water contamination by turning livestock wastes into renewable energy. However,the adoption of AD systems is costly,and the initial capital investment is formidable especially for medium and small farms. To promote adoption of AD systems,the EPA and state governments have implemented various incentive programs providing technical and financial assistance. The objective of this study is to examine the effectiveness of state-level incentives in promoting the adoption of AD systems in the U.S. We compile a panel data for 48 states in the U.S. from 2003 to 2015 on the state-level adoption rate of AD systems,livestock production,and incentive programs to promote the adoption of AD systems. We compare the effectiveness of performance-based incentives,loan,and tax credit while controlling for state-level adoption of renewable portfolio standards and net metering,climate,livestock production,and types of AD systems. We expect to find that adoption rates for AD systems are significantly greater with performance-based incentives than with loan and tax credits.