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Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model

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Abstract

We quantify the emergence of biofuel markets and its impact on U.S. and world agriculture for the coming decade using the multi-market, multi-commodity international FAPRI (Food and Agricultural Policy Research Institute) model. The model incorporates the trade-offs between biofuel, feed, and food production and consumption and international feedback effects of the emergence through world commodity prices and trade. We examine land allocation by type of crop, and pasture use for countries growing feedstock for ethanol (corn, sorghum, wheat, sugarcane, and other grains) and major crops competing with feedstock for land resources such as oilseeds. We shock the model with exogenous changes in ethanol demand, first in the United States, then in Brazil, China, the European Union-25, and India, and compute shock multipliers for land allocation decisions for crops and countries of interest. The multipliers show at the margin how sensitive land allocation is to the growing demand for ethanol. Land moves away from major crops and pasture competing for resources with feedstock crops. Because of the high U.S. tariff on ethanol, higher U.S. demand for ethanol translates into a U.S. ethanol production expansion. The latter has global effects on land allocation as higher coarse grain prices transmit worldwide. Changes in U.S. coarse grain prices also affect U.S. wheat and oilseed prices, which are all transmitted to world markets. In contrast, expansion in Brazil ethanol use and production chiefly affects land used for sugarcane production in Brazil and to a lesser extent in other sugar-producing countries, but with small impacts on other land uses in most countries.

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Bibliographic Info

Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 09-wp488.

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Date of creation: Mar 2009
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Handle: RePEc:ias:cpaper:09-wp488

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Keywords: acreage; area; biofuel; corn; crops; ethanol; FAPRI model; feedstock; land; sugar; sugarcane.;

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References

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  1. Uwe A. Schneider & Bruce A. McCarl, 2001. "Economic Potential of Biomass-Based Fuels for Greenhouse Gas Emission Mitigation," Center for Agricultural and Rural Development (CARD) Publications, Center for Agricultural and Rural Development (CARD) at Iowa State University 01-wp280, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Amani Elobeid & Simla Tokgoz & Dermot J. Hayes & Bruce A. Babcock & Chad E. Hart, 2006. "Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, The," Food and Agricultural Policy Research Institute (FAPRI) Publications, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University 06-bp49, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
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Citations

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Cited by:
  1. Jerome Dumortier & Dermot J. Hayes & Miguel Carriquiry & Fengxia Dong & Xiaodong Du & Amani Elobeid & Jacinto F. Fabiosa & Kranti Mulik, 2010. "Modeling the Effects of Pasture Expansion on Emissions from Land-Use Change," Center for Agricultural and Rural Development (CARD) Publications, Center for Agricultural and Rural Development (CARD) at Iowa State University 10-wp504, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Hertel, Thomas W. & Steinbuks, Jevgenijs & Baldos, Uris Lantz C., 2012. "Competition for Land in the Global Bioeconomy," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil, International Association of Agricultural Economists 129614, International Association of Agricultural Economists.
  3. Sobowale, Folakemi & Dicks, Michael R. & Campiche, Jody L., 2011. "Impact of United States Corn-based Ethanol Production on Land Use," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas, Southern Agricultural Economics Association 98854, Southern Agricultural Economics Association.
  4. Jane, Harrigan, 2011. "Food Security in the Middle East and North Africa (MENA) and sub-Saharan Africa: A Comparative Analysis," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2011-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  5. repec:ags:iaae12:126735 is not listed on IDEAS
  6. Krissana Treesilvattanakul & Farzad Taheripour & Wallace E. Tyner, 2014. "Application of US and EU Sustainability Criteria to Analysis of Biofuels-Induced Land Use Change," Energies, MDPI, Open Access Journal, vol. 7(8), pages 5119-5128, August.
  7. Castro, Eduardo Rodrigues de & Teixeira, Erly Cardoso & Valdes, Constanza, 2012. "Sugar Cane Expansion: Does It Contribute To Amazon Deforestation?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil, International Association of Agricultural Economists 131703, International Association of Agricultural Economists.
  8. Sobowale, Flakkeh & Dicks, Michael R. & Adam, Brian D. & Campiche, Jody L., 2012. "Impact of United States Corn-Based Ethanol Production on Land Use," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama, Southern Agricultural Economics Association 119800, Southern Agricultural Economics Association.
  9. Fabiosa, Jacinto F. & Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Tokgoz, Simla & Yu, Tun-Hsiang, 2010. "The Global Bioenergy Expansion: How Large Are the Food−Fuel Trade-Offs?," Staff General Research Papers, Iowa State University, Department of Economics 31603, Iowa State University, Department of Economics.
  10. Brown, Jesslyn F. & Pervez, Md Shahriar, 2014. "Merging remote sensing data and national agricultural statistics to model change in irrigated agriculture," Agricultural Systems, Elsevier, Elsevier, vol. 127(C), pages 28-40.
  11. Okwo, Adaora & Thomas, Valerie M., 2014. "Biomass feedstock contracts: Role of land quality and yield variability in near term feasibility," Energy Economics, Elsevier, Elsevier, vol. 42(C), pages 67-80.
  12. Felippe Cauê Serigati & Paulo Furquim De Azevedo & Mario Antonio Margarido, 2014. "How Integrated Are The Main Markets Ofethanol?," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Grad 185, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

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