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Measuring Indirect Land Use Change with Biofuels: Implications for Policy


  • Madhu Khanna

    () (Department of Agricultural and Consumer Economics and
    Energy Biosciences Institute, University of Illinois Urbana-Champaign, Urbana, Illinois 68101)

  • Christine L. Crago

    () (Energy Biosciences Institute, University of Illinois Urbana-Champaign, Urbana, Illinois 68101)


The indirect land use change (ILUC) effect of biofuels has called into question the greenhouse gas (GHG) mitigation benefit of biofuels compared with that of fossil fuels. This article reviews the various economic modeling approaches being used to assess the ILUC effect and discusses the key factors that influence estimates of its magnitude. We find that there is considerable variability in the magnitude of ILUC associated with a biofuel pathway across studies and within a study, depending on underlying model parameters. These estimates are sensitive to the scale of biofuel production, the mix of policies and biofuels considered, variations in the parametric assumptions that govern price transmission through international trade, and the ease of changes in land use at the intensive and extensive margins. We discuss the challenges in implementing policies to address ILUC.

Suggested Citation

  • Madhu Khanna & Christine L. Crago, 2012. "Measuring Indirect Land Use Change with Biofuels: Implications for Policy," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 161-184, August.
  • Handle: RePEc:anr:reseco:v:4:y:2012:p:161-184

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    Cited by:

    1. Sexton, Steven & Eyer, Jonathan, 2016. "Leveling the playing field of transportation fuels: Accounting for indirect emissions of natural gas," Energy Policy, Elsevier, vol. 95(C), pages 21-31.
    2. Chen, Xiaoguang & Khanna, Madhu, 2014. "Indirect Land Use Effects of Corn Ethanol in the U.S: Implications for the Conservation Reserve Program," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170284, Agricultural and Applied Economics Association.
    3. John M. DeCicco, 2015. "The liquid carbon challenge: evolving views on transportation fuels and climate," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 4(1), pages 98-114, January.
    4. Crago, Christine Lasco & Khanna, Madhu, 2014. "Carbon abatement in the fuel market with biofuels: Implications for second best policies," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 89-103.
    5. Panichelli, Luis & Gnansounou, Edgard, 2015. "Impact of agricultural-based biofuel production on greenhouse gas emissions from land-use change: Key modelling choices," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 344-360.
    6. Mooney, Daniel F. & Barham, Bradford L. & Lian, Chang, 2013. "Sustainable Biofuels, Marginal Agricultural Lands, and Farm Supply Response: Micro-Evidence for Southwest Wisconsin," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150510, Agricultural and Applied Economics Association.
    7. Hochman, Gal & Zilberman, David, 2014. "Climate change and balance of trade," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt87d2b3kx, Department of Agricultural & Resource Economics, UC Berkeley.
    8. Khanna, Madhu & Wang, Weiwei & Hudiburg, Tara & DeLucia, Evan, 2016. "The Economic Cost of Including the Indirect Land Use Factor in Low Carbon Fuel Policy: Efficiency and Distributional Implications," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235774, Agricultural and Applied Economics Association.
    9. Plevin, Richard J. & Delucchi, Mark A. & O’Hare, Michael, 2017. "Fuel carbon intensity standards may not mitigate climate change," Energy Policy, Elsevier, vol. 105(C), pages 93-97.
    10. Chen, Xiaoguang & Huang, Haixiao & Khanna, Madhu & Önal, Hayri, 2014. "Alternative transportation fuel standards: Welfare effects and climate benefits," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 241-257.
    11. Carol McAusland & Nouri Najjar, 2015. "Carbon Footprint Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(1), pages 37-70, May.


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