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Impact of biofuel policies on the use of land and energy in U.S. agriculture

Author

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  • Miljkovic, Dragan
  • Ripplinger, David
  • Shaik, Saleem

Abstract

The goal of this study is to evaluate the importance of biofuel policies on the price levels of grains that compete for the use of limited resources, as well as to the use of alternative inputs in grains production in the United States. A theoretical 2-inputs, 2-outputs model is developed to provide foundation of the relationship between ethanol policy and grains prices and agricultural inputs use. Simulations are run using the theoretical model results and empirical values of the demand and supply elasticities for given crops and inputs, and input and output shares in production, to determine the indirect and direct effects of ethanol policy on grain prices and input use. Results suggest that corn prices increase leading to an increase in wheat prices. Both land and energy use in corn production increases disproportionally more than what they decrease in wheat production. The relative increase of energy used in agriculture following the adoption of ethanol policies is especially interesting since it stands in contrast to the proclaimed goals of the policy. The results of this study may give greater knowledge to policy makers, who can be better informed with respect to the secondary effects of ethanol legislation.

Suggested Citation

  • Miljkovic, Dragan & Ripplinger, David & Shaik, Saleem, 2016. "Impact of biofuel policies on the use of land and energy in U.S. agriculture," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1089-1098.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:6:p:1089-1098
    DOI: 10.1016/j.jpolmod.2016.10.001
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    References listed on IDEAS

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    1. Mohanty, Samarendu & Peterson, E. Wesley F., 1999. "Estimation of Demand for Wheat by Classes for the United States and the European Union," Agricultural and Resource Economics Review, Cambridge University Press, vol. 28(2), pages 158-168, October.
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    Cited by:

    1. Wei, Yu & Wang, Yizhi & Vigne, Samuel A. & Ma, Zhenyu, 2023. "Alarming contagion effects: The dangerous ripple effect of extreme price spillovers across crude oil, carbon emission allowance, and agriculture futures markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    2. Puneet Vatsa & Dragan Miljkovic, 2022. "Energy and crop price cycles before and after the global financial crisis: A new approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 220-233, February.
    3. Iván García Kerdan & Sara Giarola & Ellis Skinner & Marin Tuleu & Adam Hawkes, 2020. "Modelling Future Agricultural Mechanisation of Major Crops in China: An Assessment of Energy Demand, Land Use and Emissions," Energies, MDPI, vol. 13(24), pages 1-31, December.
    4. Miljkovic, Dragan & Vatsa, Puneet, 2025. "Drilling down: Oil prices, oil production, and production taxes in North Dakota," Resources Policy, Elsevier, vol. 110(C).
    5. Dragan Miljkovic & Cole Goetz, 2020. "Destabilizing role of futures markets on North American hard red spring wheat spot prices," Agricultural Economics, International Association of Agricultural Economists, vol. 51(6), pages 887-897, November.
    6. Goetz, Cole & Miljkovic, Dragan & Barabanov, Nikita, 2021. "New empirical evidence in support of the theory of price volatility of storable commodities under rational expectations in spot and futures markets," Energy Economics, Elsevier, vol. 100(C).

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    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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