IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v47y2025i5p1888-1917.html

Cash crop demand and conservation practices: The effect of ethanol expansion on cover cropping

Author

Listed:
  • Sungmin Cheu
  • Matthew Gammans

Abstract

Efforts to understand farmers' willingness to adopt conservation practices have typically focused on the effects of economic incentives to adopt, such as government cost‐share programs (Fleming, 2017), or informational treatments, such as extension education (Baumgart‐Getz, Prokopy, and Floress, 2012). This paper considers the effect of ethanol production on the adoption of on‐farm conservation practices. From 2002 to 2019, United States ethanol production increased 10‐fold (Newes et al., 2022). Using renewable fuel standard (RFS) mandate changes to instrument for ethanol capacity, we assess whether changes in ethanol production affect the prevalence of cover cropping in corn–soy agriculture. We find that a 100 million gallon/year increase in local ethanol capacity implies a 0.35 percentage point decline in the cover cropping rate. Considering a counterfactual where United States ethanol capacity remained at 2005 levels, our estimates imply that United States annual cover cropped area would be 570.5 thousand acres greater, leading to additional greenhouse gas sequestration valued at $19.0 million/year based on current estimates of the social cost of carbon (Environmental Protection Agency, 2022).

Suggested Citation

  • Sungmin Cheu & Matthew Gammans, 2025. "Cash crop demand and conservation practices: The effect of ethanol expansion on cover cropping," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(5), pages 1888-1917, December.
    • Handle: RePEc:wly:apecpp:v:47:y:2025:i:5:p:1888-1917
    DOI: 10.1002/aepp.13537
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.13537
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.13537?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Swinton, Scott M. & Babcock, Bruce A. & James, Laura K. & Bandaru, Varaprasad, 2011. "Higher US crop prices trigger little area expansion so marginal land for biofuel crops is limited," Energy Policy, Elsevier, vol. 39(9), pages 5254-5258, September.
    2. Jennifer Ifft & Deepak Rajagopal & Ryan Weldzuis, 2019. "Ethanol Plant Location and Land Use: A Case Study of CRP and the Ethanol Mandate," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(1), pages 37-55, March.
    3. Wallander, Steven & Claassen, Roger & Nickerson, Cynthia J., 2011. "The Ethanol Decade: An Expansion of U.S. Corn Production, 2000-09," Economic Information Bulletin 117982, United States Department of Agriculture, Economic Research Service.
    4. Swinton, Scott & Babcock, Bruce A. & James, Laura K. & Bandaru, Varaprasad, 2011. "Higher U.S. Crop Prices Trigger Little Area Expansion So Marginal Land for Biofuels is Limited," Staff General Research Papers Archive 34897, Iowa State University, Department of Economics.
    5. Lambert, Dayton M. & Wilcox, Michael D. & English, Alicia & Stewart, Lance A., 2008. "Ethanol Plant Location Determinants and County Comparative Advantage," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), pages 1-19, April.
    6. Chen, Xiaoguang & Khanna, Madhu, 2018. "Effect of corn ethanol production on Conservation Reserve Program acres in the US," Applied Energy, Elsevier, vol. 225(C), pages 124-134.
    7. Yijia Li & Ruiqing Miao & Madhu Khanna, 2019. "Effects of Ethanol Plant Proximity and Crop Prices on Land-Use Change in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(2), pages 467-491.
    8. Newes, Emily & Clark, Christopher M. & Vimmerstedt, Laura & Peterson, Steve & Burkholder, Dallas & Korotney, David & Inman, Daniel, 2022. "Ethanol production in the United States: The roles of policy, price, and demand," Energy Policy, Elsevier, vol. 161(C).
    9. Patrick Fleming, 2017. "Agricultural Cost Sharing and Water Quality in the Chesapeake Bay: Estimating Indirect Effects of Environmental Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(5), pages 1208-1227.
    10. Mesbah Motamed & Lihong McPhail & Ryan Williams, 2016. "Corn Area Response to Local Ethanol Markets in the United States: A Grid Cell Level Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 726-743.
    11. Editors: & Duffield, James A. & Johansson, Robert & Meyer, Seth, 2015. "U.S. Ethanol: An Examination of Policy, Production, Use, Distribution, and Market Interactions," USDA Miscellaneous 392427, United States Department of Agriculture.
    12. Nathan P. Hendricks & Aaron Smith & Daniel A. Sumner, 2014. "Crop Supply Dynamics and the Illusion of Partial Adjustment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1469-1491.
    13. Charles Towe & Constant I. Tra, 2013. "Vegetable Spirits and Energy Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(1), pages 1-16.
    14. Yoder, Landon & Houser, Matthew & Bruce, Analena & Sullivan, Abigail & Farmer, James, 2021. "Are climate risks encouraging cover crop adoption among farmers in the southern Wabash River Basin?," Land Use Policy, Elsevier, vol. 102(C).
    15. repec:cup:jagaec:v:40:y:2008:i:1:p:117-135_4 is not listed on IDEAS
    16. Khanna, M., 2018. "Effect of Corn Ethanol Production on Conservation Reserve Program Acres in the US," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277014, International Association of Agricultural Economists.
    17. Michael J. Roberts & Wolfram Schlenker, 2013. "Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate," American Economic Review, American Economic Association, vol. 103(6), pages 2265-2295, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruiqing Miao & Yijia Li & Madhu Khanna & Christopher Clark & Dallas Burkholder & Luoye Chen, 2026. "Quantifying the land‐use change due to soybean‐based biodiesel in the United States," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 48(1), pages 20-47, March.
    2. Cheu, Sungmin & Gammans, Matthew, 2023. "The Effect of Ethanol Capacity on Cover Crop Use in the Midwest," 2023 Annual Meeting, July 23-25, Washington D.C. 335819, Agricultural and Applied Economics Association.
    3. repec:ags:aaea22:335819 is not listed on IDEAS
    4. Jennifer Ifft & Deepak Rajagopal & Ryan Weldzuis, 2019. "Ethanol Plant Location and Land Use: A Case Study of CRP and the Ethanol Mandate," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(1), pages 37-55, March.
    5. Austin, K.G. & Jones, J.P.H. & Clark, C.M., 2022. "A review of domestic land use change attributable to U.S. biofuel policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    6. Li, Tongtong, 2026. "Fuels and Feathers: The Effect of Ethanol Capacity and Crop Prices on U.S. Bird Abundance," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404748, Agricultural and Applied Economics Association.
    7. Sampson, Gabriel S. & Al-Sudani, Amer & Bergtold, Jason, 2021. "Local irrigation response to ethanol expansion in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 66(C).
    8. Ani L. Katchova & Ana Claudia Sant’Anna, 2019. "Impact of Ethanol Plant Location on Corn Revenues for U.S. Farmers," Sustainability, MDPI, vol. 11(22), pages 1-13, November.
    9. Junpyo Park, 2022. "Distance to Biorefinery Plants and Its Influence on Agricultural Land Value: Evidence from the United States Midwest Region," Land, MDPI, vol. 11(9), pages 1-14, September.
    10. Ifft, Jennifer & Rajagopal, Deepak & Ryan, Weldzius, 2016. "The effect of the ethanol mandate on the Conservation Reserve Program," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236178, Agricultural and Applied Economics Association.
    11. Liu, Ziheng, 2025. "CO2-driven crop comparative advantage and planting decision: Evidence from US cropland," Food Policy, Elsevier, vol. 130(C).
    12. Han, Guang & Niles, Meredith T., 2023. "An adoption spectrum for sustainable agriculture practices: A new framework applied to cover crop adoption," Agricultural Systems, Elsevier, vol. 212(C).
    13. Junpyo Park & John Anderson & Eric Thompson, 2019. "Land-Use, Crop Choice, and Proximity to Ethanol Plants," Land, MDPI, vol. 8(8), pages 1-14, July.
    14. Ahmed, Musa Hasen & Tesfaye, Wondimagegn Mesfin & Gassmann, Franziska, 2022. "Within Growing Season Weather Variability and Land Allocation Decisions: Evidence from Maize Farmers in Ethiopia," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321171, Agricultural Economics Society - AES.
    15. Nicholas J. Pates & Nathan P. Hendricks, 2021. "Fields from Afar: Evidence of Heterogeneity in United States Corn Rotational Response from Remote Sensing Data," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1759-1782, October.
    16. Nathan P. Hendricks, 2022. "Would farmers benefit from removing more land from production in the next farm bill?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1139-1157, September.
    17. Stigler, Matthieu M., "undated". "Supply response at the field-level: disentangling area and yield effects," 2018 Annual Meeting, August 5-7, Washington, D.C. 274343, Agricultural and Applied Economics Association.
    18. Brian Cornish & Ruiqing Miao & Madhu Khanna, 2022. "Impact of changes in Title II of the 2018 Farm Bill on the acreage and environmental benefits of Conservation Reserve Program," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(2), pages 1100-1122, June.
    19. repec:ags:aaea22:343763 is not listed on IDEAS
    20. Le, Hoanh & Gálvez-Soriano, Oscar, 2024. "Impact of the renewable fuel standard on Midwest farmland values," 2024 Annual Meeting, July 28-30, New Orleans, LA 343763, Agricultural and Applied Economics Association.
    21. Yanbing Wang & Michael S. Delgado & Juan Sesmero & Benjamin M. Gramig, 2020. "Market Structure and the Local Effects of Ethanol Expansion on Land Allocation: A Spatially Explicit Analysis," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(5), pages 1598-1622, October.
    22. Musa Hasen Ahmed & Wondimagegn Mesfin Tesfaye & Franziska Gassmann, 2023. "Early growing season weather variation, expectation formation and agricultural land allocation decisions in Ethiopia," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(1), pages 255-272, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:47:y:2025:i:5:p:1888-1917. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.