Impact of United States Corn-Based Ethanol Production on Land Use

This study measures the impact of corn-based ethanol production in the United States on land use in other countries, or indirect land use. Indirect land use is a change from non-cropland to cropland (e.g. deforestation) that may occur in response to increasing scarcity of cropland. As farmers worldwide respond to higher crop prices in order to maintain the global food supply and demand balance, pristine lands are cleared and converted to new cropland to replace the crops for feed and food that were diverted elsewhere to biofuel production. The results show that increasing ethanol production in the US has a positive and significant relation to U.S corn price. However, U.S. corn price does not have a significant impact on changes in corn acreage in Brazil and other countries such as Canada, Japan and China. Although many authors have hypothesized that increased ethanol production in the U.S. will increase corn prices, which will result in increased change in land use in other countries, these results suggest that the effect is minimal at best. This is important because although production of ethanol for fuel is often criticized for negatively impacting the environment because of indirect land use, this study was unable to prove the existence of indirect land use.