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Land Use Change Impacts of Biofuels: Near-VAR Evidence from the US

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  • Giuseppe Piroli
  • Pavel Ciaian
  • d'Artis Kancs

Abstract

The present paper studies the land use change impacts of fuels and biofuels. We test the theoretical hypothesis, which says that changes in fuel prices cause changes in land use both directly and indirectly and, because of price inter-dependencies, biofuels reinforce the land use change impacts. Our data consists of yearly observations extending from 1950 to 2007 for the US, to which we apply time-series analytical mechanisms of five major traded agricultural commodities, the area of cultivated agricultural land and crude oil price. The empirical findings confirm that markets for crude oil and cultivated agricultural land are interdependent: an increase in oil price by 1 dollar/barrel increases land use between 54 and 68 thousand hectares. We also find that the rise of bioenergy sector accelerates land use change in the US.

Suggested Citation

  • Giuseppe Piroli & Pavel Ciaian & d'Artis Kancs, 2011. "Land Use Change Impacts of Biofuels: Near-VAR Evidence from the US," EERI Research Paper Series EERI_RP_2011_11, Economics and Econometrics Research Institute (EERI), Brussels.
  • Handle: RePEc:eei:rpaper:eeri_rp_2011_11
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    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. d'Artis Kancs & Hans Kremers, 2002. "Assessing Impacts of Alternative Renewable Energy Strategies," EERI Research Paper Series EERI_RP_2002_03, Economics and Econometrics Research Institute (EERI), Brussels.
    3. repec:ner:leuven:urn:hdl:123456789/413548 is not listed on IDEAS
    4. Kancs, d'Artis & Wohlgemuth, Norbert, 2008. "Evaluation of renewable energy policies in an integrated economic-energy-environment model," Forest Policy and Economics, Elsevier, vol. 10(3), pages 128-139, January.
    5. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
    6. 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.
    7. Miroslava Rajcaniova & d'Artis Kancs & Pavel Ciaian, 2014. "Bioenergy and global land-use change," Applied Economics, Taylor & Francis Journals, vol. 46(26), pages 3163-3179, September.
    8. Ciaian, Pavel & Kancs, d'Artis, 2011. "Interdependencies in the energy-bioenergy-food price systems: A cointegration analysis," Resource and Energy Economics, Elsevier, vol. 33(1), pages 326-348, January.
    9. d'Artis Kancs,, 2002. "Integrated appraisal of renewable energy strategies: a CGE analysis," International Journal of Energy Technology and Policy, Inderscience Enterprises Ltd, vol. 1(1/2), pages 59-90.
    10. Gardner Bruce, 2007. "Fuel Ethanol Subsidies and Farm Price Support," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-22, December.
    11. Thomas W. Hertel & Wallace E. Tyner & Dileep K. Birur, 2010. "The Global Impacts of Biofuel Mandates," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 75-100.
    12. Julda Kielyte, 2008. "Estimating Panel Data Models in the Presence of Endogeneity and Selection," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 1-19.
    13. Katsushi Imai & Raghav Gaiha & Ganesh Thapa, 2008. "Food and oil prices," Economics Discussion Paper Series 0801, Economics, The University of Manchester.
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    1. repec:ner:leuven:urn:hdl:123456789/413548 is not listed on IDEAS
    2. Piroli, Giuseppe & Rajcaniova, Miroslava & Ciaian, Pavel & Kancs, d׳Artis, 2015. "From a rise in B to a fall in C? SVAR analysis of environmental impact of biofuels," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 921-930.
    3. Maslyuk, Svetlana & Dharmaratna, Dinusha, 2013. "Renewable Electricity Generation, CO2 Emissions and Economic Growth: Evidence from Middle-Income Countries in Asia /Generación de electricidad renovable, las emisiones de CO2 y crecimiento económico: ," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 31, pages 217-244, Enero.
    4. Dong Hee Suh & Charles B. Moss, 2021. "Examining the Input and Output Linkages in Agricultural Production Systems," Agriculture, MDPI, Open Access Journal, vol. 11(1), pages 1-13, January.
    5. Rossanto Dwi HANDOYO & Mansor JUSOH & Mohd. Azlan SHAH ZAIDI, 2015. "Impact of Monetary Policy and Fiscal Policy on Indonesian Stock Market," Expert Journal of Economics, Sprint Investify, vol. 3(2), pages 113-126.
    6. María Blanco & Marcel Adenäuer & Shailesh Shrestha & Arno Becker, 2012. "Methodology to assess EU Biofuel Policies: The CAPRI Approach," JRC Working Papers JRC80037, Joint Research Centre (Seville site).
    7. Bastianin, Andrea & Galeotti, Marzio & Manera, Matteo, 2014. "Causality and predictability in distribution: The ethanol–food price relation revisited," Energy Economics, Elsevier, vol. 42(C), pages 152-160.
    8. Miroslava Rajcaniova & d'Artis Kancs & Pavel Ciaian, 2014. "Bioenergy and global land-use change," Applied Economics, Taylor & Francis Journals, vol. 46(26), pages 3163-3179, September.
    9. Ciaian, Pavel & Kancs, d'Artis, 2011. "Food, energy and environment: Is bioenergy the missing link?," Food Policy, Elsevier, vol. 36(5), pages 571-580, October.
    10. Pavel Ciaian & Sergio Gomez y Paloma, 2011. "Valuation of EU Agricultural Landscape," EERI Research Paper Series EERI_RP_2011_20, Economics and Econometrics Research Institute (EERI), Brussels.
    11. Cornelis Gardebroek & Jeffrey J. Reimer & Lieneke Baller, 2017. "The Impact of Biofuel Policies on Crop Acreages in Germany and France," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(3), pages 839-860, September.
    12. Anelise Rahmeier Seyffarth, 2016. "The Impact of Rising Ethanol Production on the Brazilian Market for Basic Food Commodities: An Econometric Assessment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(3), pages 511-536, July.
    13. Heinz-Peter Witzke & Pavel Ciaian & Jacques Delince, 2014. "CAPRI long-term climate change scenario analysis: The AgMIP approach," JRC Working Papers JRC85872, Joint Research Centre (Seville site).

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    More about this item

    Keywords

    Near-VAR; energy; bioenergy; prices; land use; biofuel support policies.;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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