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Biofuel Expansion, Fertilizer Use and GHG Emissions: Unintended Consequences of Mitigation Policies

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  • Elobeid, Amani
  • Carriquiry, Miguel A.
  • Demotier, Jerome
  • Rosas, Juan (Francisco)
  • Mulik, Kranti
  • Fabiosa, Jacinto F.
  • Hayes, Dermot J.
  • Babcock, Bruce A.

Abstract

Increased biofuel production has been associated with direct and indirect land-use change, changes in land management practices, and increased application of fertilizers and pesticides. This has resulted in negative environmental consequences in terms of increased carbon emissions, water quality, pollution, and sediment loads, which may offset the pursued environmental benefits of biofuels. This study analyzes two distinct policies aimed at mitigating the negative environmental impacts of increased agricultural production due to biofuel expansion. The first scenario is a fertilizer tax, which results in an increase in the US nitrogen fertilizer price, and the second is a policy-driven reversion of US cropland into forestland (afforestation). Results show that taxing fertilizer reduces US production of nitrogen-intensive crops, but this is partially offset by higher fertilizer use in other countries responding to higher crop prices. In the afforestation scenario, crop production shifts from high-yielding land in the United States to low-yielding land in the rest of the world. Important policy implications are that domestic policy changes implemented by a large producer like the United States can have fairly significant impacts on the aggregate world commodity markets. Also, the law of unintended consequences results in an inadvertent increase in global greenhouse gas emissions.

Suggested Citation

  • Elobeid, Amani & Carriquiry, Miguel A. & Demotier, Jerome & Rosas, Juan (Francisco) & Mulik, Kranti & Fabiosa, Jacinto F. & Hayes, Dermot J. & Babcock, Bruce A., 2013. "Biofuel Expansion, Fertilizer Use and GHG Emissions: Unintended Consequences of Mitigation Policies," Staff General Research Papers Archive 37415, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:37415
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    References listed on IDEAS

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    1. Amani Elobeid & Simla Tokgoz, 2008. "Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 918-932.
    2. Jerome Dumortier & Dermot J. Hayes & Miguel Carriquiry & Fengxia Dong & Xiaodong Du & Amani Elobeid & Jacinto F. Fabiosa & Simla Tokgoz, 2011. "Sensitivity of Carbon Emission Estimates from Indirect Land-Use Change," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 428-448.
    3. Glenn Sheriff, 2005. "Efficient Waste? Why Farmers Over-Apply Nutrients and the Implications for Policy Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(4), pages 542-557.
    4. Bruce A. Babcock, 1992. "The Effects of Uncertainty on Optimal Nitrogen Applications," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 14(2), pages 271-280.
    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. Dumortier, Jerome & Hayes, Dermot J. & Carriquiry, Miguel & Dong, Fengxia & Du, Xiaodong & Elobeid, Amani E. & Fabiosa, Jacinto F. & Martin, Pamela A. & Mulik, Kranti, 2012. "The effects of potential changes in United States beef production on global grazing systems and greenhouse gas emissions," ISU General Staff Papers 201206010700001000, Iowa State University, Department of Economics.
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    Cited by:

    1. Catherine L. Kling & Raymond W. Arritt & Gray Calhoun & David A. Keiser, 2016. "Research Needs and Challenges in the FEW System: Coupling Economic Models with Agronomic, Hydrologic, and Bioenergy Models for Sustainable Food, Energy, and Water Systems," Center for Agricultural and Rural Development (CARD) Publications 16-wp563, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Jerome Dumortier & Amani Elobeid, 2020. "Effects of the Energy Innovation and Carbon Dividend Act on U.S. and Global Agricultural Markets," Center for Agricultural and Rural Development (CARD) Publications 20-wp598, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Stephen M. Ogle & Bruce A. McCarl & Justin Baker & Stephen J. Grosso & Paul R. Adler & Keith Paustian & William J. Parton, 2016. "Managing the nitrogen cycle to reduce greenhouse gas emissions from crop production and biofuel expansion," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 21(8), pages 1197-1212, December.

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