Title: An Evaluation of the Economic and Environmental Impacts of the Corn Grain Ethanol Industry on the Agricultural Sector
1An Evaluation of the Economic and Environmental
Impacts of the Corn Grain Ethanol Industry on the
Agricultural Sector
James A. Larson, Burton C. English, and Daniel
G. De La Torre Ugarte
Western Agricultural Economics Association Annual
Meeting, Big Sky, MT, June 25-27, 2008
2Problem
- The Energy Independence and Security Act of 2007
mandates production 36 billion gallons per year
(BGY) of ethanol to by 2022, with 21 BGY from
feedstocks other than corn. - Notwithstanding, production of ethanol from corn
grain is expected to rise significantly over the
next decade in response to legislative mandates
and tight energy market supply and demand
conditions. - Changes in crop mix and production practices with
increased corn production have the potential to
impact land resources in different locals across
the U.S. - For example, soil erosion is the major pathway by
which sediment, nutrients, and pesticide residues
reach surface water.
3Objective
- To analyze the impacts on the agricultural sector
as a result of increasing corn ethanol
production. - To evaluate changes in fertilizer expenditures,
herbicide expenditures, gross soil erosion and
sedimentation, and carbon sequestration.
4Analytical Tool
- POLYSYS
- 305 crop production regions (ASDs)
- National livestock production
- National demand market (Elasticity Driven)
- (Sum of Production Domestic Supply)
- Energy market is goal driven
- Solutions compared to a USDA Baseline
5Cropland Base
2002 Agricultural Census
6POLYSYS Model
Economic Module
Environmental Module
7Extended Economic Baseline
- 2007 USDA Baseline (2007 to 2016)
- Ethanol use at 12 BGY by 2016.
- Crop yield increases for traditional crops.
- No changes in current tillage practices.
- Corn grain was the assumed feedstock for ethanol
production through the year 2016. - Conversion efficiency for corn ethanol grows to
3.0 gallons/bushel.
8Ethanol Scenarios
- Changes in selected economic and environmental
indicators from the baseline were evaluated for - 8.6 BGY of ethanol by 2016,
- 14 BGY of ethanol by 2016,
- 16 BGY of ethanol by 2016, and
- 18 BGY of ethanol by 2016.
- Results from these four scenarios were compared
with the 12 BGY baseline scenario to illustrate
how various ethanol industry output expansion
paths might influence the agricultural sector.
9Environmental Submodule
- Change in Land Use
- Change in Input Expenditures
- Fertilizer application changes estimated based on
changes in expenditures in N,P,K (Fert). - Herbicides and insecticides application changes
estimated based on changes in expenditures on
herbicide and insecticides for the 8 major crops. - Change in Soil Erosion
- Estimated using NRCS ASD region KLSR and P
estimates combined with an estimated C factor
(incorporating tillage) based on 1997 NRI data - Changes in land use by POLYSYS region.
- Impact on Sedimentation
- Made using erosion estimates converted to 99
river basins and coupled with sediment delivery
and deposit ratios used in MOSS II along with
Ribaudos 1985 cost of erosion study with costs
indexed to 2007.
10Environmental Submodule
- Changes in carbon sequestration
- Carbon emissions for each ethanol scenario were
calculated using methods and estimated
coefficients from the carbon lifecycle literature
(West and Marland, 2002, Marland et al., 2003). - The estimated coefficients and the quantities of
fuel and inputs in the budgets in POLYSYS were
used to calculate total carbon emissions for each
crop in each ASD. - In addition, the carbon sequestered in
agricultural soils for each crop and tillage
practice was estimated using methods outlined by
West et al. (2008).
11Ethanol Production Paths
12Change in Land Use from the 12 BGY USDA Baseline
Scenario under the 18BGY Scenario
13Change in Land Use from the 8.6 BGY Scenario
under the 18 BGY Scenario.
14Change in Crop Area from the USDA Baseline 12 BGY
to 18 BGY Scenario 2016
Corn
Cotton
Soybeans
Wheat
15Change in Crop Area from the 8.6 BGY to 18 BGY
Scenario 2016
Corn
Cotton
Soybeans
Wheat
16Change in Herbicide Expenditures for Selected
Scenarios Compared to the 12 BGY USDA Baseline
Scenario
8.6 BGY 14 BGY 16 BGY
18 BGY
17Herbicide Use Regional Changes
- Changes between 18 BGY and 12 BGY USDA Baseline
Scenarios - Changes between 18 BGY and 8.6 BGY Scenarios
18Change in Fertilizer Expenditures for Selected
Scenarios Compared to the 12 BGY USDA Baseline
Scenario
8.6 BGY 14 BGY 16 BGY
18 BGY
19Fertilizer Use Regional Changes
- Changes between 18 BGY and 12 BGY USDA Baseline
Scenarios - Changes between 18 BGY and 8.6 BGY Scenarios
20Erosion Regional Changes
- Changes between 18 BGY and 12 BGY USDA Baseline
Scenarios - Changes between 18 BGY and 8.6 BGY Scenarios
21Change in Carbon Emissions for Selected Scenarios
Compared to the 8.6 BGY Scenario
18 BGY 16 BGY 14 BGY 12 BGY
22Carbon Emissions Regional Changes
- Changes between 18 BGY and 12 BGY USDA Baseline
Scenarios - Changes between 18 BGY and 8.6 BGY Scenarios
23Implications
- The production of feedstock for biofuels using
corn as the feedstock will result in increased
erosion, chemical and fertilizer use unless the
methods used to produce corn are dramatically
altered. - Investment in research in agricultural production
and conversion technology, is required to reduce
projected environmental impacts. - Increased yields, increased input efficiency, and
increased use of no-tillage production practices
would reduce impacts of this projected
bioeconomy. - Acceleration of introduction of
cellulose-to-ethanol path would likely ease
environmental impacts.
24Implications
- What will happen when CRP land becomes available
to crop? - incentives to biofuels industry should be
consistent with availability of environmental
sustainable crop and conversion technologies.