Economic Impacts of the Conservation Reserve Program: A General Equilibrium Framework

This article uses a general equilibrium framework and econometric analyses to examine economic wide impacts of the Conservation Reserves Program. It determines direct and indirect factors which affect the economic efficiency of the program and shows their magnitudes. It shows that the interaction between the program and the tax system causes indirect efficiency costs but the interaction between the program and the agricultural support subsidies generate economic gains. The program has the potential to distort the labor market and cause efficiency losses form this channel. However the analytical model shows that trade can reduce social costs of the policy because a part of the burden of the policy can be passed on to foreign consumers of crop products through the world market. The numerical results show that at the current level of acreage reduction (34 millions acres), the marginal cost of spending one more dollar on the program is about $1.9 for the US economy. In addition, the numerical results illustrate that the program has the potential to generate different and significant unintended economic impacts. For example, depending on the parameters of the model, the program can raise the prices of land up to 10.6%, generate up to 20% land conversion, and raise the demand for nitrogen fertilizer up to 4.2% at the current level of acreage reduction. Finally, the empirical regression results demonstrate that the program has affected the production behavior of the crop industry significantly. In particular, the program has increased the demand for fertilizer and labor and has decreased the demand for land and capital.land retirement, slippage effect, efficiency cost, agricultural pollution, tax system, Environmental Economics and Policy,

Ethanol Policy Analysis - What Have We Learned So Far?

Resource /Energy Economics and Policy, Q48, Q42,

Land Use Implications of Biofuel Production in the Presence of Idled Cropland and Crop Yield Improvement: Analytical and Numerical General Equilibrium Analyses

Labor and Human Capital,

Welfare Impacts of Alternative Public Policies for Environmental Protection in Agriculture in an Open Economy: A General Equilibrium Framework

This paper uses stylized analytical and numerical general equilibrium models to evaluate the welfare impacts of alternative policies for reducing nitrogen run-off from agricultural production in an open economy while recognizing the presence of distortionary agricultural support subsidies and factor income taxes. The alternative policies examined here are a nitrogen run-off tax, a nitrogen run-off reduction subsidy, a tax on the production of agricultural goods, a "two-part" instrument - a combination of the second and the third policies, and land retirement. The paper uses an analytical model to express the welfare impacts of each policy into several components and compares these components across alternative policies. From the analytical model the paper concludes that all alternative policies, except land retirement, may generate a double dividend because they reduce the provision of distortionary agricultural support subsidies and because a part of the burden of these policies can be passed on to foreign consumers of agricultural products through the world market. The numerical results indicate that all policies, except for land retirement, generate some welfare gains at low levels of nitrogen reduction targets in the first and second best settings when nitrogen and other inputs are substitutable. Gains are higher in the second best setting. As the level of nitrogen reduction increases, all policies become costly and they impose net welfare costs. These costs are higher in the second best setting. The numerical results also indicate that the relative efficiency of alternative policies is sensitive to the level of nitrogen reduction target.Environmental Economics and Policy,

The Role of Irrigation in Determining the Global Land Use Impacts of Biofuels

In recent years there has been a flurry of activity aimed at evaluating the land use consequences of biofuels programs and the associated carbon releases. In this paper we argue that these studies have tended to underestimate the ensuing land use change, because they have ignored the role of irrigation, and associated constraints on cropland expansion. In this paper, we develop a new general equilibrium model which distinguishes irrigated and rainfed cropping industries at a global scale. Using the new model we evaluate the implications of land use change due to US ethanol programs, in the context of short run constraints on the expansion of irrigated cropland. Since irrigated area tends to offer a higher yield than its rainfed counterpart, this provides an upper bound on the change in cropland following biofuel expansion. We find that the biofuel-induced expansion in global cropland cover is about 16 percent larger when the irrigation constraint is imposed. This translates into a 21 percent increase in land use emissions due to US ethanol production. This estimate represents an upper bound, since irrigated area can be expanded over the medium run in many places around the world.Land Economics/Use, Resource /Energy Economics and Policy,

Implications of the Biofuels Boom for the Global Livestock Industry: A Computable General Equilibrium Analysis

In this paper, we offer a general equilibrium analysis of the impacts of US and EU biofuel mandates for the global livestock sector. Our simulation boosts biofuel production in the US and EU from 2006 levels to mandated 2015 levels. We show that mandates will encourage crop production in both biofuel and non biofuel producing regions, while reducing livestock and livestock production in most regions of the world. The non-ruminant industry curtails its production more than other livestock industries. The numerical results suggest that the biofuel mandates reduce food production in most regions while they increase crude vegetable oils in almost all regions. Implementing biofuel mandates in the US and EU will increase croplands within the biofuel and non-biofuel producer regions. A large portion of this increase will be obtained from reduced grazing lands. The biofuel producing regions are expected to reduce their coarse grains exports and raise imports of oilseeds and vegetable oils. While all livestock industries use more biofuel byproducts in their animal feed rations, the dairy and other ruminant industry benefit most from the expansion of DDGS. We finally conclude that, while biofuel mandates have important consequences for the livestock industry, they do not harshly curtail these industries. This is largely due to the important role of byproducts in substituting for higher priced feedstuffs. In addition, with relatively inelastic food demands, producers are able to pass much of the price rise on to consumers. In general, US, EU, Meddle East & North Africa, and Russia will experience significant welfare loses due to the combined US and EU mandates, while Brazil, Japan, India, and East Asia are expected to get major gains.Biofuels, Livestock, Feed Ration, Biofuel Co-Product, Land Use, Livestock Production/Industries,

Climate change interactions with agriculture, forestry sequestration, and food security

This is a working draft. Please do not cite

Oilseed Cover Crops for Sustainable Aviation Fuels Production and Reduction in Greenhouse Gas Emissions Through Land Use Savings

13-C-AJFF-PU-029This is an open access article under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) license https://creativecommons.org/licenses/by/4.0/. Please cite this article as: Taheripour F, Sajedinia E and Karami O (2022) Oilseed Cover Crops for Sustainable Aviation Fuels Production and Reduction in Greenhouse Gas Emissions Through Land Use Savings. Front. Energy Res. 9:790421. doi: 10.3389/fenrg.2021.790421Induced Land Use Changes (ILUCs) can decrease the environmental benefits of Sustainable Aviation Fuels (SAFs) if produced from traditional food crops. The development of oilseed cover crops can eliminate the side effect of ILUCs for biofuel production because they come in rotation with the major crops with some savings in demand for new cropland. This study implemented Life Cycle Analysis (LCA) and GTAPBIO to estimate ILUC emissions values, the potentially available area, and total possible emissions savings of producing SAFs from carinata, camelina, and pennycress in the United States. The results suggest that: 1) the meals produced in conjunction with increases in Sustainable Aviation Fuel production from carinata, camelina, and pennycress could reduce land use emissions by 12.9, 15.3, and 18.3 gCO2e/MJ, respectively; 2) the total area of available land for producing these feedstocks could be about 29.3 million ha in 2035; and 3) using this area of land for SAF production, depends on the mix of oilseed cover crops that can be produced in practice, could generate up to 92 million metric tons of savings in GHG emissions per year. The projected emissions savings is about 11% of the current global GHG emissions generated by the aviation industry. Providing incentives to encourage farmers to produce these cover crops and facilitating investment in producing SAF from these cover crops are the most important factors that could help the aviation industry to enhance emissions savings

Effects of Demand-Side Restrictions on High-Deforestation Palm Oil in Europe on Deforestation and Emissions in Indonesia

13-C-AJFF-PU-29, 36This is an open access article under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) license https://creativecommons.org/licenses/by/4.0/. Please cite this article as:Jonah Busch et al 2022 Environ. Res. Lett. 17 014035. https://doi.org/10.1088/1748-9326/ac435eDemand-side restrictions on high-deforestation commodities are expanding as a climate policy, but their impact on reducing tropical deforestation and emissions has yet to be quantified. Here we model the effects of demand-side restrictions on high-deforestation palm oil in Europe on deforestation and emissions in Indonesia. We do so by integrating a model of global trade with a spatially explicit model of land-use change in Indonesia. We estimate a European ban on high-deforestation palm oil from 2000 to 2015 would have led to a 8.9% global price premium on low-deforestation palm oil, resulting in 21 374 ha yr 121 (1.60%) less deforestation and 21.1 million tCO2 yr 121 (1.91%) less emissions from deforestation in Indonesia relative to what occurred. A hypothetical Indonesia-wide carbon price would have achieved equivalent emission reductions at $0.81/tCO2. Impacts of a ban are small because: 52% of Europe\u2019s imports of high-deforestation palm oil would have shifted to non-participating countries; the price elasticity of supply of high-deforestation oil palm cropland is small (0.13); and conversion to oil palm was responsible for only 32% of deforestation in Indonesia. If demand-side restrictions succeed in substantially reducing deforestation, it is likely to be through non-price pathways

Impacts of the U.S. Renewable Fuel Standard on Commodity and Food Prices

When a government imposes a regulation, it usually indicates that the market would not produce the socially desired outcome. A good example is the U.S. Renewable Fuel Standard (RFS). This paper examines the extent to which biofuel production has been driven over time by the RFS and the extent to which it was driven by market changes unforeseen at the time of RFS passage. While the RFS has played a critical role in providing a secure environment to produce and use more biofuels, it was not the only factor that encouraged the biofuel industry to grow. To some extent, at least in the 2000s, the non-RFS biofuel policies and market forces have also influenced the rapid expansion in biofuels. Over the past decade, many papers have studied the economic impacts of biofuel production and policy. The existing literature has failed to properly quantify the impacts and contributions of each of these drivers separately. This paper develops short and long run economic analyses, using Partial Economic (PE) and Computable General Equilibrium (CGE) models, to differentiate the economic impacts of the RFS from other drivers that have helped biofuels to grow. Results show: i) the bulk of the ethanol production prior to 2012 was driven by what was happening in the national and global markets for energy and agricultural commodities and by the federal and sometimes state incentives for biofuel production; ii) the medium to long run price impacts of biofuel production were not large; iii) Due to biofuel production, regardless of the drivers, real crop prices have increased between 1.1% and 5.5% in 2004-11 with only one-tenth of the price increases were assigned to the RFS, iv) For 2011-16, the long run price impacts of biofuels were less than the time period of 2004-11, as in the second period biofuel production increased at much slower rate, v) Biofuel production, regardless of the drivers, has increased US annual farm incomes by $10.6 billion between 2002-16 with 28% share for the RFS