Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model

Jacinto F. Fabiosa, John Beghin (), Fengxia Dong, Amani Elobeid, Simla Tokgoz and Tun-hsiang Yu

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We quantify the emergence of biofuel markets and its impact on U.S. and world agriculture for the coming decade using the multi-market multi-commodity international FAPRI model. The model incorporates the tradeoffs between biofuel, feed, and food production and consumption and international feedback effects of the emergence through world commodity prices and trade. We examine land allocation by type of crop, and pasture use for countries growing feedstock for ethanol (corn, sorghum, wheat, sugarcane, and other grains) and major crops competing with feedstock for land resources such as oilseeds. We shock the model with exogenous changes in ethanol demand, first in the United States, then in Brazil, China, EU, and India, and compute shock multipliers for land allocation decisions for crops and countries of interest. The multipliers show at the margin how sensitive land allocation is to the growing demand for ethanol. Land moves away from major crops and pasture competing for resources with feedstock crops. Because of the high U.S. tariff on ethanol, higher U.S. demand for ethanol translates into a U.S. ethanol production expansion. The latter has global effects on land allocation as higher coarse grains prices transmit worldwide. Changes in U.S. coarse grain prices also affect U.S. wheat and oilseeds prices, which are all transmitted to world markets. In contrast, expansion in Brazil ethanol use and production chiefly affects land used for sugarcane production in Brazil and to a lesser extent in other sugar-producing countries, but with small impact on other land uses in most countries. Keywords: Acreage, area, biofuel, corn, crops, ethanol, FAPRI model, feedstock, land, sugar, sugarcane. JEL Code: Q42 Q17 Q15

Keywords: ethanol; acreage; area; biofuel; corn; crops; FAPRI model; feedstock; land; sugar; sugarcane (search for similar items in EconPapers)
JEL-codes: Q15 Q17 Q18 Q42 (search for similar items in EconPapers)
Date: 2009-03-03
New Economics Papers: this item is included in nep-agr and nep-ene
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model (2010)
Working Paper: Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model (2010)
Working Paper: Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model (2009)
Working Paper: Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model (2009)
Working Paper: Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model (2009)
Working Paper: Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model (2008)
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