Cash crop demand and conservation practices: The effect of ethanol expansion on cover cropping

Sungmin Cheu and Matthew Gammans

Applied Economic Perspectives and Policy, 2025, vol. 47, issue 5, 1888-1917

Abstract: Efforts to understand farmers' willingness to adopt conservation practices have typically focused on the effects of economic incentives to adopt, such as government cost‐share programs (Fleming, 2017), or informational treatments, such as extension education (Baumgart‐Getz, Prokopy, and Floress, 2012). This paper considers the effect of ethanol production on the adoption of on‐farm conservation practices. From 2002 to 2019, United States ethanol production increased 10‐fold (Newes et al., 2022). Using renewable fuel standard (RFS) mandate changes to instrument for ethanol capacity, we assess whether changes in ethanol production affect the prevalence of cover cropping in corn–soy agriculture. We find that a 100 million gallon/year increase in local ethanol capacity implies a 0.35 percentage point decline in the cover cropping rate. Considering a counterfactual where United States ethanol capacity remained at 2005 levels, our estimates imply that United States annual cover cropped area would be 570.5 thousand acres greater, leading to additional greenhouse gas sequestration valued at $19.0 million/year based on current estimates of the social cost of carbon (Environmental Protection Agency, 2022).

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:wly:apecpp:v:47:y:2025:i:5:p:1888-1917

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