Greenhouse Gas and Nitrogen Fertilizer Scenarios for U.S. Agriculture and Global Biofuels

Amani Elobeid, Miguel Carriquiry, Jacinto Fabiosa, Kranti Mulik (), Dermot Hayes, Bruce Babcock, Jerome Dumortier () and Juan Rosas ()

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: This analysis uses the 2011 FAPRI-CARD (Food and Agricultural Policy Research Institute-Center for Agricultural and Rural Development) baseline to evaluate the impact of four alternative scenarios on U.S. and world agricultural markets, as well as on world fertilizer use and world agricultural greenhouse gas emissions. A key assumption in the 2011 baseline is that ethanol support policies disappear in 2012. The baseline also assumes that existing biofuel mandates remain in place and are binding. Two of the scenarios are adverse supply shocks, the first being a 10% increase in the price of nitrogen fertilizer in the United States, and the second, a reversion of cropland into forestland. The third scenario examines how lower energy prices would impact world agriculture. The fourth scenario reintroduces biofuel tax credits and duties. Given that the baseline excludes these policies, the fourth scenario is an attempt to understand the impact of these policies under the market conditions that prevail in early 2011. A key to understanding the results of this fourth scenario is that in the absence of tax credits and duties, the mandate drives biofuel use. Therefore, when the tax credits and duties are reintroduced, the impacts are relatively small. In general, the results show that the entire international commodity market system is remarkably robust with respect to policy changes in one country or in one sector. The policy implication is that domestic policy changes implemented by a large agricultural producer like the United States can have fairly significant impacts on the aggregate world commodity markets. A second point that emerges from the results is that the law of unintended consequences is at work in world agriculture. For example, a U.S. nitrogen tax that might presumably be motivated for environmental benefit results in an increase in world greenhouse gas emissions. A similar situation occurs in the afforestation scenario in which crop production shifts from high-yielding land in the United States to low-yielding land and probably native vegetation in the rest of the world, resulting in an unintended increase in global greenhouse gas emissions.

Keywords: afforestation; energy price; ethanol tax credit; fertilizer; partial equilibrium model; policy analysis. (search for similar items in EconPapers)
Date: 2011-06
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.card.iastate.edu/products/publications/pdf/11wp524.pdf Full Text (application/pdf)
https://www.card.iastate.edu/products/publications/synopsis/?p=1161 Online Synopsis (text/html)

Related works:
Working Paper: Greenhouse Gas and Nitrogen Fertilizer Scenarios for U.S. Agriculture and Global Biofuels (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ias:cpaper:11-wp524

Access Statistics for this paper

More papers in Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University Contact information at EDIRC.
Bibliographic data for series maintained by ().