Pros & Cons of Counting
Indirect Land Use Change
Ron Plain, Ph.D.
Professor of Agricultural Economics
University of Missouri-Columbia
http://web.missouri.edu/~rplain
Indirect Land Use Change
 “More
Perspectives on Indirect Land Use
Change Effects” by William K. Jaeger,
Oregon State University
 “Indirect Land Use: The Folly of OverIndulgent Environmentalism?” by Mark
Edelman, Iowa State University
Source: Agricultural Marketing Resource Center,
Renewable Energy Newsletter, Dec 09 & Jan 10
Indirect Land Use Logic
U.S. biofuels production uses a lot of corn and some
veg oil that otherwise would be available for other
uses (feed, food, etc)
This causes crop prices to rise and world crop acreage
to increase
More cultivated acres means less carbon sequestration
since CO2 is released when land in permanent
vegetation (grass or trees) is converted to annual
crops
Biofuels should be “charged” for this reduced CO2
sequestration
Indirect Market Impacts
The way that changes in supply or demand in
one market effects other markets
Are Indirect Impacts Important?
Can’t we just ignore them?
The 2007 Renewable Fuels Standards Act
mandates the consideration of indirect land
effects
3 Indirect Impacts of Biofuels
Fuel: Increased biofuel production will decrease
fossil fuel use (not 1 to 1 relationship)
Feed: Increased distillers grain production will
decrease corn use (not 1 to 1 relationship)
Land: Converting land from food/feed
production to biofuel production in one
location will cause acres to move into
food/feed production elsewhere (not 1 to 1
relationship)
Are Indirect Impacts Important?
Let’s just ignore the indirect land use impact, it’s
less precise and harder to calculate
One can clearly identify cars that are burning
E10 ethanol rather than 100% gasoline
One can clearly identify animals that are eating
DDGS instead of corn and soybean meal
One can never be certain which acres or even
how many were brought into production
because U.S. crops were used for biofuels
Are Indirect Impacts Important?
We should ignore the indirect land use impact
because it threatens the continuing expansion
of the biofuels industry
Why does policy encourage biofuels?
 Replace
imported energy with domestic
 Increase the energy supply

More energy = lower energy prices
 Improve

GHG
the environment
Why the Indirect Land Use Question?
 Are
biofuels part of the GHG solution?
or
 Are biofuels part of the GHG problem?
Indirect Land Use Question
 Which
fuel type is a bigger contributor to
GHG, gasoline/diesel or ethanol/biodiesel?
 The answer depends on what you count
Greenhouse Gas Emissions





Corn
Biomass
Gasoline
Ethanol Ethanol
--grams of GHG/MJ of energy-Feedstock
+ 4
+ 24
+ 10
Refining fuel
+15
+ 40
+ 9
Vehicle
+72
+ 71
+ 71
Feedstock Uptake
0
- 62
- 62
Sub-total
+92
+ 73
+ 27
Source: Searchinger, et al, Science, February 29, 2008
Greenhouse Gas Emissions






Corn
Biomass
Gasoline
Ethanol Ethanol
--grams of GHG/MJ of energy-Feedstock
+ 4
+ 24
+ 10
Refining fuel
+15
+ 40
+ 9
Vehicle
+72
+ 71
+ 71
Feedstock Uptake
0
- 62
- 62
Land use change
0
+104
+111
Total
+92
+177
+138
Source: Searchinger, et al, Science, February 29, 2008
Why the Indirect Land Use Question
Is Important
 Threatens
public support for biofuels
 Puts at risk billions for U.S. farmers
08-09
06-07
04-05
02-03
00-01
98-99
96-97
94-95
92-93
90-91
88-89
86-87
84-85
82-83
80-81
78-79
76-77
74-75
72-73
70-71
Dollars Per Bushel
U.S. Soybean Price, 1970-11
12
10
8
6
4
2
0
10-11
08-09
06-07
04-05
02-03
00-01
98-99
96-97
94-95
92-93
90-91
88-89
86-87
84-85
82-83
80-81
78-79
76-77
74-75
72-73
70-71
Dollars Per Bushel
U.S. Corn Price 1970-11
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
U.S. Corn Production, 1970-10
14
10
8
6
4
Production is increasing by 190
million bu/year
2
09
06
03
00
97
94
91
88
85
82
79
76
73
0
70
Billion Bushels
12
CORN DISAPPEARANCE AND STOCKS
Crop Year
Bil. Bushels
16
14
Stocks
12
10
Exports
8
6
Food, Seed
& Industrial
4
2
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
0
Feed &
Residual
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
Billion Dollars
Value of U.S. Corn Crop, 1970-10
60
50
40
30
20
10
0
Value of U.S. Corn Crop






2004 2009
Change
-------billion dollars-------U.S. feed
12.7
19.3
+ 6.7
U.S. ethanol
2.7
15.8
+13.1
U.S. food, seed, other 2.8
4.8
+ 2.0
Exports
3.7
7.0
+ 3.3
Inventory
2.4
0.2
- 2.2
TOTAL
24.3
47.2
+22.9
Source: USDA/NASS
U.S. Net Farm Income, 1949-2010
$100
$90
$80
Billion $
$70
$60
$50
$40
$30
$20
$10
$0
49 53 57 61 65 69 73 77 81 85 89 93 97 01 05 09
U.S. Farmland Values, 1950-2009*
USDA/NASS
$/acre
2500
2000
1500
1000
500
06
02
98
94
90
86
82
78
74
70
66
62
58
54
50
0
Indirect Land Use Measurement
 The
key question: How much more land will
be cultivated in a world with biofuels than in a
world without biofuels?
Corn ethanol
Cellulosic
2008
2012
Bio-diesel
More non-grain
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2011
2010
40
35
30
25
20
15
10
5
0
2009
Billion Gallons
2007 Renewable Fuels Mandate
Corn for ethanol needs to increase 220 million bushels/year
Forecast
% corn for ethanol:
2000-01: 6%
2005-06: 14%
2007-08: 23%
2009-10: 33%
10-11
08-09
06-07
04-05
02-03
00-01
98-99
96-97
94-95
2010-11: 34%
92-93
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
90-91
Billion Bushels
Corn Milled for Ethanol
After 2014, 5.4 billion bushels per year will be used for ethanol
Indirect Land Use Measurement
 This
year roughly 4.4 billion bushels of U.S.
corn will be used to make ethanol. How much
indirect land use does this cause?
Indirect Land Use Measurement
 30%
of the corn (the non-starch portion) used
to make ethanol becomes DDGS and is used
as livestock feed
Indirect Land Use Measurement
 This
year roughly 4.4 billion bushels of U.S.
corn will be used to make ethanol.
 3.1 billion bushels less feed
Indirect Land Use Measurement
 Higher
crop prices lead to a less profitable and
smaller livestock/poultry industry, thus not all
the 70% of the corn used to make ethanol will
be replaced with more feed from elsewhere
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
96
94
92
90
88
86
84
82
80
78
76
2000
Billion Pounds
US Red Meat & Poultry Production, 2000-10
10-11
08-09
06-07
04-05
02-03
00-01
98-99
96-97
94-95
92-93
90-91
88-89
86-87
84-85
82-83
80-81
78-79
76-77
74-75
Billion Bushels
US Feed & Residual Use of Corn, 1975-10
7
6
5
4
3
2
1
0
Indirect Land Use Measurement
 This
year 4.4 billion bushels of U.S. corn will
be used to make ethanol.
 3.1 billion bushels less feed
 2.1 billion bushels of feed will be replaced
Indirect Land Use Measurement
 Higher
crop prices lead to higher yields which
holds down world crop acres
U.S. Average Corn Yield, 1970-10
180
160
120
100
80
60
09
06
03
00
97
94
91
82
79
76
73
20
0
88
40
85
Yield is increasing by
2 bu/year
70
Bushels
140
U.S. Corn Crop

Average increase in corn yield


1970-06
2006-10
Source: USDA/NASS
2.13bu/year
3.60bu/year
Indirect Land Use Measurement
 This
year 4.4 billion bushels of U.S. corn will
be used to make ethanol.
 3.1 billion bushels less feed
 2.1 billion bushels of feed will be replaced
 Assuming an extra 1.5 bu/acre/year
 1.6 billion bushels replaced on extra acres
Indirect Land Use Measurement
 This
year 4.4 billion bushels of U.S. corn will
be used to make ethanol.
 3.1 billion bushels less feed
 2.1 billion bushels of feed will be replaced
 Assuming an extra 1.5 bu/acre/year
 1.6 billion bushels replaced on extra acres
 Assuming 160 bu/acre land
 10 million extra cultivated acres
Indirect Land Use Measurement
 Where
are these extra cultivated acres?
 What were these acres used for before?
Source: Takle & Hofstrand, Iowa State University
Summary
adjust – using 5 billion bushels of
corn annually for ethanol has impact on land
use
 2 to 3 million acres of increased cultivation
per billion gallons of annual ethanol
production
 Calculating this impact on GHG is inexact
 Indirect land use shifts focus away from
renewable energy
 Markets
Questions?