Biofuels and Land Use Change

Biofuels may make a substantial contribution to meeting the world’s energy needs. That contribution may come sooner and be greater if there is a strong climate policy to reduce greenhouse gases and biofuels can be produced in a way that minimizes greenhouse gas emissions. We investigate the land use implications of biofuels under different policy conditions using a computable general equilibrium model of the world economy that has been adapted to explicitly consider land use change. We find that to meet a substantial portion of the worlds liquid fuel needs a global area approximately equal to that of today’s cropland would be needed. As much as two-thirds of the land could come from intensification of existing land, especially pastureland. Conversion of forests and the loss of natural ecosystems and carbon dioxide emissions associated with land use change present a substantial risk. We also find that comparative advantage in biofuels likely rests in the tropics despite belief in the US that biofuels could be a domestic source of energy, freeing us from imports. An attempt to meet US fuel needs through a domestic biofuels program would likely mean the US would become a major food importer and would contribute to higher land and food prices in the US.