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Potential for Uncertainty about Indirect Effects of Ethanol on Land Use in the Case of Brazil

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  • Thompson, Wyatt
  • Meyer, Seth D.
  • Westhoff, Patrick C.

Abstract

The indirect effects of ethanol on land are a focus of recent US biofuel literature and policy. The experiments presented here highlight the sensitivity of land use changes to assumptions about the ability of land to be converted from one use to another and the ease with which decision makers can make these conversions. By varying parameters governing land use in a simulation model, indirect effects on land use can be varied no less widely. Extending this result, there is an inverse relationship between the responsiveness of land allocation, which is a key element of overall supply response in the medium-term, and the magnitude of price effects: for a given shock, greater land response dampens the scale of price changes and lower land response is associated with greater price effects. Moving beyond agricultural commodity markets alone, Brazilian ethanol markets may be as sensitive to prices as US markets are sometimes believed to be. If so, then changes in Brazilian trade may represent a substantial part of the market response to changes in US ethanol consumption at least over certain ranges. With uncertainties about area and ethanol market effects taken into account, a particular path of US imports may be associated with any number of land use effects.

Suggested Citation

  • Thompson, Wyatt & Meyer, Seth D. & Westhoff, Patrick C., 2008. "Potential for Uncertainty about Indirect Effects of Ethanol on Land Use in the Case of Brazil," Environmental and Rural Development Impacts Conference, October 15-16, 2008, St. Louis, Missouri 54650, Farm Foundation, Transition to a Bio Economy Conferences.
    • Handle: RePEc:ags:fftren:54650
    DOI: 10.22004/ag.econ.54650
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    References listed on IDEAS

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    1. Birur, Dileep & Hertel, Thomas & Tyner, Wally, 2008. "Impact of Biofuel Production on World Agricultural Markets: A Computable General Equilibrium Analysis," GTAP Working Papers 2413, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    2. Schneider, Uwe A. & McCarl, Bruce A., 2005. "Implications of a Carbon-Based Energy Tax for U.S. Agriculture," Agricultural and Resource Economics Review, Cambridge University Press, vol. 34(2), pages 265-279, October.
    3. Birur, Dileep & Hertel, Thomas & Tyner, Wally, 2008. "Impact of Biofuel Production on World Agricultural Markets: A Computable General Equilibrium Analysis," GTAP Working Papers 2413, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    4. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
    5. Gurgel Angelo & Reilly John M & Paltsev Sergey, 2007. "Potential Land Use Implications of a Global Biofuels Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-36, December.
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    Cited by:

    1. Valdes, Constanza & Hjort, Kim & Seeley, Ralph, 2016. "Brazil’s Agricultural Land Use and Trade: Effects of Changes in Oil Prices and Ethanol Demand," Economic Research Report 242449, United States Department of Agriculture, Economic Research Service.

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