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Economics Research International
Volume 2013 (2013), Article ID 708604, 12 pages
http://dx.doi.org/10.1155/2013/708604
Research Article

Biofuel Expansion, Fertilizer Use, and GHG Emissions: Unintended Consequences of Mitigation Policies

1Center for Agricultural and Rural Development, Iowa State University, 260 Heady Hall, Ames, IA 50011-1070, USA
2School of Public and Environmental Affairs, Indiana University-Purdue University Indianapolis, BS 4074, 801 W. Michigan Street, Indianapolis, IN 46202, USA
3Universidad ORT Uruguay and Centro de Investigaciones Económicas, Boulevard España 2633, 11300 Montevideo, Uruguay
4Union of Concerned Scientists, 1825 K Street NW, Suite 800, Washington, DC 20006-1232, USA
5U.S. Agency for International Development, 1300 Pennsylvania Avenue NW, Washington, DC 20523, USA
6Department of Economics, Iowa State University, 260 Heady Hall, Ames, IA 50011-1070, USA

Received 7 March 2013; Accepted 29 September 2013

Academic Editor: Silvia Secchi

Copyright © 2013 Amani Elobeid et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Increased biofuel production has been associated with direct and indirect land-use change, changes in land management practices, and increased application of fertilizers and pesticides. This has resulted in negative environmental consequences in terms of increased carbon emissions, water quality, pollution, and sediment loads, which may offset the pursued environmental benefits of biofuels. This study analyzes two distinct policies aimed at mitigating the negative environmental impacts of increased agricultural production due to biofuel expansion. The first scenario is a fertilizer tax, which results in an increase in the US nitrogen fertilizer price, and the second is a policy-driven reversion of US cropland into forestland (afforestation). Results show that taxing fertilizer reduces US production of nitrogen-intensive crops, but this is partially offset by higher fertilizer use in other countries responding to higher crop prices. In the afforestation scenario, crop production shifts from high-yielding land in the United States to low-yielding land in the rest of the world. Important policy implications are that domestic policy changes implemented by a large producer like the United States can have fairly significant impacts on the aggregate world commodity markets. Also, the law of unintended consequences results in an inadvertent increase in global greenhouse gas emissions.