Title
Impacts of Ethanol on Planted Acreage in Market Equilibrium
Campus Units
Economics, Center for Agricultural and Rural Development
Document Type
Article
Publication Version
Submitted Manuscript
Publication Date
4-7-2010
Journal or Book Title
American Journal of Agricultural Economics
Volume
92
Issue
3
First Page or Article ID Number
789
Last Page
802
DOI
10.1093/ajae/aaq023
Abstract
The magnitude of land conversion caused by biofuels expansion largely determines whether biofuels reduce net greenhouse gas emissions. To examine this issue, we model how equilibrium changes in input use and land allocation decisions respond to market- and policy-induced increases in corn ethanol demand. We demonstrate why total cropland area unambiguously increases with increased ethanol demand. The impact of ethanol price subsidies and consumption mandates are examined in the context of technical change. If ethanol demand is elastic enough, an exogenous increase in corn yields leads to cropland expansion with price subsidies. Yield increases under consumption mandates reduce land use.
JEL Classification
Q11, Q18, Q21
Recommended Citation
Feng, Hongli and Babcock, Bruce, "Impacts of Ethanol on Planted Acreage in Market Equilibrium" (2010). Economics Publications. 519.
https://lib.dr.iastate.edu/econ_las_pubs/519
Comments
This working paper was published as Feng, Hongli and Bruce A. Babcock, "Impacts of Ethanol on Planted Acreage in Market Equilibrium," American Journal of Agricultural Economics 92 (2010): 789–802, doi:10.1093/ajae/aaq023.