Chapter 7 - Implications of biofuel production on direct and indirect land use change: Evidence from Brazil

Abstract

The increase in the demand for biofuels as a result of biofuel-friendly policies and market forces has led to higher crop prices. The rise in prices has provided incentives for land expansion for agricultural production, as well as the reallocation of land among different agricultural activities. Biofuels have both direct and indirect land use changes. While direct effects can be determined by the amount of feedstocks needed per unit of bioenergy produced, and feedstock yields per unit of land, indirect land use changes are much more difficult to assess. These are highly dependent on the interactions of yields of different crops and locations as well as on possibilities for substitutions in terms of demand and supply. Accounting for national and global indirect land use change is critical because of its impacts on the level of greenhouse gas emissions and other environmental metrics as well as on commodity prices and food markets. This chapter provides a general overview of the implications of the expansion of biofuels and the related feedstock needs as sources of both direct and indirect land use changes. In order to properly assess land use changes resulting from biofuels, it is important to reflect on how agricultural production has responded to price increases from increased demand for biofuel feedstock. This chapter offers an illustration from Brazil, namely, agricultural production trends and observed land use change based on land intensification (double cropping, increased yields) and extensification (land expansion) in response to price signals. The evidence from Brazil highlights the challenges associated with assessing the extent of the expansion and reallocation of land. A major difficulty in assessing land use change is the diversity of possibilities in which agricultural activities can be conducted, including production practices, climatic conditions, resource bases, etc. These are all highly specific, location dependent, and are reflected and modulated by institutional and cultural aspects. The dynamics of agricultural expansion can also change in short periods of time as they respond to policy, technologies, and market forces. The recent evolution of agricultural activities in Brazil, including zoning restrictions, possibilities for double cropping, and stricter enforcement of policies, all illustrate the difficulties and the need to frequently evaluate and update land use change assessments.