Abstract
This paper examines how proximity to an ethanol plant influences land-use and crop choice among producers. We estimated a Tobit model of crop choice within parcels located in Central Nebraska in a 2014 sample period in order to analyze changes in land-use and crop choice. We employed Geographic Information System (GIS) databases to access relevant data on crop choice and other land uses in the study area parcels, in addition to detailed information on the location and capacity of irrigation wells. We utilized an instrumental variable approach to account for the endogeneity of crop choice with ethanol refinery locations in the study area. Our regional model also took into account specific characteristics of the local processing markets for grains, including animal food manufacturers and livestock as well as ethanol plants. Our estimates revealed that ethanol plants alter land-use in several ways. We found that proximity to an ethanol plant increases the share of land allocated to corn cultivation up to a distance of 30 miles and that the portion of land parcels allocated to corn production falls with distance from an ethanol plant in a non-linear pattern. We also find that land allocation to grassland and pasture rises with distance from ethanol plants.
Highlights
IntroductionThe U.S total corn grain production increased to
The renewable fuels sector has been a significant factor in the recent evolution of crop choice in the corn-producing regions of the United States
The current study examines the relationship between crop choice and distance to an ethanol plant using parcel-level data for an agricultural region in Nebraska, a corn-producing state located in the Midwest region of the United States
Summary
The U.S total corn grain production increased to. Three quarters of that increase was corn production used for ethanol fuel. This resulted from a combination of rising gasoline prices and a suite of state and federal bioenergy policies [3,4]. Corn is delivered by trucks for relatively short distances to a nearby ethanol plant and producers consider the transport cost and crop price received. Individual ethanol plants in the midwestern states (IL, IN, IA, KS, KY, MN, MO, NE, OH, SD, and WI) define a market area by the closest plant’s input suppliers, farmers, and the density of surrounding corn [7,8]
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