Potential Environmental Impacts of Increased Reliance on Corn-Based Bioenergy

Abstract

This paper integrates economic and physical models to assess: a) how increases in agricultural commodity prices, driven by ethanol production and other factors, affect land use and cropping systems in the US Midwest, and b) how the changes in land use and cropping systems in turn affect environmental quality in the region. The empirical framework includes a set of econometric models that predict land conversion, crop choices, and crop rotations at the parcel level based on commodity prices, land quality, climate conditions, and other physical characteristics at the sites. The predictions are then combined with site-specific environmental production functions to determine the effect of rising commodity prices on nitrate runoff and leaching, soil water and wind erosion, and carbon sequestration. Results suggest that increasing commodity prices will result in widespread conversions of non-cropland to cropland. Fifty percent of the region’s pasture and range land will be converted to cropland with $6 corn. Rising commodity prices will also result in dramatic changes in crop mix and rotation systems in the Midwest. With $6 corn, the total acreage of corn will increase by 23% and 40% in the Corn Belt and Lake States, respectively; the acreage of continuous corn will increase considerably in both regions as well. These changes in land use and crop mix will have a large impact on agricultural pollution. Approaches to mitigating the environmental impacts are discussed.