Hostname: page-component-848d4c4894-2xdlg Total loading time: 0 Render date: 2024-07-07T17:46:38.681Z Has data issue: false hasContentIssue false
  • English
  • Français

Contributions of U.S. Crop Subsidies to Biofuel and Related Markets

Published online by Cambridge University Press:  26 January 2015

Stephen Devadoss  and
Jude Bayham
Stephen Devadoss
Affiliation:
Department of Agricultural Economics, University of Idaho, Moscow, ID
Jude Bayham
Affiliation:
Department of Agricultural Economics, University of Idaho, Moscow, ID
Get access Rights & Permissions [Opens in a new window]

Abstract

The U.S. crop subsidies provide incentives for farmers to expand feedstock production, which benefits the biofuel producers by lowering input costs. This study develops a general equilibrium model to analyze the effects of a reduction in the U.S. crop subsidy on biofuel industries and social welfare. The impacts of feedstock policies on the biofuel market are marginal. In contrast, the biofuel mandate has a larger impact and counteracts the effects of the crop subsidy reduction. The mandate increases the demand for feedstock and causes not only grain ethanol, but also cellulosic ethanol production to rise. The mandate exacerbates the distortion, and government spending increases significantly, leading to greater welfare loss.

Keywords

biofuelenvironmental impactsfarm supportswelfare analysisQ18Q27
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 42 , Issue 4 , November 2010 , pp. 743 - 756
Copyright
Copyright © Southern Agricultural Economics Association 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, D., Anderson, J.D., and Sawyer, J. “Impact of the Ethanol Boom on Livestock and Dairy Industries: What Are They Going to Eat?” Journal of Agricultural and Applied Economics 40(2008):573–79.Google Scholar
Bhaskar, A., and Beghin, J.C. “How Coupled Are Decoupled Farm Payments? A Review of the Evidence.” Journal of Agricultural and Resource Economics 34(2009): 130–53.Google Scholar
Burniaux, J.-M., and Truong, T. GTAP-E: An Energy-Environmental Version of the GTAP Model. Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, 2002.Google Scholar
Canada. Canada Requests WTO Consultation on U.S. Agricultural Subsidies. Foreign Affairs and International Trade Canada. Press Release, 2007.Google Scholar
de Goiter, H., and Just, D.R. “The Economics of the U.S. Ethanol Import Tariff with a Blend Mandate and Tax Credit.” Journal of Agricultural and Food Industrial-Organization 6(2008): 1–21.Google Scholar
de Goiter, H., and Just, D.R. “The Welfare Economics of a Biofuel Tax Credit and the Interaction Effects with Price Contingent Farm Subsidies.” American Journal of Agricultural Economics 91(2009a): 477–88.Google Scholar
de Goiter, H., and Just, D.R. “The Economics of a Blend Mandate for Biofuels.” American Journal of Agricultural Economics 91(2009b):738–50.CrossRefGoogle Scholar
de Gorter, H., Just, D.R., and Tan, Q. “The Social Optimal Import Tariff and Tax Credit for Ethanol with Farm Subsidies.” Agricultural and Resource Economics Review 38(2009):65–77.Google Scholar
Devadoss, S., and Luckstead, J. “Implications of Immigration Policies for the U.S. Farm Sector and Workforce.” Economic Inquiry (2010): (forthcoming).Google Scholar
Dicks, M.R., Campiche, J., De La Torre Ugarte, D., Hellwinckel, C., Bryant, H.L., and Richardson, J.W. “Land Use Implications of Expanding Biofuel Demand.” Journal of Agricultural and Applied Economics 41(2009):435–53.Google Scholar
Duffield, J.A., and Collins, K. “Evolution of Renewable Energy Policy.” Choices (New York, NY.) 21(2006):9–14.Google Scholar
Eidman, V.R. “Economic Parameters for Corn Ethanol and Biodiesel Production.” Journal of Agricultural and Applied Economics 39(2007): 345–56.Google Scholar
Elobeid, A., and Tokgoz, S. “Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?” American Journal of Agricultural Economics 90(2008):918–32.Google Scholar
Gardner, B. “Fuel Ethanol Subsidies and Farm Price Support: Boom or Boondoggle?” Working Paper 03-11, Department of Agricultural and Resource Economics, The University of Maryland, College Park, 2003.Google Scholar
Goulder, L.H., and Williams, R.C. “The Substantial Bias From Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution.” The Journal of Political Economy 111(2003):898–927.Google Scholar
Harrison, R.W. “The Food versus Fuel Debate: Implications for Consumers.” Journal of Agricultural and Applied Economics 41(2009): 493–500.CrossRefGoogle Scholar
Hayes, D., Babcock, B., Fabiosa, J., Tokgoz, S., Elobeid, A., Yu, T.H., Dong, F., Hart, C., Chavez, E., Pan, S., Carriquiry, M., and Dumortier, J. “Biofuels: Potential Production Capacity, Effects on Grain and Livestock Sectors, and Implications for Food Prices and Consumers.” Journal of Agricultural and Applied Economics 41(2009): 465–91.Google Scholar
Herndon, C.W. “The Ethanolization of Agriculture and the Roles or Agricultural Economists.” Journal of Agricultural and Applied Economics 40(2008):403–14.Google Scholar
Hochman, G., Sexton, S.E., and Zilberman, D.D. “The Economics of Biofuel Policy and Biotechnology.” Journal of Agricultural and Food Industrial-Organization 6(2008): 1–24.CrossRefGoogle Scholar
Holland, D., Devadoss, S., and Stodick, L. “Regional CGE Modeling Using IMPLAN and GAMS.” Internet site: www.agribusinessmgmtwsu.edu/Holland_model/obtain_model.htm (Accessed September 12, 2005).Google Scholar
ICTSD (The International Centre for Trade and Sustainable Development). Bridges Weekly Trade News Digest. Vol. 11. Internet site: http://ictsd.net/downloads/bridges/bridges 11-5.pdf (Accessed August 10, 2007).Google Scholar
Kenkel, P., and Holcomb, R.B. “Conditions Necessary for Private Investment in the Ethanol Industry.” Journal of Agricultural and Applied Economics 41(2009):455–64.CrossRefGoogle Scholar
Kim, CS., Schlaible, G., and Daberkow, S. “The Relative Impacts of U.S. Biofuel Policies on Fuel-Energy Markets: A Comparative Static Analysis.” Journal of Agricultural and Applied Economics 42(2010): 121–32.CrossRefGoogle Scholar
Lamb, R.L., and Henderson, J. “FAIR Act Implications for Land Values in the Corn Belt.” Review of Agricultural Economics 22(2000): 102–19.Google Scholar
Liska, A.J., Yang, H.S., Bremer, V.R., and Klopfenstein, T.J. “Improvements in Life Cycle Energy Efficiency and Greenhouse Gas Emissions of Corn-Ethanol.” Journal of Industrial Ecology 13(2009):58–74.Google Scholar
Löfgren, H., Harris, R.L., and Robinson, S. “A Standard Computable General Equilibrium (CGE) Model in GAMS.” Microcomputers in Policy Research. Vol 5. Washington, DC: IFPRI, 2002.Google Scholar
Luckstead, J., Devadoss, S., and Rodriguez, A. “The Effects of NAFTA and U.S. Farm Policies on Illegal Immigration and Agricultural Trade,” Working paper, Dept. of Agr. Econ., University of Idaho, Moscow, 2010.Google Scholar
Naylor, R.L., and Mendelsohn, R. “Measuring the Damages of Air Pollution in the United States.” Journal of Environmental Economics and Management 54(2007): 1–14.Google Scholar
Outlaw, J.L., Ribera, L.A., Richardson, J.W., da Silva, J., Bryant, H., and Klose, S.L. “Economics of Sugar-Based Ethanol Production and Related Policy Issues.” Journal of Agricultural and Applied Economics 39(2007): 357–63.CrossRefGoogle Scholar
Patzek, T., Anti, S.M., Campos, R., and Ha, K. “Ethanol from Corn: Clean Renewable Fuel for the Future, or Drain on Our Resources and Pockets?” Environment, Development and Sus-tainability 7(2005):319–36.Google Scholar
Perroni, C, and Rutherford, T.F. “A Comparison of the Performance of Flexible Functional Forms for Use in Applied General Equilibrium Modelling.” Computational Economics 11(1998): 245–63.Google Scholar
Pimentel, D. “Ethanol Fuels: Energy Security, Economics, and the Environment.” Journal of Agricultural & Environmental Ethics 4(1991): 1–13.Google Scholar
Pimentel, D. “Ethanol Fuels: Energy Balance, Economics, and Environmental Impacts Are Negative.” Natural Resources Research 12(2003): 127–34.CrossRefGoogle Scholar
Popp, M.P. “Assessment of Alternative Fuel Production from Switchgrass: An Example from Arkansas.” Journal of Agricultural and Applied Economics 39(2007):373–80.CrossRefGoogle Scholar
Searchinger, T., Heimlich, R., Houghton, R.A., and Dong, F. “Use of U.S. Croplands for Biofuels Increases Greenhouse Gases though Emissions From Land-Use Change.” Science 319(2008): 1238–40.Google Scholar
Shapouri, H., Duffield, J.A., and Wang, M. The Energy Balance of Corn Ethanol: An Update. Washington, DC: Office of Energy Policy and New Uses Office of the Chief Economist, U.S. Department of Agriculture, 2002.Google Scholar
Susanto, D. Rosson, CP., and Hudson, D. “Impacts of Expanded Ethanol Production on Southern Agriculture.” Journal of Agricultural and Applied Economics 40(2008):581–592.Google Scholar
Taheripour, F., Khanna, M., and Nelson, C. H. “Welfare Impacts of Alternative Public Policies for Agricultural Pollution Control in an Open Economy: A General Equilibrium Framework.” American Journal of Agricultural Economics 90,3(2008):701–18.Google Scholar
Unnasch, S., and Pont, J. “Full Fuel Cycle Assessment: Well to Wheels Energy Inputs, Emissions, and Water Impacts.” TIAX LLC, CEC-600-2007-004-D, 2007.Google Scholar
U.S. Department of Agriculture. Published Estimates of Crop Production. Washington, DC: National Agricultural Statistics Service, 2007.Google Scholar
U.S. Department of Commerce. Annual Survey of Manufactures, Statistics for Industry Groups and Industries. Washington, DC: Bureau of the Census, 2007.Google Scholar
Walsh, M.E., Ugarte, D.G. De La Torre, English, B.C., Jensen, K., Hellwinckel, C., Menard, R.J., and Nelson, R.G. “Agricultural Impacts of Biofuels Production.” Journal of Agricultural and Applied Economics 39(2007): 365–72.Google Scholar