1. Biofuel Policy Effects on Soil Erosion C. Robert Taylor, Auburn University Ronald D. Lacewell Texas A&M

3. Aggregate Economic Estimates Based on AGSIM, a Large-Scale Econometric-Simulation Model of the Agricultural Economy

4. Scenarios Biofuel (essentially corn ethanol) ramps up to 30 billion gallons in next 10 years ◦ No CRP land returns to crop production ◦ CRP land allowed to return to production based on economic forces

5. Key Assumptions Federal Tax Credits for 1 st gen biofuels (corn ethanol and biodiesel) will not be restored EPA biofuel mandate will remain ◦ 2 nd gen biofuels will not become commercially viable in next 10-15 years ◦ 1 st gen biofuels will replace 2 nd gen biofuels in the mandate No new CRP Program, or changes in current CRP contracts

6. Estimated CRP Acreage Changes Difficult to estimate return of CRP land to crop production as a result of economic forces Essentially all observations are for land going into the CRP

8. Table 1. Average Erosion Rates (Tons/acre) Crop Not Highly Erosive Highly Erosive Corn2.795.46 Wheat0.901.18 Soybeans2.014.21 Cotton3.136.62 Hay0.200.86 Major Crop Average1.662.50 CRP CROPLAND BEFORE: CRP acreage before being placed in a conserving use 20.7 CRP CROPLAND AFTER:1.6

9. Table 2. Estimated Change in Major Crop Prices from Increasing Biofuel Production from 10 to 30 Billion Gallons Annually CommodityCRP FixedCRP Variable Corn ($/bu)$1.45$1.31 Soybeans ($/bu)$0.86$0.66 Wheat ($/bu)$0.46$0.26 Cotton Lint ($/cwt)$0.01$0.00 Hay ($/T)$2.64$0.76

11. Table 3. Estimated Change in Acreage Planted to Major Crops (millions of acres) from Increasing Biofuel Production from 10 to 30 Billion Gallons Annually Commodity CRP Fixed CRP Variable Acreage Planted 2026-20309.6314.83 CRP Acreage 2026-20300.00-6.98

12. Table 4. Estimated Change in Economic Surpluses in the Domestic Food Sector (millions of dollars) from Increasing Biofuel Production from 10 to 30 Billion Gallons Annually CommodityCRP Fixed CRP Variable Difference Food Consumers' Well Being -$39,185-$34,212-$4,973 Net Farm Income$31,523$28,175$3,347 Net Surplus Change-$18,352-$16,727-$1,625

13. Table 3. Estimated Change in Soil Erosion at Alternative Levels of BioFuel Production (million tons annually) from Increasing Biofuel Production from 10 to 30 Billion Gallons Annually CommodityCRP FixedCRP Variable Based on NOT highly erosive31.35174.06 Based on Highly Erosive59.84206.20

14. Tradeoffs Return of 7 million acres of CRP land to production would reduce the impact of expanded first generation biofuel production by $1.6 billion annually With a cost of about 145 million tons in increased erosion Cost or impact value is $11.13/T of soil erosion ◦ Plus long-term productivity loss

15. Questions? http://www.climateark.org/shared/alerts/send.aspx?id=corn_ethanol2 Shutterstock. February 19, 2009. http://www.faqs.org/photo-dict/phrase/1115/corn.html