Monday, February 08, 2010

Indirect Land-Use Regulation of Biofuels

Indirect land use theory goes something like this:

the U.S. biofuels industry creates more demand for domestic corn,
which causes less soybeans to be produced,
which in turn creates more demand for Brazilian soybeans,
which in turn causes more rainforests to be converted.
Since Brazilian rainforests sequester carbon and green house gases, therefore U.S. biofuels should be regulated for indirect land use impacts on rain forest conversion. Does the logic make sense for regulatory purposes? Brazil has more land area than the continental U.S. Brazil only uses 19 percent of its 790 million cultivable acres, so an obvious question is whether there is room for agricultural expansion without harming the rain forests?

House Agriculture Committee Chairman Collin Peterson, right, introduced legislation to prevent EPA from regulating GHGs and also has a provision blocking its land-use biofuels rule as well. Alaskan Senator Lisa Murkowski has similar legislation in the Senate.

What are the risks of imposing an extra U.S. regulatory policy on indirect land use? Some of the risks are that the policy may:

interfere with U.S. agricultural competitiveness,
not achieve desired results in rain forest preservation,
impede maximum potential in reducing domestic carbon and greenhouse gas emissions, and impede progress toward less dependence on imported oil.
It is important to note that for the U.S. indirect land use policy proposed there appears to be no direct institutional authority or policy linkages that effectively assure less rain forest conversion. In the final analysis, the approach of pursing a unilateral indirect land use policy appears to run the risk of imposing extra costs on a domestic sector while having no apparent impact on rain forest preservation. (Agricultural Marketing Resource Center, )

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