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Full-Text Articles in Social and Behavioral Sciences

Estimating Willingness To Pay For E85 In The United States, Kenneth Liao, Sébastien Pouliot, Bruce A. Babcock Nov 2016

Estimating Willingness To Pay For E85 In The United States, Kenneth Liao, Sébastien Pouliot, Bruce A. Babcock

CARD Working Papers

Meeting US ethanol blending mandates proposed by the Environmental Protection Agency will require a substantial number of motorists with flex-fuel vehicles to switch from low ethanol-gasoline blends to high ethanol-gasoline blends. The lower the willingness to pay for high-ethanol blends, the greater the cost of complying with the proposed mandates. Existing estimates of the willingness to pay for high-ethanol blends use data from Brazil (where consumers have knowledge of and experience with high-ethanol blends), data generated when retail prices greatly favored low-ethanol blends, or stated data collected from mail and online surveys. To obtain more accurate estimates of US willingness ...


Willingness To Pay For Ethanol In Motor Fuel: Evidence From Revealed And Stated Preference For E85, Kenneth Liao, Sebastien Pouliot Mar 2016

Willingness To Pay For Ethanol In Motor Fuel: Evidence From Revealed And Stated Preference For E85, Kenneth Liao, Sebastien Pouliot

CARD Working Papers

This paper estimates the relative preferences of motorists for E10 and E85 in different regions of the United States. We conducted an intercept survey of motorists with flex-fuel vehicles at E85 fuel stations in Iowa, Colorado, Oklahoma, Arkansas and California. The information collected includes prices observed at fuel stations, fuel choices by flex motorists, and responses to a series of opinion questions about ethanol and gasoline. We also proposed a hypothetical scenario to each motorist where either the price of the fuel selected was increased or the price of the fuel not selected was decreased. We estimate fuel preferences first ...


Essays On The Demand For Ethanol In The United States: Willingness To Pay For E85, Kenneth Liao Jan 2016

Essays On The Demand For Ethanol In The United States: Willingness To Pay For E85, Kenneth Liao

Graduate Theses and Dissertations

This dissertation contains three studies that estimate the distribution of willingness to pay (WTP) for E85 as a substitute for E10 among flex motorists in the United States. The results are vital for estimating the demand for ethanol beyond the blend wall and for analysis of the Renewable Fuel Standard. The first study attempts to estimate the distribution of preference for E85 from data generated by a survey of E85 stations in Minnesota. The study uses an extensive sample of recent observations, but estimates of the WTP distribution vary substantially depending on model specification. The conclusion is that the data ...


The Impact Of An Eu-Us Transatlantic Trade And Investment Partnership Agreement On Biofuel And Feedstock Markets, John C. Beghin, Jean-Christophe Bureau, Alexandre Gohin Nov 2014

The Impact Of An Eu-Us Transatlantic Trade And Investment Partnership Agreement On Biofuel And Feedstock Markets, John C. Beghin, Jean-Christophe Bureau, Alexandre Gohin

CARD Working Papers

We assess the impact of a potential TTIP bilateral free trade agreement on the EU and US bio-economies (feedstock, biofuels, by-products, and related competing crops) and major trade partners in these markets. The analysis develops a multi-market model that incorporates bilateral trade flows (US to EU, EU to US, and similarly with third countries) and is calibrated to OECD-FAO baseline for 2013–2022 to account for recent policy decisions. The major policy reforms from a TTIP involve tariff and TRQ liberalization and their direct contractionary impact on US sugar supply, EU biofuel production, and indirect negative effect on US HFCS ...


Impact Of Ethanol Mandates On Fuel Prices When Ethanol And Gasoline Are Imperfect Substitutes, Sebastien Pouliot, Bruce A. Babcock Sep 2014

Impact Of Ethanol Mandates On Fuel Prices When Ethanol And Gasoline Are Imperfect Substitutes, Sebastien Pouliot, Bruce A. Babcock

CARD Working Papers

Past studies that examine the impact of ethanol mandates on fuel prices make the assumption that ethanol and gasoline are perfect substitutes because they are both sources of energy in transportation fuels. These studies, however, have been of limited use in informing current policy debates because the short- to medium-run reality is one of strong regulatory and infrastructure rigidities that restrict how ethanol can be consumed in the United States. Our objective here is to improve understanding of how these rigidities change the findings of existing studies. We accomplish this by estimating the impacts of higher ethanol mandates using a ...


Arbitrage Between Ethanol And Gasoline: Evidence From Motor Fuel Consumption In Brazil, Sebastien Pouliot Jan 2013

Arbitrage Between Ethanol And Gasoline: Evidence From Motor Fuel Consumption In Brazil, Sebastien Pouliot

Economics Presentations, Posters and Proceedings

Unlike regular cars, ex-fuel vehicles (FFVs) allow motorists to fuel on motor blends that contain between zero and one hundred percent of ethanol. This paper investigates how motorists arbitrage between hydrous ethanol and gasoline using aggregate fuel consumption data in Brazil. The ability of FFV motorists to arbitrage between fuel blends shapes of aggregate demands for hydrous ethanol and gasoline. I estimate using nonlinear seemingly unrelated regressions the demands for hydrous ethanol and gasoline in Brazil, and motorists preferences for hydrous ethanol. I find that on average, accounting for the relative energy contents of the two fuels, FFV motorists in ...


Economics Of Biofuels: An Overview Of Policies, Impacts And Prospects, Giancarlo Moschini, Jingbo Cui, Harvey Lapan Jan 2012

Economics Of Biofuels: An Overview Of Policies, Impacts And Prospects, Giancarlo Moschini, Jingbo Cui, Harvey Lapan

Economics Publications

This paper provides an overview of the economics of biofuels. It starts by describing the remarkable growth of the biofuel industry over the last decade, with emphasis on developments in the United States, Brazil and the European Union, and it identifies the driving role played by some critical policies. After a brief discussion of the motivations that are commonly argued in favor of biofuels and biofuel policies, the paper presents an assessment of the impacts of biofuels from the economics perspective. In particular, the paper explains the basic analytics of biofuel mandates, reviews several existing studies that have estimated the ...


The Impacts Of Biofuels Targets On Land-Use Change And Food Supply: A Global Cge Assessment, Govinda R. Timilsina, John Beghin, Dominique Van Der Mensbrugghe, Simon Mevel Jan 2012

The Impacts Of Biofuels Targets On Land-Use Change And Food Supply: A Global Cge Assessment, Govinda R. Timilsina, John Beghin, Dominique Van Der Mensbrugghe, Simon Mevel

Economics Publications

We analyze the long-term impacts of large-scale expansion of biofuels on land-use change, food supply and prices, and the overall economy in various countries or regions using a multi-country, multi-sector global computable general equilibrium model augmented with an explicit land-use module and detailed biofuel sectors. We find that an expansion of biofuel production to meet the existing or even higher targets in various countries would slightly reduce GDP at the global level but with mixed effects across countries or regions. Significant land re-allocation would take place with notable decreases in forest and pasture lands in a few countries. The expansion ...


A Literature Review Of The Market Effects Of Federal Biofuel Policy And Recommendations For Future Policy, Alex Ayers Jan 2012

A Literature Review Of The Market Effects Of Federal Biofuel Policy And Recommendations For Future Policy, Alex Ayers

Graduate Theses and Dissertations

The United States has had a federal biofuels policy since the 1970s. The purpose of this policy was to help the development of a biofuel industry during a time of high fuel prices in order to provide a domestic alternative to expensive foreign oil. Later the policy was changed to help lower the environmental impact caused by conventional fuels. Since that time the industry has grown and currently produces around 15 billion gallons of biofuels every year.

The current federal biofuel policy is largely based on one program, the Renewable Fuel Standard (RFS), which mandates the production and blending of ...


Evaluating Food-Fuel Trade-Offs Via Market Choice: The Case Of Iowa Corn Producers, Tun-Hsiang Yu, Chad Hart, Wen You Jan 2011

Evaluating Food-Fuel Trade-Offs Via Market Choice: The Case Of Iowa Corn Producers, Tun-Hsiang Yu, Chad Hart, Wen You

Economics Publications

This study examines food-fuel trade-offs from the perspective of crop producers and their choices in marketing their grain among food, feed and fuel use. Based on a recent survey of Iowa grain producers, this study finds that price competition from ethanol plants has increased the share of the corn marketed directly to ethanol plants and lowered the market share of corn marketed for domestic and international food/feed purposes. Other factors, such as farm size and market distance, affect the share of corn directed to the fuel, food, and feed markets. The results indicate corn producers are willing to bear ...


How Market Efficiency And The Theory Of Storage Link Corn And Ethanol Markets, Mindy L. Mallory, Dermot J. Hayes, Scott Alan Irwin Dec 2010

How Market Efficiency And The Theory Of Storage Link Corn And Ethanol Markets, Mindy L. Mallory, Dermot J. Hayes, Scott Alan Irwin

CARD Working Papers

In this article we use the theories of market efficiency and supply of storage to develop a conceptual link between the corn and ethanol markets and explore statistical evidence for the link. We propose that a long-run no-profit condition is established in distant futures markets for ethanol, corn, and natural gas and then use the theory of storage to define an inter-temporal equilibrium among these prices. The relationship shows that under certain conditions, future price expectations will influence current spot prices and that a short-term relationship between input and output prices will exist. This short-term relationship will contain fixed costs ...


An Economic Breakeven Model Of Cellulosic Feedstock Production And Ethanol Conversion With Implied Carbon Pricing, John Miranowski, Alicia Rosburg Feb 2010

An Economic Breakeven Model Of Cellulosic Feedstock Production And Ethanol Conversion With Implied Carbon Pricing, John Miranowski, Alicia Rosburg

Economics Working Papers (2002–2016)

The objectives of this paper include: 1) developing an economic framework to estimate long run equilibrium breakeven prices that cellulosic ethanol processors can pay for the marginal or last unit of biomass feedstock they purchase and still breakeven and that cellulosic feedstock producers need to receive for supplying the last unit of feedstock delivered to a commercial-scale plant; 2) estimating the gap or difference between the biorefinery’s willingness to pay (WTP) or derived demand for the last unit of cellulosic feedstock and the suppliers’ willingness to accept (WTA) or marginal cost (MC) of supplying the last unit of feedstock ...


Location Choices Of Ethanol Firms In The Midwest Corn Belt, Monica A. Haddad, Gary Taylor, Francis Y. Owusu Jan 2010

Location Choices Of Ethanol Firms In The Midwest Corn Belt, Monica A. Haddad, Gary Taylor, Francis Y. Owusu

Community and Regional Planning Publications

The Corn Belt has experienced a rapid expansion of corn-based ethanol plants. This has provided researchers the opportunity to examine the relative importance to the renewable fuels industry of several location factors previously identified as important to agro-industries. Using probit regression this study identifies the factors significant to ethanol firms’ location decisions in the four-state study area of Iowa, Illinois, Minnesota and Nebraska. In Iowa and Illinois, where corn is largely ubiquitous, firms move beyond corn supply to consider other localized factors in their decisionmaking process. Factors such as rail access, population density and proximity to blending terminals emerge as ...


Essays On Energy Economics: Microeconomic And Macroeconomic Dimensions, Leandro Gaston Andrian Jan 2010

Essays On Energy Economics: Microeconomic And Macroeconomic Dimensions, Leandro Gaston Andrian

Graduate Theses and Dissertations

The 2000's rise in oil prices has reignited the interest of economists about the influence of these swings on both specific good markets and macroeconomic fluctuations. In the macroeconomic arena, the attention of policymakers and economists has been posed the effects of oil price swings on the economic domestic cycle. In this work, we explore a question under scrutiny among economists and policymakers: the use of fiscal policy as an instrument to accommodate the domestic fluctuations caused by oil price shocks. In particular, we study a floating oil-tax rate used as an instrument to reduce the pass-through of the ...


Biofuels: Potential Production Capacity, Effects On Grain And Livestock Sectors, And Implications For Food Prices And Consumers, Dermot J. Hayes, Bruce Babcock, Jacinto F. Fabiosa, Simla Tokgoz, Amani Elobeid, Tun-Hsiang E. Yu, Fengxia Dong, Chad Hart, Eddie Chavez, Suwen Pan, Miguel Carriquiry, Jerome R. Florian-Dumortier Aug 2009

Biofuels: Potential Production Capacity, Effects On Grain And Livestock Sectors, And Implications For Food Prices And Consumers, Dermot J. Hayes, Bruce Babcock, Jacinto F. Fabiosa, Simla Tokgoz, Amani Elobeid, Tun-Hsiang E. Yu, Fengxia Dong, Chad Hart, Eddie Chavez, Suwen Pan, Miguel Carriquiry, Jerome R. Florian-Dumortier

Economics Publications

We examine four scenarios for the evolution of the biofuel sector using a partial equilibrium model of the world agricultural sector. The model includes the new Renewable Fuels Standard in the 2007 energy act, the two-way relationship between fossil energy and biofuel markets, and a new trend toward corn oil extraction in ethanol plants. At one extreme, one scenario eliminates all support to the biofuel sector when the energy price is low, while the other extreme assumes no distribution bottleneck in ethanol demand growth when the energy price is high. Of the remaining two scenarios, one considers a pure market ...


Biofuels: Potential Production Capacity, Effects On Grain And Livestock Sectors, And Implications For Food Prices And Consumers, Dermot J. Hayes, Bruce A. Babcock, Jacinto F. Fabiosa, Simla Tokgoz, Amani E. Elobeid, Tun-Hsiang (Edward) Yu, Fengxia Dong, Chad E. Hart, Eddie Chavez, Suwen Pan, Miguel Carriquiry, Jerome R. F. Dumortier Mar 2009

Biofuels: Potential Production Capacity, Effects On Grain And Livestock Sectors, And Implications For Food Prices And Consumers, Dermot J. Hayes, Bruce A. Babcock, Jacinto F. Fabiosa, Simla Tokgoz, Amani E. Elobeid, Tun-Hsiang (Edward) Yu, Fengxia Dong, Chad E. Hart, Eddie Chavez, Suwen Pan, Miguel Carriquiry, Jerome R. F. Dumortier

CARD Working Papers

We examine four scenarios for the evolution of the biofuel sector using a partial equilibrium model of the world agricultural sector. The model includes the new Renewable Fuels Standard in the 2007 energy act, the two-way relationship between fossil energy and biofuel markets, and a new trend toward corn oil extraction in ethanol plants. At one extreme, one scenario eliminates all support to the biofuel sector when the energy price is low, while the other extreme assumes no distribution bottleneck in ethanol demand growth when the energy price is high. Of the remaining two scenarios, one considers a pure market ...


Land Allocation Effects Of The Global Ethanol Surge: Predictions From The International Fapri Model, Jacinto F. Fabiosa, John C. Beghin, Fengxia Dong, Amani E. Elobeid, Simla Tokgoz, Tun-Hsiang (Edward) Yu Mar 2009

Land Allocation Effects Of The Global Ethanol Surge: Predictions From The International Fapri Model, Jacinto F. Fabiosa, John C. Beghin, Fengxia Dong, Amani E. Elobeid, Simla Tokgoz, Tun-Hsiang (Edward) Yu

CARD Working Papers

We quantify the emergence of biofuel markets and its impact on U.S. and world agriculture for the coming decade using the multi-market, multi-commodity international FAPRI (Food and Agricultural Policy Research Institute) model. The model incorporates the trade-offs between biofuel, feed, and food production and consumption and international feedback effects of the emergence through world commodity prices and trade. We examine land allocation by type of crop, and pasture use for countries growing feedstock for ethanol (corn, sorghum, wheat, sugarcane, and other grains) and major crops competing with feedstock for land resources such as oilseeds. We shock the model with ...


Three Essays Concerning Agriculture And Energy, Mindy Lyn Baker Jan 2009

Three Essays Concerning Agriculture And Energy, Mindy Lyn Baker

Graduate Theses and Dissertations

This dissertation consists of three papers, each regarding a particular aspect of the relationship between energy and agriculture. The objective of the first paper is to create a model that will enhance informed policy decisions regarding the bioeconomy. A forward-looking stochastic model captures the effect of uncertainty in crude oil prices and commodity yields on biofuel industry development. Acreage limitations on feedstocks such as corn, soybeans, and switchgrass are shown to create competition for acreage among the crops. Investors in the model are rational in the sense that they engage in biofuel production only if returns exceed what they expect ...


Ethanol In The Media Agenda: The Life Cycle Of An Issue In Different Geographic Areas, Shoshana Esther Hebshi Jan 2009

Ethanol In The Media Agenda: The Life Cycle Of An Issue In Different Geographic Areas, Shoshana Esther Hebshi

Graduate Theses and Dissertations

The rise of ethanol as a fuel alternative has come with much controversy over its true benefits. Much of this debate has been played out in the media. This study aims to determine patterns in media coverage of ethanol through a content analysis of reports published from 1999 to 2008 in three newspapers whose respective service areas exhibit different dispositions about the topic--the Des Moines Register, the Houston Chronicle and the Fresno Bee. The study also aimed to expand on the attributes of coverage within each identified phase of the coverage cycle

The study found only one cycle of pre-hoopla ...


Welfare Changes From The U.S. Ethanol Tax Credit: The Role Of Uncertainty And Interlinked Commodity Markets, Mindy L. Baker Dec 2008

Welfare Changes From The U.S. Ethanol Tax Credit: The Role Of Uncertainty And Interlinked Commodity Markets, Mindy L. Baker

CARD Working Papers

A model of the corn, soybean, and wheat markets calculates welfare effects of the U.S. ethanol tax credit. Crop yields are uncertain, and demand consists of feed, food, energy, and exports. Modeling uncertainty in crop yields allows the valuation of deficiency payments as options. Disaggregating demand records who benefits from the tax credit and by how much; incorporating linked crop markets captures indirect effects important for determining the transfer from consumers to producers. There is $600 million in net welfare loss, increased taxpayer liability, and a large transfer from consumers to farmers. A brief comparison of recent literature is ...


A Welfare Analysis Of The U.S. Ethanol Subsidy, Xiaodong Du, Dermot J. Hayes, Mindy L. Baker Nov 2008

A Welfare Analysis Of The U.S. Ethanol Subsidy, Xiaodong Du, Dermot J. Hayes, Mindy L. Baker

CARD Working Papers

Based on a transparent analytical model of multiple markets including corn, ethanol, gasoline, and transportation fuel, this study estimates the welfare changes for consumers and producers resulting from ethanol production and related support polices in 2007. The welfare estimation takes into account the second-best gain from eliminating loan deficiency payments. The results suggest the total social cost is about $0.78 billion for given market parameters. We validate the model's underlying assumption and test for the results' sensitivity to assumed parameters.


Impacts Of Ethanol On Planted Acreage In Market Equilibrium, Hongli Feng, Bruce A. Babcock Jun 2008

Impacts Of Ethanol On Planted Acreage In Market Equilibrium, Hongli Feng, Bruce A. Babcock

CARD Working Papers

Land use impacts of biofuel expansion have attracted a tremendous amount of attention because of the implications for the climate, the environment, and the food supply. To examine these impacts, we set up an economic framework that links input use and land allocation decisions with ethanol and agricultural commodity markets. Crops can be substitutes or complements in supply depending on the relative magnitude of three effects of crop prices: total cropland effect, land share effect, and input use effect. We show that with unregulated free markets, total cropland area increases with corn prices whether crops are substitutes or complements in ...


The Impact Of Ethanol Production On U.S. And Regional Gasoline Prices And On The Profitability Of The U.S. Oil Refinery Industry, Xiaodong Du, Dermot J. Hayes Apr 2008

The Impact Of Ethanol Production On U.S. And Regional Gasoline Prices And On The Profitability Of The U.S. Oil Refinery Industry, Xiaodong Du, Dermot J. Hayes

CARD Working Papers

Using pooled regional time-series data and panel data estimation, we quantify the impact of monthly ethanol production on monthly retail regular gasoline prices. This analysis suggests that the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. The analysis shows that the negative impact of ethanol on gasoline prices varies considerably across regions. The Midwest region has the biggest impact, at $0.39/gallon, while the Rocky Mountain region had the smallest impact, at $0.17/gallon. The results also indicate that ethanol ...


Ethanol, Mandates, And Drought: Insights From A Stochastic Equilibrium Model Of The U.S. Corn Market, Lihong Lu Mcphail, Bruce A. Babcock Mar 2008

Ethanol, Mandates, And Drought: Insights From A Stochastic Equilibrium Model Of The U.S. Corn Market, Lihong Lu Mcphail, Bruce A. Babcock

CARD Working Papers

The outlook for U.S. corn markets is inextricably linked to what happens to the U.S. ethanol industry, which depends, in turn, on the level of government subsidies and mandates. We develop a stochastic partial equilibrium model to simulate outcomes for the corn market for the 2008/09 marketing year to gain insight into these linkages. The model includes five stochastic variables that are major contributors to corn price volatility: planted acreage, corn yield, export demand, gasoline prices, and capacity of the ethanol industry. Our results indicate that integration of gasoline and corn markets has increased corn price volatility ...


Crop-Based Biofuel Production Under Acreage Constraints And Uncertainty, Mindy L. Baker, Dermot J. Hayes, Bruce A. Babcock Feb 2008

Crop-Based Biofuel Production Under Acreage Constraints And Uncertainty, Mindy L. Baker, Dermot J. Hayes, Bruce A. Babcock

CARD Working Papers

A myriad of policy issues and questions revolve around understanding the bioeconomy. To gain insight, we develop a stochastic and dynamic general equilibrium model and capture the uncertain nature of key variables such as crude oil prices and commodity yields. We also incorporate acreage limitations on key feedstocks such as corn, soybeans, and switchgrass. We make standard assumptions that investors are rational and engage in biofuel production only if returns exceed what they can expect to earn from alternative investments. The Energy Independence and Security Act of 2007 mandates the use of 36 billion gallons of biofuels by 2022, with ...


Determinants Of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory, Xiaodong Du, David A. Hennessy, William M. Edwards Oct 2007

Determinants Of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory, Xiaodong Du, David A. Hennessy, William M. Edwards

CARD Working Papers

Based on the Ricardian rent theory, this study employs the variable profit function to analyze the determinants of Iowa cropland cash rental rates using county-level panel data from 1987 to 2005. Accounting for spatial and temporal autocorrelations, responses of local cash rental rates to changes in output prices and other exogenous variables are estimated. We find that Iowa cash rental rates are largely determined by output/input prices, soil quality, relative location, and other county-specific factors. Cash rents go up by $79 for a $1 increase in corn price in the short run. The marginal value of cropland quality, as ...


Ethanol Expansion In The Food Versus Fuel Debate: How Will Developing Countries Fare?, Amani Elobeid, Chad Hart Jan 2007

Ethanol Expansion In The Food Versus Fuel Debate: How Will Developing Countries Fare?, Amani Elobeid, Chad Hart

Economics Publications

his paper examines the impact of ethanol expansion in the United States, brought about by higher crude oil prices, on agricultural commodity prices. Given the United States's stature as a major producer and exporter of many agricultural commodities, the resulting increase in commodity prices has spillover effects into the global market. Using the price changes estimated within a multi-commodity, multi-country agricultural modeling system, this paper attempts to show how an increase in world commodity prices would affect the costs of food baskets around the world and how higher food costs will impact food security, particularly in developing countries. In ...


An Analysis Of The Link Between Ethanol, Energy, And Crop Markets, Simla Tokgoz, Amani E. Elobeid Nov 2006

An Analysis Of The Link Between Ethanol, Energy, And Crop Markets, Simla Tokgoz, Amani E. Elobeid

CARD Working Papers

This study analyzes the impact of price shocks in three input and output markets critical to ethanol: gasoline, corn, and sugar. We investigate the impact of these shocks on ethanol and related agricultural markets in the United States and Brazil. We find that the composition of a country's vehicle fleet determines the direction of the response of ethanol consumption to changes in the gasoline price. We also find that a change in feedstock costs affects the profitability of ethanol producers and the domestic ethanol price. In Brazil, where two commodities compete for sugarcane, changes in the sugar market affect ...


The Long-Run Impact Of Corn-Based Ethanol On The Grain, Oilseed, And Livestock Sectors: A Preliminary Assessment, Amani E. Elobeid, Simla Tokgoz, Dermot J. Hayes, Bruce A. Babcock, Chad E. Hart Nov 2006

The Long-Run Impact Of Corn-Based Ethanol On The Grain, Oilseed, And Livestock Sectors: A Preliminary Assessment, Amani E. Elobeid, Simla Tokgoz, Dermot J. Hayes, Bruce A. Babcock, Chad E. Hart

CARD Briefing Papers

The ongoing growth of corn-based ethanol production raises some fundamental questions about what impact continued growth will have on U.S. and world agriculture. Estimates of the long-run potential for ethanol production can be made by calculating the corn price at which the incentive to expand ethanol production disappears. Under current ethanol tax policy, if the prices of crude oil, natural gas, and distillers grains stay at current levels, then the break-even corn price is $4.05 per bushel. A multi-commodity, multi-country system of integrated commodity models is used to estimate the impacts if we ever get to $4.05 ...


Removal Of U.S. Ethanol Domestic And Trade Distortions: Impact On U.S. And Brazilian Ethanol Markets, Amani E. Elobeid, Simla Tokgoz Oct 2006

Removal Of U.S. Ethanol Domestic And Trade Distortions: Impact On U.S. And Brazilian Ethanol Markets, Amani E. Elobeid, Simla Tokgoz

CARD Working Papers

We analyze the impact of trade liberalization and removal of the federal tax credit in the United States on U.S. and Brazilian ethanol markets using a multi-market international ethanol model calibrated on 2005 market data and policies. The removal of trade distortions induces a 23.2 percent increase in the price of world ethanol on average between 2006 and 2015 relative to the baseline. The U.S. domestic ethanol price decreases by 14.1 percent, which results in a 7.5 percent decline in production and a 3.2 percent increase in consumption. The lower domestic price leads to ...