Agriculture News

January 23, 2020

Don’t blame U.S. biofuels for Indonesia and Malaysia deforestation, study shows

malaysia-deforestation A Purdue University analysis shows that U.S. biofuel production and policy may account for only a negligible portion of the land cleared for increased palm oil production since the 1990s. (Photo courtesy mongabay.com). Download image

WEST LAFAYETTE, Ind. – Since 1990, the United States has ramped up its production of biofuels — to about 16 billion gallons of ethanol and 1.6 billion gallons of biodiesel in 2017. At the same time, production of palm oil has increased nearly sixfold, mainly for food production, and with it significant deforestation in Indonesia and Malaysia.

That overlap has led some analysts to blame the United States for deforestation in Indonesia and Malaysia, suggesting that the expansion in palm oil production is driven by biofuel production in U.S. But a Purdue University study shows that only a scant fraction of the deforestation in those countries can be pinned on U.S. biofuel production and policy.

“Our analysis shows that less than 1 percent of the land cleared in Indonesia and Malaysia can be tied to U.S. biofuel production,” said Farzad Taheripour, a research associate professor of agricultural economics at Purdue. “The amount is not significant. We’re talking about thousands of hectares amidst the millions that have been cleared for oil palm plantations and production of other commodities in Malaysia and Indonesia.”

Taheripour and the late Wally Tyner, who was the James and Lois Ackerman Chair in Purdue’s Department of Agricultural Economics, published their results in the journal Biotechnology for Biofuels based on analysis from the GTAP-BIO model, a Purdue-led economic model of the global economy available to researchers around the world for quantitative analysis of international economic-environmental-energy issues. The model included a more comprehensive look at demand for all types of vegetable oils and fats impacted by U.S. biofuel policies rather than focusing on only soy and palm as past studies have done.

“Those analyses that limit their modeling framework to only palm and soy oils and ignore other types of vegetable oils and fats provide misleading information and exaggerate about the land use implications of the U.S. biofuels for (Malaysia and Indonesia),” the authors wrote.

As the United States uses soybeans and corn to produce biofuels, one could expect less soybeans and corn will remain for other uses, including exports. That could generate some land use changes and deforestation across the world including Malaysia and Indonesia, which clear natural land to plant palm oil trees and other commodities.

 “But we’ve not seen that happen. In the U.S, we have lots of unused land available to farmers who can convert it to corn or soybeans. There has been no need to cut forests here,” Taheripour said. “In addition, crop productivity has increased significantly over time, providing more yield on the same amount of land. Because of those, the expected deforestation or conversion of natural land has not had to largely happen to account for U.S. biofuel production.”

Countries that import U.S. corn and soybeans also benefit from yield increases and use of other types of oils, such as canola, sunflower and cottonseed. It’s more likely that growing populations in countries such as India, China, and rest of Asia are mainly fueling the demand for oil palms grown in Malaysia and Indonesia. The U.S. uses little palm oil for food, just under 2 percent of the palm oil produced worldwide.

When considering all those factors, U.S. biofuel production accounts for fewer than 60,000 hectares — or 0.5 percent — of the more than 11.7 million hectares of natural land cleared in Malaysia and Indonesia between 2000 and 2016.

“Production of biofuels in the U.S. generates some land use effects in Malaysia and Indonesia due to market-mediated responses, in particular through the links between markets for vegetable oils,” the authors wrote. “These effects are minor compared to the magnitude of land use change in Malaysia and Indonesia.”

The U.S. National Biodiesel Board Foundation and the U.S. Federal Aviation Administration funded the research.

Writer: Brian Wallheimer, 765-532-0233, bwallhei@purdue.edu

Source: Farzad Taheripour, 765-494-4612, tfarzad@purdue.edu 

PHOTO: A Purdue University analysis shows that U.S. biofuel production and policy may account for only a negligible portion of the land cleared for increased  palm oil production since the 1990s. (Photo courtesy mongabay.com). A publication quality photo is available at https://news.uns.purdue.edu/images/2019/malaysia-deforestation.jpg


ABSTRACT

US biofuel production and policy: Implications for land use changes in Malaysia and Indonesia

Farzad Taheripour and Wallace E. Tyner

Background

It has been argued that the US biofuel policy is responsible for the land use changes in Malaysia and Indonesia (M&I). In this paper, following a short literature review that highlights the relevant topics and issues, we develop analytical and numerical analyses to evaluate the extent to which production of biofuels in the US alters land use in M&I. The analytical analyses make it clear that market-mediated responses may generate some land use change in M&I due to biofuel production in the US. These analyses highlight the role of substitution among vegetable oils in linking these economies in markets for vegetable oils. To numerically quantify these effects, we modified and used a well-known Computable General Equilibrium model (CGE), GTAP-BIO. We conducted some sensitivity tests as well. 

Results

According to the simulation results obtained from two base case scenarios for corn ethanol and soy biodiesel, we find that producing 15 BGs of corn ethanol and 2 BGs gallons of soy biodiesel together could potentially increase area of cropland in M&I by 59.6 thousand hectares. That is less than 0.5% of the cropland expansion in M&I for the time period of 2000-2016, when biofuel production increased in the US. The original GTAP-BIO model parameters including the regional substitution rates among vegetable oils were used for the base case scenarios. The estimated Induced Land Use Change (ILUC) emissions values for corn ethanol and soy biodiesel are about 12.3 g CO2e MJ-1, 17.5 g CO2e MJ-1 for the base case scenarios, respectively.  The share of M&I in the estimated ILUC emissions value for corn ethanol is 10.9%. The corresponding share for soy biodiesel is much higher, 78%. The estimated ILUC emissions value for soy biodiesel is sensitive with respect to the changes in the regional rates of substitution elasticity among vegetable oils. That is not the case for corn ethanol.

When we replaced the original substitution elasticities of the base case, which are very large (i.e. 5 or 10) for many regions, with a small and uniform rate of substitution (i.e. 0.5) across the world, the ILUC emissions value for soy biodiesel drops from 17.5 g CO2e MJ-1 to 10.16 g CO2e MJ-1. When we applied larger substitution elasticities among vegetable oils, the estimated ILUC emissions value for soy biodiesel converged towards the base case results. This suggests that, other factors being equal, the base case substitution elasticities provide the largest possible ILUC emissions value for soy biodiesel.  

Finally, our analyses clearly indicate that those analyses that limit their modeling framework to only palm and soy oil and ignore other types of vegetable oils and fats provide misleading information and exaggerate about the land use implications of the US biofuels for M&I.

Conclusion

1) Production of biofuels in the US generates some land use effects in M&I due to market-mediated responses, in particular through the links between markets for vegetable oils. These effects are minor compared to the magnitude of land use change in M&I. However, because of the high carbon intensity of the peatland the emissions fraction of M&I is larger, in particular for soy biodiesel.

2) The GTAP-BIO model implemented a set of regional substitution elasticities among vegetable oils that, other factors being equal, provides the largest possible ILUC emissions value for soy biodiesel.

3) With a larger substitution elasticity among all types of vegetable oils and animal fats in the US, less land use changes occur in M&I. That is due to the fact that a larger substitution elasticity among vegetable oils in the US, diverts a larger portion of the additional demand for soy oil to non-palm vegetable oils and animal fats that are produced either in the US or regions other than M&I.

4) Those analyses that limit their modeling framework to only palm and soy oils and ignore other types of vegetable oils and fats provide misleading information and exaggerate about the land use implications of the US biofuels for M&I.

Agricultural Communications: 765-494-8415;

Maureen Manier, Department Head, mmanier@purdue.edu  

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