Land Use Change, Ethanol Production Expansion and Food Security in Brazil

Abstract

The concurrence of major increases in ethanol production and world commodity price increases were captured by the ‘food-versus-fuel’ dilemma around 2008. Brazil is the largest producer of ethanol worldwide and still has vast tracts of natural land available. This paper uses Brazil as case study to simulate food security and environmental impacts, especially on forests, of increased biofuel production. Results show that sugarcane production is concentrated in higher productivity regions so reaching the 2022 ethanol target would require only 0.07 Mha of new land, or 0.02% additional deforestation over baseline. Second, per-area production intensifies as land prices increase, indicating a nonlinear relationship between land area and production. Specifically, results indicate an average indirect land use change effect of 0.083 ha of new agricultural land for every 1.0 ha of additional sugarcane. Current discussions of biofuel expansion miss this critical point of intensification, which results from market forces and technological change. These results are assumed to be driven solely by cost-minimizing behavior, thus leaving significant room for policy to expand agricultural research resulting in greater per unit output and subsequent environmental benefits. Finally, results support historical data that land use change due to biofuel production has little impact on food security.