Farm Subsidies Are Not an Energy Policy
The big news in Missouri today is President Barack Obama’s visit to an ethanol plant in Macon, so I thought it would be worth briefly rehashing the airtight case against ethanol subsidies, as we have done here so many times in the past.
Most obviously, ethanol costs more than gasoline, so consumers have to pay more for energy to run their vehicles. However, because ethanol diverts foods like corn from their more traditional use as energy for humans and farm animals, food prices are driven up by greater ethanol use. Ethanol backers like to claim that such costs are justified by the environmental benefits of ethanol, but those benefits appear to be completely illusory. From the abstract of a 2008 study on biofuels:
Most prior studies have found that substituting biofuels for gasoline will reduce greenhouse gases because biofuels sequester carbon through the growth of the feedstock. These analyses have failed to count the carbon emissions that occur as farmers worldwide respond to higher prices and convert forest and grassland to new cropland to replace the grain (or cropland) diverted to biofuels. By using a worldwide agricultural model to estimate emissions from land-use change, we found that corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years.
Research has repeatedly confirmed that ethanol subsidies only drive price inflation for both energy and food without cutting greenhouse gas emissions, and it is long past time for politicians to admit that such programs are nothing more than a means for buying favor with voters in agricultural states.
John,
Here’s the interesting question. US corn producers receive corn subsidies now to the tune of $9 billion (if my memory serves me correctly). This allows US agribusiness to flood the world market at a price that is less than the marginal cost of production for other international producers. If we end US corn subsidies, does the resulting increased production of corn internationally (as foreign producers are able to compete and develop more land for corn farming) trigger the environmental impacts that happen if ethanol subsidies exist?
Comment by Eapen Thampy — April 29, 2010 @ 4:28 p.m.
That would be question better directed at the authors of the study on ethanol’s environmental impact instead of me as I’m just a middle man on that one, but I would expect not. With the subsidy, more total corn is grown than without it, which (all else being equal) requires more land. I realize that growing in the U.S. typically requires less land than elsewhere, but those gaps are much narrower now than they were in the past and probably wouldn’t completely offset the impact of growing less corn in total.
Comment by John Payne — April 29, 2010 @ 4:33 p.m.