emerging biofuels outlook of effects on u s grain oilseed and livestock markets projections of u s ethanol production and its impacts on planted acreage crop prices livestock production and prices trade and retail food costs are presented under the assumption that current tax credits and trade policies are maintained the projections were made using a multi product multi country deterministic partial equilibrium model the impacts of higher oil prices a drought combined with an ethanol mandate and removal of land from the conservation reserve program crp relative to baseline projections are also presented the results indicate that expanded u s ethanol production will cause long run crop prices to increase in response to higher feed costs livestock farmgate prices will increase enough to cover the feed cost increases retail meat egg and dairy prices will also increase if oil prices are permanently 10 per barrel higher than assumed in the baseline projections u s ethanol will expand significantly the magnitude of the expansion will depend on the future makeup of the u s automobile fleet if sufficient demand for e 85 from flex fuel vehicles is available corn based ethanol production is projected to increase to over 30 billion gallons per year with the higher oil prices the direct effect of higher feed costs is that u s food prices would increase by a minimum of 1 1 over baseline levels results of a model of a 1988 type drought combined with a large mandate for continued ethanol production show sharply higher crop prices a drop in livestock production and higher food prices corn exports would drop significantly and feed costs would rise wheat feed use would rise sharply taking additional land out of the crp would lower crop prices in the short run but because long run corn prices are determined by ethanol prices and not by corn acreage the long run impacts on commodity prices and food prices of a smaller crp are modest cellulosic ethanol from switchgrass and biodiesel from soybeans do not become economically viable in the corn belt under any of the scenarios this is so because high energy costs that increase the prices of biodiesel and switchgrass ethanol also increase the price of corn based ethanol so long as producers can choose between soybeans for biodiesel switchgrass for ethanol and corn for ethanol they will choose to grow corn cellulosic ethanol from corn stover does not enter into any scenario because of the high cost of collecting and transporting corn stover over the large distances required to supply a commercial sized ethanol facility

the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

correlations between biofuels and related commodities before and during the food crisis a taxonomy perspective abstract in this paper we analyze the relationships between the prices of biodiesel ethanol and related fuels and agricultural commodities with a use of minimal spanning trees and hierarchical trees to distinguish between short term and medium term effects we construct these trees for different frequencies weekly and monthly we find that in short term both ethanol and biodiesel are very weakly connected with the other commodities in medium term the biofuels network becomes more structured the system splits into two well separated branches a fuels part and a food part biodiesel tends to the fuels branch and ethanol to the food branch when the periods before and after the food crisis of 2007 2008 are compared the connections are much stronger for the post crisis period this is the first application of this methodology on the biofuel systems

higher us crop prices trigger little area expansion so marginal land for biofuel crops is limited abstract by expanding energy biomass production on marginal lands that are not currently used for crops food prices increase and indirect climate change effects can be mitigated studies of the availability of marginal lands for dedicated bioenergy crops have focused on biophysical land traits ignoring the human role in decisions to convert marginal land to bioenergy crops recent history offers insights about farmer willingness to put non crop land into crop production the 2006 09 leap in field crop prices and the attendant 64 gain in typical profitability led to only a 2 increase in crop planted area mostly in the prairie states at this rate a doubling of expected profitability from biomass crops would expand cropland supply by only 3 2 yet targets for cellulosic ethanol production in the us energy independence and security act imply boosting us planted area by 10 or more with perennial biomass crops given landowner reluctance to expand crop area with familiar crops in the short run large scale expansion of the area in dedicated bioenergy crops will likely be difficult and costly to achieve

global land use implications of first and second generation biofuel targets recently an active debate has emerged around greenhouse gas emissions due to indirect land use change iluc of expanding agricultural areas dedicated to biofuel production in this paper we provide a detailed analysis of the iluc effect and further address the issues of deforestation irrigation water use and crop price increases due to expanding biofuel acreage we use globiom an economic partial equilibrium model of the global forest agriculture and biomass sectors with a bottom up representation of agricultural and forestry management practices the results indicate that second generation biofuel production fed by wood from sustainably managed existing forests would lead to a negative iluc factor meaning that overall emissions are 27 lower compared to the no biofuel scenario by 2030 the iluc factor of first generation biofuels global expansion is generally positive requiring some 25 years to be paid back by the ghg savings from the substitution of biofuels for conventional fuels second generation biofuels perform better also with respect to the other investigated criteria on the condition that they are not sourced from dedicated plantations directly competing for agricultural land if so then efficient first generation systems are preferable since no clear technology champion for all situations exists we would recommend targeting policy instruments directly at the positive and negative effects of biofuel production rather than at the production itself

understanding the reductions in us corn ethanol production costs an experience curve approach the us is currently the world s largest ethanol producer an increasing percentage is used as transportation fuel but debates continue on its costs competitiveness and energy balance in this study technological development of ethanol production and resulting cost reductions are investigated by using the experience curve approach scrutinizing costs of dry grind ethanol production over the timeframe 1980 2005 cost reductions are differentiated between feedstock corn production and industrial ethanol processing corn production costs in the us have declined by 62 over 30 years down to 100 2005 tonne in 2005 while corn production volumes almost doubled since 1975 a progress ratio pr of 0 55 is calculated indicating a 45 cost decline over each doubling in cumulative production higher corn yields and increasing farm sizes are the most important drivers behind this cost decline industrial processing costs of ethanol have declined by 45 since 1983 to below 130 2005 m3 in 2005 excluding costs for corn and capital equivalent to a pr of 0 87 total ethanol production costs including capital and net corn costs have declined approximately 60 from 800 2005 m3 in the early 1980s to 300 2005 m3 in 2005 higher ethanol yields lower energy use and the replacement of beverage alcohol based production technologies have mostly contributed to this substantial cost decline in addition the average size of dry grind ethanol plants increased by 235 since 1990 for the future it is estimated that solely due to technological learning production costs of ethanol may decline 28 44 though this excludes effects of the current rising corn and fossil fuel costs it is also concluded that experience curves are a valuable tool to describe both past and potential future cost reductions in us corn based ethanol production

earnings within education groups and overall productivity growth to offer a possible interpretation for recent empirical findings on earnings growth this paper constructs a simple model with endogenous human capital investment a distribution of natural abilities and unbiased technological progress the model predicts that in the long run average earnings within any education group will grow more slowly than average wages overall it also predicts that average earnings in high education groups ultimately will rise relative to average earnings in low education groups in the model these processes do not imply secular increases in the degree of inequality in the overall cross sectional distribution of earnings

semiparametric estimation of selection models some empirical results among the central theoretical developments in the econometric analysis of nonexperimental microeconomic data has been the analysis of selectivity bias following the work of james heckman 1974 statistical techniques were developed in the 1970s to consistently estimate the parameters of these models one potential drawback to the application of these techniques is their sensitivity to the assumed parametric distribution of the unobservable error terms in the model in recent years a number of estimation methods for selection models have been developed which do not impose parametric forms on error distributions these methods are termed semiparametric since only part of the model of interest the regression function is parametrically specified while the statistical theory of these semiparametric estimators has received much attention practical applications of the methods are lacking an exception being the paper by joel horowitz and george neumann 1987 in this paper we use semiparametric methods to reanalyze data on the labor supply of married women first studied by thomas mroz 1987 using parametric methods the object of this reanalysis is to determine whether mroz s results are sensitive to his parametric assumptions

a global general equilibrium analysis of biofuel mandates and greenhouse gas emissions in the last decade global biofuel production has grown rapidly as a result of oil price increases and government policies promoting the development of biofuels though reducing greenhouse gas ghg emissions is one of the stated policy goals along with increasing energy security and promoting rural development the ghg implications of biofuels have come under intense scrutiny particular attention has been focused on ghg impacts of the direct and indirect land use change luc associated with feedstock production for the commercially viable first generation biofuels global biofuel production currently represents about 3 of total transportation fuels with the vast majority of production concentrated in the united states brazil and the european union the primary sources are maize feedstock ethanol in the united states sugarcane feedstock ethanol in brazil and oilseed feedstock biodiesel in the european union all three regions have mandatory requirements to increase production or consumptionofbiofuelsoverthenextfivetoseven years as well as other policies in place to promote production the conventional wisdom has been that substituting ethanol for gasoline will reduce ghg emissions modestly with maize feedstock and substantially with sugarcane or second generation cellulosic feedstocks and

bioenergy and global land use change this is the first article that econometrically estimates the global land use change impact of bioenergy applying time series analytical mechanisms to fuel biofuel and agricultural commodity prices and production we estimate the long run relationship between energy prices bioenergy production and the global land use change our results suggest that rising energy prices and bioenergy production significantly contribute to the global land use change both through the direct and indirect land use change impact globally the total agricultural area yearly increases by 35 578 1 thousand ha due to increasing oil price and by 12 125 1 thousand ha due to increasing biofuel production which corresponds to 0 73 and 0 25 of the total worldwide agricultural area respectively soya land use change and wheat land use change have the highest elasticities with respect to both oil price and biofuel production in contrast nonbiomass crops grassland and rice have negative land use change elasticities region spe

competing land uses and fossil fuel and optimal energy conversion rates during the transition toward a green economy under a pollution stock constraint abstract we study the transition to a carbon free economy in a model with a polluting non renewable resource and a clean renewable resource transforming primary energy into ready to use energy services is costly and more efficient energy transformation rates are more costly to achieve renewable energy competes with food production for land and the food productivity of land can be improved at some cost to avoid catastrophic climate damages the pollution stock is mandated to stay below a given cap when the economy is not constrained by the cap the efficiency of energy transformation increases steadily until the transition toward the ultimate green economy when renewable energy is exploited its land use rises at the expense of food production food productivity increases together with the land rent but food production drops the food and energy prices increase and renewables substitute for non renewable energy during the constrained phase the economy follows a constant path of prices quantities efficiency rates food productivity and land rent a phenomenon we call the ceiling efficiency paradox

student abilities during the expansion of us education abstract the us experienced two dramatic changes in the structure of education in a 50 year period the first was a large expansion of educational attainment the second an increase in test score gaps between college bound and non college bound students this paper documents the impact of these two trends on the composition of school groups by ability and the importance of these composition effects for wages the main finding is that there is a growing gap between the abilities of high school and college educated workers that accounts for one half of the college wage premium for recent cohorts and for the entire rise of the college wage premium between the 1910 and 1960 birth cohorts

the new competition for land food energy and climate change abstract the paper addresses the new competition for land arising from growing and changing demand for food when combined with increasing global demand for transport energy under conditions of declining petro chemical resources and the urgent need to reduce greenhouse gas emissions the paper starts from the premise of a food energy and environment trilemma tilman et al 2009 where all demands to expand the area of cultivated land present high risks of increasing the carbon footprint of agriculture having reviewed the main drivers of demand for food and for liquid transport fuels the paper weighs the controversies surrounding biofuels arising from food price spikes the demand for land and consequent direct and indirect land use change it suggests that we need a more complex and geographically differentiated analysis of the interactions between direct and indirect land use change the paper then reviews evidence of land availability and suggests that in addition to technical availability in terms of soil water and climate political social and technological factors have significantly shaped the competition for land in different global regions particularly the three major biofuel producing ones of the usa brazil and europe this point is further developed by reviewing the different innovation pathways for biofuels in these three regions the main conclusion of this review is firstly that any analysis requires an integrated approach to the food energy environment trilemma and secondly that strategic political direction of innovation and sustainability regulation are required to bring about major shifts in agriculture leading to sustainable intensification of cultivation royal society 2009 rather than the continued expansion of cultivated area the consequent perspective is one of considerable global variety in technologies agricultural productive systems and use of natural resources this contrasts sharply with the world of a dominant global and integrated technology platform based on petro chemicals to which we have become accustomed

inequality income growth and mobility the basic facts during the 1950s and 1960s mean wages in the united states grew rapidly and the dispersion around this growing mean changed very litde starting in the 1970s and continuing into the 1980s and 1990s these patterns were reversed mean wages grew slowly and inequality increased rapidly these changes in labor markets were reflected in changes in the distribution of family income the mean of the distribution of family income did increase after 1973 in spite of the near constancy of mean real wages as family members increased the number of hours they worked however the increase in inequality of wages was mirrored by an increase in the dispersion of family income a large descriptive literature has documented the rise in inequality while a smaller behavioral literature has sought to delineate the causes of this rise these changes in the distribution of family income a fected rates of poverty directly during the 1950s and 1960s temporary increases in poverty during recessions were more than offset by declines in poverty during economic expansions as long as the poor gained along with everyone else fi om the secular growth in the mean one could be confident that poverty rates would ratchet down this is exactly what happened as poverty rates fell from 22 4 percent in 1959 to 11 1 percent in 1973

the impact of ethanol production on us and regional gasoline markets abstract this study quantifies the impact of increasing ethanol production on wholesale retail gasoline prices employing pooled regional time series data from january 1995 to march 2008 we find that the growth in ethanol production kept wholesale gasoline prices 0 14 gallon lower than would otherwise have been the case the negative impact of ethanol on retail gasoline prices is found to vary considerably across regions the midwest region has the biggest impact at 0 28 gallon while the rocky mountain region had the smallest impact at 0 07 gallon the results also indicate that the ethanol induced reduction in gasoline prices comes at the expense of refiners profits we find a net welfare loss of 0 5 billion from the ethanol support policies in multiple markets

food versus fuel what do prices tell us abstract sorting out the impacts of biofuels on global agricultural commodity prices is impossible without turning to data and distinguishing between the short run versus the long run impacts using time series prices on fuels and agricultural commodities the aim is to investigate the long run cointegration of these prices simultaneously with their multivariate short run interactions results indicate no direct long run price relations between fuel and agricultural commodity prices and limited if any direct short run relationships in terms of short run price movements sugar prices are influencing all the other agricultural commodity prices except rice with sugar the number one world input for ethanol results indicate increased ethanol production is potentially influencing short run agricultural commodity prices overall results support the effect of agricultural commodity prices as market signals which restore commodity markets to their equilibria after a demand or supply event shock

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

the integration of energy and agricultural markets this article addresses the evolving links between energy and agricultural markets prior to 2005 there was little correlation between energy and agricultural commodity prices in 2006 2008 with the ethanol boom in the united states there emerged a strong link between crude oil gasoline and corn prices there was little link between ethanol and corn however in late 2008 and 2009 the markets changed as ethanol production came under severe economic pressure and 2 billion out of 12 billion gallons of capacity shut down during this period ethanol became priced more on corn as the breakeven corn price helped drive the ethanol market this article explores the drivers in these markets as well as other major issues facing the corn ethanol industry in the united states such as the blend wall the article concludes with a review of prospects of a future cellulosic biofuels industry

land use change impacts of biofuels near var evidence from the us abstract the present paper studies the land use change impacts of fuels and biofuels we test the theoretical hypothesis which says that changes in fuel prices cause changes in land use both directly and indirectly and that because of price inter dependencies biofuels reinforce the land use change impacts we apply time series analytical mechanisms to five major traded agricultural commodities the cultivated area of agricultural land and crude oil price our data consists of yearly observations extending from 1950 to 2007 for the us the empirical findings confirm that markets for crude oil and cultivated agricultural land are interdependent an increase in oil price by 1 dollar barrel increases land use between 54 000 and 68 000 ha we also find that the increase of bioenergy sector accelerates land use change in the us i e food commodities are being substituted for bioenergy crops

the slowdown in american educational attainment relative to those for high school graduates lifetime earnings for college graduates are higher for more recent cohorts at the same time across successive cohorts born after 1950 there is a stagnation in the fraction of high school graduates that go on to complete a college degree what explains this phenomenon i formulate a life cycle model of human capital accumulation in college and on the job where successive cohorts decide whether or not to acquire a college degree as well as the quality of their college education cohorts differ by the sequence of rental price per unit of human capital they face and by the distribution of initial human capital across individuals my model reproduces the observed pattern in college attainment for the 1920 1970 birth cohorts the stagnation in college attainment is due to the decrease in the growth rate of the rental price per unit of human capital commencing in the 1970s my model also generates about 80 of the increase in lifetime earnings for college graduates relative to those for high school graduates observed across cohorts

education borrowing constraints and growth abstract this paper studies the effects of educational borrowing constraints on economic growth and welfare we consider a three period lived overlapping generations model in which individuals finance their educational expenditures by borrowing we show that if the elasticity of human capital to educational expenditure is great enough the relationship between the tightness of the constraints and the growth rate is inverted u shaped when the constraints are binding moreover when the constraints cease to be binding the growth rate is constant we also show that a relaxation of the constraints cannot be pareto improving even if the growth rate rises

how market efficiency and the theory of storage link corn and ethanol markets this article uses the theories of market efficiency and supply of storage to develop a conceptual link between the corn and ethanol markets and explores 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 nearby futures prices and that a short term relationship between input and output prices will exist we demonstrate validity of the theory using a structural price model and then by means of time series techniques

endogenous fiscal policy and capital market transmissions in the presence of demographic shocks abstract previous analyses of population aging mainly focused on the social security implications of the aging trend this paper addresses aging in an open economy framework with two regions that have politically responsive fiscal policy regarding education finance demographic shocks start an economic growth process but results are sensitive to a critical parameter in the model that indicates return to education spending low values of this parameter are associated with less favorable economic outcomes hence a policy implication emerges that enhancing the education system might pay off in terms of easing the negative growth and welfare consequences of expected demographic shocks

dealing with bottled water expenditures data with zero observations a semiparametric specification abstract this paper analyzes bottled water expenditures data with zero observations by employing parametric and semiparametric models the overall results of specification tests indicate that the semiparametric model outperforms the parametric model significantly

the welfare economics of a biofuel tax credit and the interaction effects with price contingent farm subsidies a framework is developed to analyze the effects of a biofuel consumer tax exemption and the interaction effects with a price contingent farm subsidy ethanol prices rise above the gasoline price by the amount of the tax credit corn farmers gain directly while gasoline consumers only gain from any reduction in world oil prices due to the extra ethanol production domestic oil producers lose historically the intercept of the ethanol supply curve is above the gasoline price hence part of the tax credit is redundant and represents rectangular deadweight costs that dwarf triangular deadweight cost measures of traditional farm subsidies copyright 2007 oxford university press

modelling willingness to pay responses from dichotomous choice contingent valuation surveys with zero observations modelling household behaviour with the data from dichotomous choice contingent valuation dccv surveys is often complicated by zero willingness to pay wtp responses in the sample to deal with the zero responses a two equation model is considered which incorporates a two level decision structure a decision on whether to participate in having wtp and a decision on the wtp amount conditional on deciding to participate and two separate stochastic processes that determine the probability and conditional level of wtp are featured the model is empirically applied to household survey data in which the dccv questions concerned the benefits of air quality improvement in korea to put the issue of the two equation model in perspective this paper also experiments with economic and econometric specifications utility theoretic restriction and heteroscedasticity it is shown how failure to allow for the restriction distorts aggregate benefit estimates and the existence of heteroscedasticity in error term is

parametric and semi parametric modelling of vacation expenditures we analyse several limited dependent variable models explaining the budget share that dutch families spend on vacations to take account of the substantial number of zero shares two types of models are used the first is the single equation censored regression model we estimate and test several parametric and semi parametric extensions of the tobit model second we consider two equation models in which the participation decision and the decision on the amount to spend are treated separately the first decision is modelled as a binary choice model the second as a conditional regression we estimate and test parametric and semi parametric specifications

how does petroleum price and corn yield volatility affect ethanol markets with and without an ethanol use mandate the recent increase in ethanol use in the us strengthens and changes the nature of links between agricultural and energy markets here we explore the interaction of market volatility and the scope for policy to affect this interaction with a focus on how corn yields and petroleum prices affect ethanol prices mandates associated with new us energy legislation may intervene in these links in the medium term future we simulate stochastically a structural model that represents these markets and that includes mandates in order to assess how shocks to corn or oil markets can affect ethanol price and use we estimate that the mandate makes ethanol producer prices more sensitive to corn yields and less sensitive to changes in petroleum prices overall we note a discontinuity in these links that is caused by the mandate ethanol use can exceed the mandate if petroleum prices and corn yields are high enough but the mandate limits downside adjustments in ethanol use to low petroleum prices or corn yields

can biomass energy be an efficient policy tool for sustainable development abstract this paper first reviews the potential causality from biomass energy to co2 emissions and economic development within relevant literature later the paper examines statistically the impacts of biomass energy consumption on co2 emissions and gdp in the us to this end paper observes environmental and economic implications of biomass fuel usage throughout energy literature and launches asymmetric causality test to confirm disconfirm the literature output the findings of the tests indicate that biomass energy consumption per capita mitigates co2 emissions per capita and increases gdp per capita eventually upon its output this research asserts that biomass energy consumption can be an efficient policy tool for environmentally sustainable development in the us and that hence biomass production technologies and biomass consumption need to be promoted in other countries as well as in the us on the other hand analyses underline the fact that policy makers should consider as well some potential constraints of biomass energy usage such as land use constraints and carbon leakage from biomass production therefore although this paper explores the remedial impact of biomass on environment and growth one may suggest also that further possible works consider the effects of biomass sources in detail to minimize the some worsening influence of biomass usage on climate change