Background

Biofuels, such as ethanol and biodiesel, are an alternative to petroleum- based transportation fuels and are produced in the United States from a  variety of renewable sources such as corn, sugar cane, and soybeans.  Ethanol, the most common U.S. biofuel, is mainly used as a gasoline  additive in blends of about 10 percent ethanol and 90 percent gasoline,  known as E10, which is available in most states. A relatively small volume  is also blended at a higher level called E85—a blend of 85 percent ethanol  and 15 percent gasoline—which can only be used in specially designed  vehicles, known as flexible fuel vehicles. Biodiesel is a renewable  alternative fuel produced from a range of plant oils, animal fats, and  recycled cooking oils. Pure biodiesel or biodiesel blended with petroleum  diesel—generally in a blend of 20 percent biodiesel and 80 percent  diesel—can be used to fuel diesel vehicles.
The federal government has promoted biofuels as an alternative to  petroleum-based fuels since the 1970s, and production of ethanol from  corn starch reached 9 billion gallons in 2008. The Energy Policy Act of  2005 originally created an RFS that generally required U.S. transportation  fuel to contain 4 billion gallons of renewable fuels in 2006 and 7.5 billion  gallons in 2012. EISA expanded the RFS by requiring that U.S.  transportation fuel contain 9 billion gallons of renewable fuels in 2008 and  increasing this amount annually to 36 billion gallons in 2022. Moreover,  the 36-billion-gallon total must include at least 21 billion gallons of  advanced biofuels, defined as renewable fuels other than ethanol derived  from corn starch that meet certain criteria; only 15 billion of the 36 billion  gallons of renewable fuels can come from conventional biofuels. In  addition, at least 16 billion gallons of the 21-billion-gallon advanced  biofuels requirement must be made from cellulosic feedstocks, such as  perennial grasses, crop residue, and woody biomass. Unlike corn starch,  most of the energy in plant and tree biomass is locked away in complex  cellulose and hemicellulose molecules, and technologies to produce  biofuels economically from this type of feedstock are still being  developed. Some cellulosic biorefineries are piloting the use of  biochemical processes, in which microbes and enzymes break down these  complex plant molecules to produce ethanol, while others are piloting the  use of thermochemical processes, which use heat and chemical catalysts  to convert plant material into a liquid that more closely resembles  petroleum.
There are a number of steps in the biofuels life cycle, from cultivation of  the feedstock through distribution to the end user at the fuel pump (see  fig. 1).
Water plays a critical role in many aspects of this life cycle. On the  cultivation side, water is needed to grow the feedstock. Crops can be  either rainfed, with all water requirements provided by natural  precipitation and soil moisture, or irrigated, with at least some portion of  water requirements met through applied water from surface or  groundwater sources. Figure 2 shows the various water inputs (sources of  water) and outputs (water losses) that are part of the agricultural water  cycle.
Water is also important for conversion of feedstocks into biofuels. In  particular, water is used for heating and cooling as well as for processing.  For example, during the processing of corn-based ethanol, corn is  converted to ethanol through fermentation using one of two standard  processes, dry milling or wet milling. The main difference is the initial  treatment of the corn kernel. In the dry-mill process, the kernel is first  ground into flour meal and processed without separating the components  of the corn kernel. The meal is then slurried with water to form a mash,  and enzymes are added to convert the starch in the mash to a fermentable  sugar. The sugar is then fermented and distilled to produce ethanol. In the  wet-mill process, the corn kernel is steeped in a mixture of water and  sulfurous acid that helps separate the kernel into starch, germ, and fiber  components. The starch that remains after this separation can then be  fermented and distilled into fuel ethanol. Traditional dry-mill ethanol  plants cost less to construct and operate than wet-mill plants, but yield  fewer marketable co-products. Dry-mill plants produce distiller’s grains  (that can be used as cattle feed) and carbon dioxide (that can be used to  carbonate soft drinks) as co-products, while wet-mill plants produce many  more co-products, including corn oil, carbon dioxide, corn gluten meal,  and corn gluten feed. The majority of ethanol biorefineries in the United  States are dry-mill facilities. Figure 3 depicts the conversion process for a  typical dry-mill biorefinery.

	Each Stage of Biofuel Production Affects Water Resources, but the Extent Depends on the Feedstock and Region

The extent to which increased biofuel production will affect the nation’s  water resources will depend on which feedstocks are selected for  production and which areas of the country they are produced in.  Specifically, increases in corn cultivation in areas that are highly  dependent on irrigated water could have greater impacts on water  availability than if the corn is cultivated in areas that primarily produce  rainfed crops. In addition, most experts believe that greater corn  production, regardless of where it is produced, may cause greater  impairments to water quality than other feedstocks, because corn  production generally relies on greater chemical inputs and the related  chemical runoff will impact water bodies. In contrast, many experts  expect next generation feedstocks to require less water and provide some  water quality benefits, but even with these feedstocks the effects on water  resources will largely depend on which feedstock is selected, and where  and how these feedstocks are grown. Similarly, the conversion of  feedstocks into biofuels may also affect water supply and water quality,  but these effects also vary by feedstock chosen and type of biofuel  produced. Many experts agree that as the agriculture and biofuel  production industries make decisions about which feedstocks to grow and  where to locate or expand conversion facilities, it will be important for  them to consider regional differences and potential impacts on water  resources.

		Water Supply and Water Quality Effects of Increased Corn Cultivation

Many experts and officials told us that corn cultivation requires substantial  quantities of water, although the amount used depends on where the crop  is grown and how much irrigation water is used. The primary corn  production regions are in the upper and lower Midwest and include 12  states classified as USDA farm production Regions 5, 6, and 7. Together,  these regions accounted for 89 percent of corn production in 2007 and  2008, and 95 percent of ethanol production in the United States in 2007.  Corn cultivation in these three regions averages anywhere from 7 to 321  gallons of irrigation water for every gallon of ethanol produced, as shown  in table 1. However, the impact of corn cultivation on water supplies in  these regions varies considerably. For example, in USDA Region 7, which  comprises North Dakota, South Dakota, Kansas, and Nebraska, the  production of one bushel of corn consumes an average of 865 gallons of  freshwater from irrigation. In contrast, in USDA Regions 5 and 6, which  comprise Iowa, Illinois, Indiana, Ohio, Missouri, Minnesota, Wisconsin,  and Michigan, corn is mostly rainfed and only requires on average 19 to 38  gallons of supplemental irrigation water per bushel.
The effects of increased corn production for ethanol on water supplies are  likely to be greatest in water-constrained regions of the United States  where corn is grown using irrigation. For example, some of the largest  increases in corn acres (1.1 million acres) are projected to occur in the  Northern Plains region, which is already a water constrained region. Parts  of this region draw heavily from the Ogallala Aquifer, where water  withdrawals are already greater than the natural recharge rate from  precipitation. A 2009 USGS report found water levels in the aquifer had  dropped more than 150 feet in parts of southwest Kansas and the Texas  Panhandle, where crop irrigation is intense and recharge to the aquifer is  minimal. In 2000, about 97 percent of the water withdrawn from the  aquifer was used for irrigation, according to USGS.
Many officials told us that an increase in corn cultivation using current  agricultural practices will also impair water quality as a result of the runoff  of fertilizer into lakes and streams. This will happen because corn requires  high applications of fertilizers relative to soybeans and other potential  biofuel feedstocks, such as perennial grasses. For example, in Iowa, the  expansion of biofuel production has already led to an increasing amount  of land dedicated to corn and other row crops, resulting in surface water  impacts, including nutrient runoff and increased bacteria counts as well as  leaching of nitrogen and phosphorus into groundwater, according to a  state official. Fertilizer runoff containing nitrogen and phosphorus can  lead to overenrichment and excessive growth of algae in surface waters. In  some waters, such enrichment has resulted in harmful algal blooms,  decreased water clarity, and reduced oxygen in the water, which impair  aquatic life. In marine waters, this excessive algal growth has created  “dead zones,” which cannot support fish or any other organism that needs  oxygen to survive. The number of reported dead zones around the world  has increased since the 1960s to more than 400. Many of them are along  the Gulf of Mexico and the Atlantic Coast, areas that receive drainage from  agricultural and urban landscapes, including a large portion of the Corn  Belt, where many of the existing and planned ethanol production facilities  are located. A 2007 USGS model estimated that 52 percent of the nitrogen  and 25 percent of the phosphorus entering the Gulf system are from corn  and soybean cultivation in the Mississippi River basin.
Increased corn production will also increase the use of pesticides— including insecticides and herbicides—which also have the potential to  affect surface water and groundwater quality. For example, a 10-year  nationwide study by USGS detected pesticides in 97 percent of streams in  agricultural and urban watersheds. As would be expected, the highest  concentrations of pesticides have been found in those areas that have the  highest use. For instance, application rates of atrazine, a commonly used  pesticide for corn production, are highest in the Corn Belt, and atrazine  was also the most widely detected pesticide in watersheds in this area,  according to the USGS nationwide study. USGS determined that the  concentrations of atrazine and other pesticides detected had the potential  to adversely affect aquatic plants and invertebrates in some of the streams,  since organisms are vulnerable to short-term exposure to relatively small  amounts of certain pesticides. Similarly, increased pesticide use for the  cultivation of corn could impair groundwater supplies. USGS found  pesticides in 61 percent of shallow wells sampled in agricultural areas.  Once groundwater is contaminated, it is difficult to clean up, according to  the experts we contacted.
According to some of the experts and officials we spoke with, increased  demand for biofuel feedstocks may also create incentives for farmers to  place marginal lands back into production. Marginal lands generally have  lower productivity soils, so cultivating them may require more nutrient  and pesticide inputs than more productive lands, potentially leading to  further water quality impairments. Furthermore, delivery of sediments,  nutrients, and pesticides to surrounding water bodies may increase if  these lands are placed back into production because these lands are often  highly susceptible to erosion due to wind and water. Of particular concern  to many of the experts with whom we spoke are the millions of acres of  land currently enrolled in the Conservation Reserve Program (CRP). This  federal program provides annual rental payments and cost share  assistance to landowners who contractually agree to retire highly erodible  or other environmentally-sensitive cropland from agricultural purposes. As  part of the contract, farmers are generally required to plant or maintain  vegetative covers (such as native grasses) on the land, which provide a  range of environmental benefits, including improved water quality,  reduced erosion, enhanced wildlife habitat, and preserved soil  productivity. However, many experts and officials we spoke with from the  five selected states are concerned that higher corn prices and increased  demand for biofuel feedstocks may encourage farmers to return CRP land  to crop production. If such conversion does occur, these officials noted  that water quality may further decline in the future.

		Little Is Yet Known about the Water Resource Implications of Next Generation Feedstocks

Next generation feedstocks for biofuels have the potential for fewer  negative effects on water resources, although several of the experts and  officials that we spoke with said that the magnitude of these effects  remains largely unknown because these feedstocks have not yet been  grown on a commercial scale. These experts suggested that certain water  resource impacts were likely for the following potential feedstocks:    Agricultural residues, such as corn stover, collected from fields that have  already been harvested, can provide feedstock for cellulosic ethanol  production. The primary advantage of using agricultural residues is that  they are a byproduct of crop cultivation and thus do not require additional  water or nutrient inputs. However, removal of these residues has  consequences for both soil and water quality, so there may be limits on  how much agricultural residues can be removed for cellulosic ethanol  production. According to the experts we spoke with, leaving crop residues  unharvested on the field benefits soil quality by providing nutrients that  help maintain long-term soil productivity, enhancing soil moisture  retention, increasing net soil carbon, and reducing the need for nutrient  inputs for future crops. In addition, leaving crop residues on the field  helps prevent soil erosion due to wind and water and nutrient runoff into  the water supply. Farmers could reduce the negative effects of residue  removal by harvesting only corn cobs or part of the stover, but the optimal  removal rate is not yet fully known, and is currently being studied by  several federal agencies and academic institutions.
Perennial grasses may require less water and provide some water quality  benefits. Perennial grasses such as mixed prairie and switchgrass can  grow with less water than corn. But some experts cautioned that any  water supply benefits from these grasses will only occur if they are  rainfed. For instance, officials in Minnesota told us that because the state’s  crops are primarily rainfed, shifting to the cultivation of cellulosic  feedstocks, like perennial grasses, without irrigation would have a minimal  impact on the state’s water supply. However, other experts and local  officials pointed out that if farmers choose to irrigate perennial grasses in  order to achieve maximum yields and profits as they do for other crops,  then producing these feedstocks could have the same detrimental effects  on water supplies as do other crops. This concern was reiterated by the  National Research Council, which stated that while irrigation of native  grasses is unusual now, it could easily become more common as cellulosic  biofuel production gets under way.
Perennial grasses can also help preserve water quality by reducing soil,  nutrient, and pesticide runoff. Research indicates that perennial grasses  cycle nitrogen more efficiently than some row crops and protect soil from  erosion due to wind and water. As a result, they can reduce the need for  most fertilizers after crops are established, and the land on which these  crops are grown do not need to be tilled every year, which reduces soil  erosion and sedimentation. According to experts, farmers could also plant  a mix of perennial grasses, which could minimize the need for pesticides  by promoting greater diversity and an abundance of natural enemies for  agricultural pests. In addition, perennial grasses cultivated across an  agricultural landscape may help reduce nutrient and chemical runoff from  farm lands. Grasses can also be planted next to water bodies to help filter  out nutrients and secure soil and can serve as a windbreak to help  minimize erosion. However, the type of land and cultivation methods used  to grow perennial grasses will influence the extent to which they improve  water quality. For instance, if perennial grasses were harvested down to  the soil, they would not reduce soil erosion as compared to conventional  feedstocks in the long run, according to some experts. In addition,  according to some experts, if farmers choose to use fertilizers to maximize  yields from these crops as they do for other crops or if these crops are  grown on lands with decreased soil quality that require increased nutrient  application, then cultivation of perennial grasses could also lead to water  quality impairments.
Woody biomass, such as biomass from the thinning of forests and  cultivation of certain fast-growing tree varieties, could serve as feedstock  for cellulosic ethanol production, according to some experts. Use of  thinnings is not expected to impact water supply, as they are residuals  from forest management. Thinning of forests can have the added benefit of  reducing the intensity of wildfires, the aftermath of which facilitates runoff  of nutrients and sediment into surface waters. Waste from urban areas or  lumber mills may also provide another source of biomass that would not  require additional water resources. This waste would include the woody  portions of commercial, industrial, and municipal solid waste, as well as  byproducts generated from processing lumber, engineered wood products,  or wood particles; however, almost all of the commercial wood waste is  currently used as fuels or raw material for existing products. In addition,  some experts said that fast-growing tree species, such as poplar, willow,  and cottonwood, are potential cellulosic feedstocks. However, these  experts also cautioned that some of these varieties may require irrigation  to cultivate and may have relatively high consumptive water requirements.
Algae are also being explored as a possible feedstock for advanced  biofuels. According to several experts, one advantage of algae is that they  can be cultivated in brackish or degraded water and do not need  freshwater supplies. However, currently algae cultivation is expected to  consume a great deal of water, although consumption estimates vary  widely—from 40 to 1,600 gallons of water per gallon of biofuel produced,  according to experts—depending on what cultivation method is used. With  open-air, outdoor pond cultivation, water loss is expected to be greater  due to evaporation, and additional freshwater will be needed to replenish  the water lost and maintain the water quality necessary for new algal  growth. In contrast, when algae are cultivated in a closed environment, as  much as 90 percent less water is lost to evaporation, according to one  expert.

		The Extent to Which Biofuel Conversion May Affect Water Resources also Depends on the Feedstock Used and Biofuel Produced

During the process of converting feedstocks into biofuels, biorefineries  not only need a supply of high-quality water, but also discharge certain  contaminants that could impact water quality. The amount of water  needed and the contaminant discharge vary by type of biofuel produced  and type of feedstock used in the conversion process. For example,  ethanol production requires greater amounts of high-quality water than  does biodiesel. Conversion of corn to ethanol requires approximately 3  gallons of water per gallon of ethanol produced, which represents a  decrease from an estimated 5.8 gallons of water per gallon of ethanol in  1998. According to some experts, these gains in efficiency are, for the  most part, the result of ethanol plants improving their water recycling  efforts and cooling systems.
According to some experts we spoke with, the biofuel conversion process  generally requires high-quality water because the primary use for ethanol  production is for cooling towers and boilers, and cleaner water transfers  heat more efficiently and does less damage to this equipment. As a result,  ethanol biorefineries prefer to use groundwater because it is generally  cleaner, of more consistent quality, and its supply is less variable than  surface water. Furthermore, the use of lesser-quality water leaves deposits  on biorefinery equipment that require additional water to remove.  However, despite water efficiency gains, some communities have become  concerned about the potential impacts of withdrawals for biofuel  production on their drinking water and municipal supplies and are  pressuring states to limit ethanol facilities’ use of the water. For example,  at least one Minnesota local water district denied a permit for a proposed  biorefinery due to concerns about limited water supply in the area.
Current estimates of the water needed to convert cellulosic feedstocks to  ethanol range from 1.9 to 6.0 gallons of water per gallon of ethanol,  depending on the technology used. Conversion of these next generation  feedstocks is expected to use less water when compared to conventional  feedstocks in the long run, according to some experts. For example,  officials from a company in the process of establishing a biorefinery  expect the conversion of pine and other cellulosic feedstocks to consume  less water than the conversion of corn to ethanol once the plant is  operating at a commercial scale. However, some researchers cautioned  that the processes for converting cellulosic feedstocks currently require  greater quantities of water than needed for corn ethanol. They said the  technology has not been optimized and commercial-scale production has  not yet been demonstrated, therefore any estimates on water use by  cellulosic biorefineries are simply projections at this time.
In contrast, biodiesel conversion requires less water than ethanol  conversion—approximately 1 gallon of freshwater per gallon of biodiesel.
Similar to ethanol conversion, much of this water is lost during the cooling  and feedstock drying processes. Biodiesel facilities can use a variety of  plant and animal-based feedstocks, providing more options when choosing  a location. This flexibility in type of feedstock that can be converted  allows such facilities to be built in locations with plentiful water supplies,  lessening their potential impact.
In addition to the water supply effects, biorefineries can have water quality  effects because of the contaminants they discharge. However, the type of  contaminant discharged varies by the type of biofuel produced. For  example, ethanol biorefineries generally discharge chemicals or salts that  build up in cooling towers and boilers or are produced as waste by reverse  osmosis, a process used to remove salts and other contaminants from  water prior to discharge from the biorefinery. EPA officials told us that  the concentrated salts discharged from reverse osmosis are a concern due  to their effects on water quality and potential toxicity to aquatic  organisms. In contrast, biodiesel refineries discharge other pollutants such  as glycerin that may be harmful to water quality. EPA officials told us that  glycerin from small biodiesel refineries can be a problem if it is released  into local municipal wastewater facilities because it may disrupt the  microbial processes used in wastewater treatment. Glycerin is less of a  concern with larger biodiesel refineries because, according to EPA  officials, it is often extracted from the waste stream prior to discharge and  refined for use in other products.
Several state officials we spoke with told us these discharges are generally  well-regulated under the Clean Water Act. Under the act, refineries that  discharge pollutants into federally regulated waters are required to obtain  a federal National Pollutant Discharge Elimination System (NPDES)  permit, either from EPA or from a state agency authorized by EPA to  implement the NPDES program. These permits generally allow a point  source, such as a biorefinery, to discharge specified pollutants into  federally regulated waters under specific limits and conditions. State  officials we spoke with reported they closely monitor the quality of water  being discharged from biofuel conversion facilities, and that the facilities  are required to treat their water discharges to a high level of quality,  sometimes superior to the quality of the water in the receiving water body.

		Storage and Distribution of Biofuels Can Have Some Water Quality Consequences

The storage and distribution of ethanol-blended fuels could result in water  quality impacts in the event that these fuels leak from storage tanks or the  pipes used to transport these fuels. Ethanol is highly corrosive and there is  potential for releases into the environment that could contaminate  groundwater and surface water, among other issues. When ethanol- blended fuels leak from underground storage tanks (UST) and aboveground  tank systems, the contamination may pose greater risks than petroleum.  This is because the ethanol in these blended fuels causes benzene, a soluble  and carcinogenic chemical in gasoline, to travel longer distances and persist  longer in soil and groundwater than it would in the absence of ethanol,  increasing the likelihood that it could reach some drinking water supplies.  Federal officials told us that, because it is illegal to store ethanol-blended  fuels in tanks not designed for the purpose, they had not encountered any  concerns specific to ethanol storage. However, officials from two states did  express concern about the possibility of leaks and told us that ethanol- blended fuels are still sometimes stored in tanks not designed for the fuel.
For instance, one of these states reported a 700-gallon spill of ethanol- blended fuels due to the scouring of rust plugs in a UST.
According to EPA officials, a large number of the 617,000 federally  regulated UST systems currently in use at approximately 233,000 sites  across the country are not certified to handle fuel blends that contain  more than 10 percent ethanol. Moreover, according to EPA officials,  most tank owners do not have records of all the UST systems’  components, such as the seals and gaskets. Glues and adhesives used in  UST piping systems were not required to be tested for compatibility with  ethanol-blended fuel until recently. Thus there may be many compatible  tanks used for storing ethanol-blended fuels that have incompatible  system components, increasing the potential for equipment failure and fuel  leakage, according to EPA officials. EPA told us that it is continuing to  work with government and industry partners to study the compatibility of  these components with various ethanol blends. EPA officials also stressed  the importance of understanding the fate and transport of biofuels into  surface water because biofuels are transported mainly by barge, rail, and  truck. The officials noted that spills of biofuels or their byproducts have  already occurred into surface waters.

		The Effect of Increased Biofuel Production Will Vary by Region, Due to Differences in Water Resources and State Laws

According to many experts and officials that we contacted, as biofuel  production increases, farmers and the biofuel production industry will  need to consider regional differences in water supply and quality when  choosing which feedstocks to grow and how and where to expand their  biofuel production capacity. Specifically, they noted that in the case of  cultivation, certain states may be better suited to cultivate particular  feedstocks because of the amount and type of water available. Some  examples they provided include the following:    Certain cellulosic feedstocks, such as switchgrass, would be well-suited  for areas with limited rainfall, such as Texas, because these feedstocks  generally require less water and are drought tolerant.
In the Midwest, switchgrass and other native perennial grasses could be  grown as stream buffer strips or as cover crops, which are crops planted  to keep the soil in place between primary plantings.
In Georgia, some experts said pine was likely to be cultivated as a next  generation biofuel feedstock because the state has relatively limited land  available for cultivation and increased cultivation of pine or other woody  biomass without irrigation would not cause a strain on water supplies.
In the Southeast and Pacific Northwest, waste from logging operations and  paper production was identified as a potential feedstock for cellulosic  ethanol production.
Areas with limited freshwater supplies and a ready supply of lower-quality  water, such as brackish water or water from wastewater treatment plants,  would be better suited to the cultivation of algae. For example, Texas was  identified as a state suitable for algae cultivation because of the large  amounts of brackish water in many of its aquifers, as well as its abundant  sunlight and supplies of carbon dioxide from industrial facilities.
Research indicates that in making decisions about feedstock production  for biofuels it will be important to consider the effects that additional  cultivation will have on the quality of individual water bodies and regional  watersheds. Farmers need to consider local water quality effects when  making decisions regarding the suitability of a particular feedstock or  where to employ agricultural management practices that minimize nutrient  application. In addition, state officials should consider these effects when  deciding where programs such as the CRP may be the most effective. For  example, experts and officials told us it will be important to identify  watersheds in the Midwest that are delivering the largest nutrient loads  into the Mississippi River basin and, consequently, contributing to the Gulf  of Mexico dead zone, in order to minimize additional degradation that  could result from increased crop cultivation in these watersheds. In  addition, research has shown it is important that management practices be  tailored to local landscape conditions, such as topography and soil quality,  and landowner objectives, so that efforts to reduce nutrient and sediment  runoff can be maximized.
In the case of biofuel conversion, some experts and officials said that state  regulators and industry will need to consider the availability of freshwater  supplies and the quality of those supplies when identifying and approving  sites for biorefineries. Currently, many biorefineries are located in areas  with limited water resources. For instance, as figure 4 shows, many  existing and planned ethanol facilities are located on stressed aquifers,  such as the Ogallala, or High Plains, Aquifer. These facilities require  100,000 to 1 million gallons of water per day, and as mentioned earlier, the  rate of water withdrawal from the aquifer is already much greater than its  recharge rate, allowing water withdrawals in Nebraska or South Dakota to  affect water supplies in other states that draw from that aquifer. Experts  noted that states with enough rainfall to replenish underlying aquifers may  be more appropriate locations for biorefineries.
Finally, relevant water laws in certain states may influence the location of  future biorefineries. Specifically, several states have enacted laws that  require permits for groundwater or surface water withdrawals and this  requirement could impact where biorefineries will be sited. These laws  specify what types of withdrawals must be permitted by the responsible  regulatory authority and the requirements for receiving a permit. For  instance, Georgia’s Environmental Protection Division grants permits for  certain withdrawals of groundwater and surface water, including for use by  a biorefinery, when the use will not have unreasonable adverse effects on  other water uses. According to state officials, there has not yet been a case  where a permit for a biorefinery was denied because the amount of  projected withdrawal was seen as unreasonable. In contrast, groundwater  decisions are made at the local level in Texas, where more than half of the  counties have groundwater conservation districts, and Nebraska. In  deciding whether to issue a permit, the Texas groundwater conservation  districts consider whether the proposed water use unreasonably affects  either existing groundwater and surface water resources or existing permit  holders, among other factors. In Nebraska, permits are only required for  withdrawals and transfers of groundwater for industrial purposes. In  addition, in Nebraska, where water supplies are already fully allocated in  many parts of the state, natural resource districts can require biofuel  conversion facilities to offset the water they will consume by reducing water  use in other areas of the region. The volume of withdrawals can also factor  into the need for a permit. While Texas conservation district permits are  required for almost all types of groundwater wells, Georgia state withdrawal  permits are only required for water users who withdraw more than an  average of 100,000 gallons per day.

	Agricultural Practices, Technological Innovations, and Alternative Water Sources Can Mitigate Some Water Resource Effects of Biofuels Production, but There Are Barriers to Adoption

Agricultural conservation practices can reduce the effects of increased  biofuel feedstock cultivation on water supply and water quality, but there  are several barriers to widespread adoption of these practices. Similarly,  the process of converting feedstocks to biofuels, technological  innovations, and the use of alternative water sources can help reduce  water supply and water quality impacts, but these options can be cost  prohibitive and certain noneconomic barriers to their widespread use  remain.

		Certain Agricultural Practices Can Benefit Water Supply and Water Quality, but Barriers May Limit Widespread Adoption

Many experts and officials we spoke with highlighted the importance of  using agricultural conservation practices to reduce the potential effects of  increased biofuel feedstock cultivation on water resources. These  practices can reduce nutrient and pesticide runoff as well as soil erosion  by retaining additional moisture and nutrients in the soil and disturbing  the land less. For example, several experts and officials we spoke with  said that installing and maintaining permanent vegetation areas adjacent  to lakes and streams, known as riparian zones, could significantly reduce  the impacts of agricultural runoff. More specifically, several experts and  officials said that planting buffer strips of permanent vegetation, such as  perennial grasses, or constructing or restoring wetlands in riparian areas  would reduce the effects that crop cultivation can have on water quality,  as shown in figure 5.
Experts also identified conservation tillage practices—such as “no-till”  systems or reduced tillage systems, where the previous year’s crop  residues are left on the fields and new crops are planted directly into these  residues—as an important way to reduce soil erosion (see fig. 6). Research  conducted by USDA has shown a substantial reduction in cropland  erosion since 1985, when incentives were put in place to encourage the  adoption of conservation tillage practices. Another practice, crop  rotation, also reduces erosion and helps replenish nutrients in the soil.  This contrasts with practices such as continuous corn cultivation—in  which farmers plant corn on the same land year after year instead of  rotating to other crops—which often leads to decreased soil quality.  Furthermore, experts identified cover crops, a practice related to crop  rotation, as a way to mitigate some of the impacts of agricultural runoff.  Cover crops are planted prior to or following a harvested crop, primarily  for seasonal soil protection and nutrient recovery before planting the next  year’s crops. These crops, which include grains or perennial grasses,  absorb nutrients and protect the soil surface from erosion caused by wind  and rain, especially when combined with conservation tillage practices.
Experts also identified “precision agriculture” as an important tool that  can reduce fertilizer runoff and water demand by closely matching  nitrogen fertilizer application and irrigation to a crop’s nutrient and water  needs. Precision agriculture uses technologies such as geographic  information systems and global positioning systems to track crop yield,  soil moisture content, and soil quality to optimize water and nutrient  application rates. Farmers can use this information to tailor water,  fertilizer, and pesticide application to specific plots within a field, thus  potentially reducing fertilizer and pesticide costs, increasing yields, and  reducing environmental impacts. Other precision agriculture tools, like  low-energy precision-application irrigation and subsurface drip irrigation  systems, operate at lower pressures and have higher irrigation water  application and distribution efficiencies than conventional irrigation  systems, as shown in figure 7. Several experts and officials said that in  order to promote such practices, it is important to continue funding and  enrollment in federal programs, such as USDA’s Environmental Quality  Incentives Program, which pay farmers or provide education and technical  support. See appendix II for an expanded discussion of agricultural  conservation practices.
Several experts and officials we spoke with also said that genetic  engineering has the potential to decrease the water, nutrient, and pesticide  requirements of biofuel feedstocks. According to an industry trade group,  biotechnology firms are currently developing varieties of drought-resistant  corn that may be available to farmers within the next several years. These  varieties could significantly increase yields in arid regions of the country  that traditionally require irrigation for corn production. Companies are  also working to develop crops that absorb additional nutrients or use  nutrients more efficiently, giving them the potential to reduce nutrient  inputs and the resulting runoff. However, industry officials believe it may  be up to a decade before these varieties become available commercially.  Furthermore, according to EPA, planting drought-resistant crops, such as  corn, may lead to increased cultivation in areas where it has not previously  occurred and may result in problems including increased nutrient runoff.
Experts and officials told us there are both economic and noneconomic  barriers to the adoption of agricultural conservation practices.
Economic barriers. According to several experts, as with any business,  farming decisions are made in an attempt to maximize profits. As a result,  experts told us that some farmers may be reluctant to adopt certain  conservation practices that may reduce yields and profits, especially in the  short term. Furthermore, experts and officials also said that some of these  agricultural conservation practices can be costly, especially precision  agriculture. For example, the installation of low-energy precision irrigation  and subsurface drip irrigation systems is significantly more expensive than  conventional irrigation systems because of the equipment needed, among  other reasons. Farmers may also hesitate to switch from traditional row  crops to next generation cellulosic crops because of potential problems  with cash flow and lack of established markets. Specifically, it can take up  to 3 years to establish a mature, economically productive crop of perennial  grasses, and farmers would be hard-pressed to forgo income during this  period. Moreover, farmers may not be willing to cultivate perennial grasses  unless they are assured that a market exists for the crop and that they  could earn a profit from its cultivation. Furthermore, efficient cultivation  and harvest could require farmers to buy new equipment, which would be  costly and would add to the price they would have to receive for perennial  grasses in order to make a profit.
Noneconomic barriers. Experts and officials we contacted said that many  farmers do not have the expertise or training to implement certain  practices, and some agricultural practices may be less suited for some  places. For example, state officials told us that farmers usually need a year  or more of experience with reduced tillage before they can achieve the  same crop yields they had with conventional tillage. In addition, precision  agriculture relies on technologies and equipment that require training and  support. Officials told us that to help address this training need, USDA and  states have programs in place that help educate farmers on how to  incorporate these practices and, in some cases, provide funding to help do  so. In addition, some experts and officials cited regional challenges  associated with some agricultural practices and the cultivation of biofuel  feedstocks. For example, these experts and officials said that the amount  of agricultural residue that can be removed would vary by region and even  by farm. Similarly, cultivation of certain cover crops as biofuel feedstocks  may not be suitable in the relatively short growing seasons of northern  regions.

		Use of Innovative Technologies and Alternative Water Sources Could Reduce the Water Resource Effects of Biorefineries, but Costs and Logistics Impede Adoption

Technological improvements have already increased water use efficiency  in the ethanol conversion process. Newly built biorefineries with improved  processes have reduced water use dramatically over the past 10 years, and  some plants have reduced their wastewater discharge to zero. Of the  remaining water use, water loss from cooling towers for biorefineries is  responsible for approximately 50 to 70 percent of water consumption in  modern dry-milling ethanol plants.
Some industry experts we spoke with said that further improvements in  water efficiency at corn ethanol plants are likely to come from minimizing  water loss from cooling towers or from using alternative water sources,  such as effluent from sewage treatment plants. One alternative technology  that can substantially reduce water lost through cooling towers is a dry  cooling system, which relies primarily on air rather than water to transfer  heat from industrial processes. In addition, some ethanol plants are  beginning to replace freshwater with alternative sources of water, such as  effluent from sewage treatment plants, water from retention ponds at  power plants, or excess water from adjacent rock quarries. For example, a  corn ethanol conversion plant in Iowa gets a third of its water from a local  wastewater treatment plant. By using these alternative water sources, the  biorefineries can lower their use of freshwater during the conversion  process. While these strategies of improved water efficiency at  biorefineries show considerable promise, there are barriers to their  adoption. For example, technologies such as dry cooling systems are often  prohibitively expensive and can increase energy consumption.  Furthermore, according to industry experts, alternative water sources can  create a need for expensive wastewater treatment equipment. Some  industry experts also told us that the physical layout of a conversion  facility may need to be changed to make room for these improvements.  Because of the considerable costs of such improvements, several experts  told us, it is difficult for biorefineries to integrate these water-conserving  technologies while remaining competitive in the economically strained  ethanol industry.
Many experts and officials stated that technological innovations for next  generation biofuel conversion also have the potential to reduce the water  supply and water quality impacts of increased biofuel production. For  example, thermochemical production of cellulosic ethanol could require  less than 2 gallons of water per gallon of ethanol produced. In addition,  some next generation biofuels, known as “drop-in” fuels, are being  developed that are compatible with the existing fuel infrastructure, which  could reduce the risk that leaks and spills could contaminate local water  bodies. For example, biobutanol is produced using fermentation processes  similar to those used to make conventional ethanol, but it does not have  the same corrosive properties as ethanol and could be distributed through  the existing gasoline infrastructure. In addition, liquid hydrocarbons  derived from algae have the potential to be converted to gasoline, diesel,  and jet fuel, which also can be readily used in the existing fuel  infrastructure. However, while these proposed technological innovations  can reduce the water resource impacts of increased biofuel production,  the efficacy of most of these innovations has not yet been demonstrated  on a commercial scale, and some innovations’ efficacy has not yet been  demonstrated on a pilot scale.

	Experts Identified a Variety of Key Research and Data Needs Related to Increased Biofuels Production and Local and Regional Water Resources

Many of the experts and officials we spoke with identified areas where  additional research is needed to evaluate and understand the effects of  increased biofuel production on water resources. These needs fall into two  broad areas: (1) research on the water effects of feedstock cultivation and  conversion and (2) better data on local and regional water resources.
Experts and officials identified the following research needs on the water  resource effects of feedstock cultivation and conversion processes:  Genetically engineered biofuel feedstocks. Many experts and officials  cited the need for more research into the development of drought-tolerant  and water- and nutrient-efficient crop varieties to decrease the amount of  water needed for irrigation and the amount of fertilizer that needs to be  applied to biofuel feedstocks. According to the National Research Council,  this research should also address the current lack of knowledge on the  general water requirements and evapotranspiration rates of genetically  engineered crops, including next generation crops. Regarding nutrient  efficiency, some experts and officials noted that research into the  development of feedstocks that more efficiently take up and store nitrogen  from the soil would help reduce nitrogen runoff. In addition, USDA  officials added that research to determine the water requirements for  conventional biofuel feedstocks and new feedstock varieties developed  specifically for biofuel production is also needed.
Effects of cellulosic crops on hydrology. Many experts and officials also  told us there is a need to better understand the water requirements of  cellulosic crops and the impact of commercial-scale cellulosic feedstock  cultivation on hydrology, which is the movement of water through land  and the atmosphere into receiving water bodies. According to one expert,  these feedstocks differ from corn in their life cycles, root systems, harvest  times, and evapotranspiration levels, all of which may influence hydrology.  In addition, some research suggests that farmers may cultivate cellulosic  feedstocks on marginal or degraded lands because these lands are not  currently being farmed and may be suitable for these feedstocks. However,  according to the National Research Council, the current  evapotranspiration rates of crops grown on such lands is not well known.
Effects of cellulosic crops on water quality. Many experts and officials we  spoke with said research is needed to better understand the nutrient needs  of cellulosic crops grown on a commercial scale. Specifically, field  research is needed on the movement of fertilizer in the soil, air, and water  after it is applied to these crops. One expert explained there are water  quality models that can describe what happens to fertilizer when applied  to corn, soy, and other traditional row crops. However, such models are  less precise for perennial grasses due to the lack of data from field trials.  Similarly, several experts and officials told us that additional research is  also needed on the potential water quality impacts from the harvesting of  corn stover. In particular, research is needed on the erosion and sediment  delivery rates of different cropping systems in order to determine the  acceptable rates of residue removal for different crops, soils, and locations  and to develop the technology to harvest residue at these rates.
Cultivation of algae. Although algae can be cultivated using lower-quality  water, the impact on water supply and water quality will ultimately depend  on which cultivation methods are determined to be the most viable once  this nascent technology reaches commercial scale. Many experts we spoke  with noted the need for research on how to more efficiently cultivate algae  to minimize the freshwater consumption and water quality impacts. For  example, research on how to maximize the quantity of water that can be  recycled during harvest will be essential to making algae a more viable  feedstock option. Further research is also needed to determine whether  the pathogens and predators in the lower-quality water are harmful to the  algae. In addition, research is also needed on how to manage water  discharges during cultivation and harvest of algae. Although it is expected  that most water will be recycled, a certain amount must be removed to  prevent the buildup of salt. This water may contain pollutants—such as  nutrients, heavy metals, and accumulated toxics—that need to be removed  to meet federal and state water quality standards.
Data on land use. Better data are needed on what lands are currently  being used to cultivate feedstocks, what lands may be most suitable for  future cultivation, and how land is actually being managed, according to  experts and officials. For example, some experts and officials told us there  is a need for improved data on the status and trends in the CRP. According  to a CRP official, USDA does not track what happens to land after it is  withdrawn from the CRP. Such data would be useful because it would help  officials gain a better understanding of the extent to which marginal lands  are being put back into production. In addition, improved data on land use  would help better target and remove the least productive lands from  agricultural production, resulting in water supply and water quality  benefits because these lands generally require greater amounts of inputs,  according to these experts and officials. Research is also needed to  determine optimal placement of feedstocks and use of agricultural  conservation practices to get the best yields and minimize adverse  environmental impacts.
Farmer decision making. Several experts and officials told us that a  better understanding of how farmers make cultivation decisions, such as  which crops to plant or how to manage their lands, is needed in the  context of the water resource effects of biofuel feedstocks. Specifically,  several experts and officials said that research is needed to better  understand how farmers decide whether to adopt agricultural  conservation practices. In particular, some experts and officials said  research should explore how absentee ownership of land affects the  choice of farming practices. These experts and officials told us it is  common for landowners to live elsewhere and rent their farmland to  someone else. For example, in Iowa, 50 percent of agricultural land is  rented, according to one expert, and renters may be making cultivation  decisions that maximize short-term gains rather than focusing on the long- term health of the land. In addition, several experts and officials said that  research is needed to understand the cultural pressures that may make  farmers slow to adopt agricultural conservation practices. For example,  some experts and officials we spoke with said that some farmers may be  hesitant to move away from traditional farming approaches.
Conversion. Existing and emerging technology innovations, such as those  discussed earlier in the report, may be able to address some effects of  conversion on water resources, but more research into optimizing current  technologies is also needed, according to experts. For example, research  into new technologies that further reduce water needs for biorefinery  cooling systems would have a significant impact on the overall water use  at a biorefinery, according to several experts. Congress is considering  legislation—the Energy and Water Research Integration Act—that would  require DOE’s research, development, and demonstration programs to  seek to advance energy and energy efficiency technologies that minimize  freshwater use, increase water use efficiency, and utilize nontraditional  water sources with efforts to improve the quality of that water. It would  also require the Secretary of Energy to create a council to promote and  enable, in part, improved energy and water resource data collection.  Similarly, with regard to conversion facilities for the next generation  feedstocks, further research is needed to ensure that the next generation  of biorefineries is as water efficient as possible. For example, for the  conversion of algae into biofuels, research is needed on how to extract oil  from algal cells so as to preserve the water contained in the cell, which  would allow some of that water to be recycled.
Storage and distribution. EPA officials noted that additional research  related to storage and distribution of biofuels is also needed to help  reduce the effects of leaks that can result from the storage of biofuel  blends in incompatible tank systems. Although EPA has some research  under way, more is needed into the compatibility of fuel blends containing  more than 10 percent ethanol with the existing fueling infrastructure. In  addition, research should evaluate advanced conversion technologies that  can be used to produce a variety of renewable fuels that can be used in the  existing infrastructure. Similarly, research is needed into biodiesel  distribution and storage, such as assessing the compatibility of blends  greater than 5 percent with the existing storage and distribution  infrastructure.
In addition, experts and officials identified the following needs for better  data on local and regional water resources:  Water availability data. Because some local aquifers and surface water  bodies are already stressed, many experts called for more and better data  on water resources. Although USGS reports data on water use every 5  years, the agency acknowledges that it does not have good estimates of  water use for biofuel production for irrigation or fuel production, so it is  unclear how much water has been or will be actually consumed with  increases in cultivation and conversion of biofuel feedstocks.  Furthermore, some experts and officials told us that even when local  water data are available, the data sources are often inconsistent or out of  date. For example, the data may capture different information or lack the  information necessary for making decisions regarding biofuel production.
According to several experts and officials, better data on water supplies  would also help ensure that new biorefineries are built in areas with  enough water for current and future conversion processes. Although  biorefineries account for only a small percentage of water used during the  biofuel production process, the additional withdrawals from aquifers can  affect other users that share these water sources. Improving water supply  data would help determine whether the existing water supplies can  support the addition of a biorefinery in a particular area. Some experts  also noted the need for research on the availability of lower-quality water  sources such as brackish groundwater, which could be used for cultivation  of some next generation feedstocks, especially algae. Better information is  necessary to better define the spatial distribution, depth, quantity, physical  and chemical characteristics, and sustainable withdrawal rates for these  lower-quality water sources, and to predict the long-term effects of water  extraction.
Linkages between datasets. Some experts also cited a need for better  linkages between existing datasets. For example, datasets on current land  use could be combined with aquifer data to help determine what land is  available for biofuel feedstock cultivation that would have minimal effects  on water resources. In addition, some experts said that while there are  data that state agencies and private engineering companies have collected  on small local aquifers, a significant effort would be required to identify,  coordinate, and analyze this information because linkages do not currently  exist.
Geological process data. Several experts and officials also said that  research into geological processes is needed to understand the rate at  which aquifers are replenished and the impact of increased biofuel  production on those aquifers. Although research suggests there should be  sufficient water resources to meet future biofuel feedstock production  demands at a national level, increased production may lead to significant  water shortages in certain regions. For example, additional withdrawals in  states relying heavily on irrigation for agriculture may place new demands  on already stressed aquifers in the Midwest. Even in water-rich states,  such as Iowa, concerns have arisen over the effects of increased biofuel  production, and research is needed to assess the hydrology and quality of  a state’s aquifers to help ensure it is on a path to sustainable production,  according to one state official.

	Agency Comments and Our Evaluation

We provided a draft of this report to USDA, DOE, DOI, and EPA for review  and comment.  USDA generally agreed with the findings of our report and  provided several comments for our consideration. Specifically, USDA  suggested that we consider condensing our discussion of agricultural  practices, equipment, and grower decisions, as these items may or may not  be relevant depending on the feedstock or regulatory control. However,  we made no revisions to the report because we believe that cultivation is a  significant part of the biofuels life cycle, and these items are relevant and  necessary to consider when discussing the potential effect of biofuel  production on water resources. USDA also noted that the report is more  focused on corn ethanol production than next generation biofuels and that  we had not adequately recognized industry efforts to be more sustainable  through a movement toward advanced biofuels. Given the maturity of the  corn ethanol industry, the extent of knowledge about the effects on water  supply and quality from cultivation of corn and its conversion into ethanol,  and the uncertainty related to the effects of next generation biofuel  production, we believe the balance in the report is appropriate. Moreover,  although the shift toward next generation biofuels is a positive step in  terms of sustainability, this industry is still developing and the full extent  of the environmental benefits from this shift is still unknown. USDA also  provided technical comments, which we incorporated as appropriate. See  appendix III for USDA’s letter.
DOE generally agreed with our findings and approved of the overall  content of the report and provided several comments for our  consideration. Specifically, DOE noted that it may be too early to make  projections on the amount of CRP land that will be converted and the  amount of additional inputs that will be needed for cultivation of biofuel  feedstocks. In addition, DOE suggested we expand our discussion of  efforts to address risks of ethanol transport and note the water use  associated with the production of biomass-to-liquid fuels. We adjusted the  text as appropriate to reflect these suggestions. DOE also suggested that  the report should discuss water pricing; however, this was outside the  scope of our review. See appendix IV for DOE’s letter.
In its general comments, DOI stated that the report is useful and agreed  with the finding on the need for better data on water resources to aid the  decision about where to cultivate feedstocks and locate biorefineries. DOI  also suggested that the report should include a discussion of the other  environmental impacts of biofuel production, such as effects on wildlife  habitat or effects on soil. In response, we note that this report was  specifically focused on the impacts of biofuel production on water  resources; however, for a broader discussion of biofuel production,  including other environmental effects, see our August 2009 report. DOI  also provided additional technical comments that we incorporated into the  report as appropriate. See appendix V for DOI’s letter.
EPA did not submit formal comments, but did provide technical comments  that we incorporated into the final report as appropriate.
We are sending copies of this report to interested congressional  committees; the Secretaries of Agriculture, Energy, and the Interior; the  Administrator of the Environmental Protection Agency; and other  interested parties. In addition, the report will be available at no charge on  the GAO Web site at http://www.gao.gov.
If you or your staff have questions about this report, please contact us at  (202) 512-3841 or mittala@gao.gov or gaffiganm@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

Our objectives for this review were to describe (1) the known water  resource effects of biofuel production in the United States; (2) the  agricultural conservation practices and technological innovations that  exist or are being developed to address these effects and any barriers that  may prevent the adoption of these practices and technologies; and (3) key  research needs regarding the effects of biofuel production on water  resources.
To address each of these objectives, we conducted a systematic analysis of  relevant articles of relevant scientific articles, U.S. multidisciplinary  studies, and key federal and state government reports addressing the  production of biofuels and its impact on water supply and quality,  including impacts from the cultivation of biofuel feedstock and water use  and effluent release from biofuel conversion processes. In conducting this  review, we searched databases such as SciSearch, Biosis Previews, and  ProQuest and used a snowball technique to identify additional studies,  asking experts to identify relevant studies and reviewing studies from  article bibliographies. We reviewed studies that fit the following criteria  for selection: (1) the research was of sufficient breadth and depth to  provide observations or conclusions directly related to our objectives; (2)  the research was targeted specifically toward projecting or demonstrating  effects of increased biofuel feedstock cultivation, conversion, and use on  U.S. water supply and water quality; and (3) typically published from 2004  to 2009. We examined key assumptions, methods, and relevant findings of  major scientific articles, primarily on water supply and water quality. We  believe we have included the key scientific studies and have qualified our  findings where appropriate. However, it is important to note that, given  our methodology, we may not have identified all of the studies with  findings relevant to these three objectives. Where applicable, we assessed  the reliability of the data we obtained and found them to be sufficiently  reliable for our purposes.
In collaboration with the National Academy of Sciences, we identified and  interviewed recognized experts affiliated with U.S.-based institutions,  including academic institutions, the federal government, and research- oriented entities. These experts have (1) published research analyzing the  water resource requirements of one or more biofuel feedstocks and the  implications of increased biofuels production on lands with limited water  resources, (2) analyzed the possible effects of increased biofuel  production on water, or (3) analyzed the water impacts of biofuels  production and use. Together with the National Academy of Sciences’ lists  of experts, we identified authors of key agricultural and environmental  studies as a basis for conducting semistructured interviews to assess what  is known about the effects of the increasing production of biofuels and  important areas that need additional research. The experts we interviewed  included research scientists in such fields as environmental science,  agronomy, soil science, hydrogeology, ecology, and engineering.
Furthermore, to gain an understanding of the programs and plans states  have or are developing to address increased biofuel production, we  conducted in-depth reviews of the following five states: Georgia, Iowa,  Minnesota, Nebraska, and Texas. We selected these states based on a  number of criteria: ethanol and biodiesel production levels, feedstock  cultivation type, reliance on irrigation, geographic diversity among states  currently producing biofuels, and approaches to water resource  management and law. For each of the states, we analyzed documentation  from and conducted interviews with a wide range of stakeholders to gain  the views of diverse organizations covering all stages of biofuel  production. These stakeholders included relevant state agencies, including  those responsible for oversight of agriculture, environmental quality, and  water and soil resources; federal agency officials with responsibility for a  particular state or region, such as officials from the Department of the  Interior’s U.S. Geological Survey (USGS), the U.S. Department of  Agriculture’s (USDA) Natural Resources Conservation Service, and the  Environmental Protection Agency (EPA); university researchers; industry  representatives; feedstock producers; and relevant nongovernmental  organizations, such as state-level corn associations, ethanol producer  associations, and environmental organizations. We also conducted site  visits to Iowa and Texas to observe agricultural practices and the  operation of selected biofuels production plants.
We also interviewed senior officials, scientists, economists, researchers,  and other federal officials from USDA, the Departments of Defense and  Energy, EPA, the National Aeronautics and Space Administration, the  Department of Commerce’s National Oceanic and Atmospheric  Administration, the National Science Foundation, and USGS about effects  on the water supply and water quality during the cultivation of biofuel  feedstocks and the conversion and storage of the finished biofuels. In  addition, we interviewed state officials from Georgia, Iowa, Minnesota,  Nebraska, and Texas as well as agricultural producers and representatives  of biofuel conversion facilities to determine the impact of biofuels  production in each state. We also interviewed representatives of  nongovernmental organizations, such as the Renewable Fuels Association,  the Biotechnology Industry Organization, the Pacific Institute, and the  Fertilizer Institute.
To conduct the interview content analysis, we reviewed interviews,  selected relevant statements from the interviews, and identified and  labeled trends using a coding system. Codes were based on trends  identified by previous GAO biofuel-related work, background information  collected for the review, and the interviews for this review. The  methodology for each objective varied slightly, because the first objective  focused on regional differences and therefore relied on case study  interviews, while analysis performed for the remaining two objectives  used expert interviews in addition to case study interviews. Once relevant  data were extracted and coded, we used the coded data to identify and  analyze trends. For the purposes of reporting our results, we used the  following categories to quantify responses of experts and officials: “some”  refers to responses from 2 to 3 individuals, “several” refers to responses  from 4 to 6 individuals, and “many” refers to responses from 7 or more  individuals.
We conducted our work from January 2009 to November 2009 in  accordance with all sections of GAO’s Quality Assurance Framework that  are relevant to our objectives. The framework requires that we plan and  perform the engagement to obtain sufficient and appropriate evidence to  meet our stated objectives and to discuss any limitations in our work. We  believe that the information and data obtained, and the analysis  conducted, provide a reasonable basis for any findings and conclusions in  this product.

Appendix II: Examples of Agricultural Practices Available to Reduce the Water Quality and Water Supply Effects of Feedstock Cultivation for Biofuels

	Any tillage method that leaves a portion of the previous crop residues (unharvested portions of the crop) on the soil surface.

Reduces soil erosion caused by tillage  and exposure of bare soil to wind and  water.
Reduces water lost to evaporation.
Improves soil quality.
Reduces sediment and fertilizer runoff.
Method that leaves soil and crop residue undisturbed except  for the crop row where the seed is placed in the ground.
Reduces soil erosion caused by tillage  and exposure of bare soil to wind and  water.
Reduces water lost to evaporation.
Improves soil quality by improving soil  organic matter.
Reduces sediment and fertilizer runoff.
A close-growing crop that temporarily protects the soil  during the interim period before the next crop is established.
Reduces erosion.
Reduces nitrate leaching.
Integrates crops that store nitrogen from  the atmosphere (such as soy), replaces  the nitrogen that corn and other grains  remove from the soil.
Reduces pesticide use by naturally  breaking the cycle of weeds, insects,  and diseases.
Improves soil quality by improving soil  organic matter.
Change in the crops grown in a field, usually in a planned  sequence. For example, crops could be grown in the  following sequence, corn-soy-corn, rather than in continuous  corn.
Integrates crops that obtain nitrogen  from the atmosphere (such as soy),  replaces the nitrogen that corn and  other grains remove from the soil.
Reduces pesticide use by naturally  breaking the cycle of weeds, insects,  and diseases.
Use of nutrients to match the rate, timing, form, and  application method of fertilizer to crop needs.
Reduces nutrient runoff and leaching.
Injection of fertilizer below the soil surface.
Reduces runoff and gaseous emission  from nutrients.
Use of fertilizers with water-insoluble coatings that can  prevent water-soluble nitrogen from dissolving.
Reduces nutrient runoff and leaching.
Increases the efficiency of the way  nutrients are supplied to and are taken  up by the plant, regardless of the crop.
Water control structures, such as a flashboard riser,  installed in the drainage outlet allow water level to be raised  or lowered as needed.
Minimizes transport of nutrients to  surface waters.
Irrigation systems buried directly beneath the crop apply  water directly to the root zone.
Minimizes water lost to evaporation and  runoff.
Irrigation systems that operate at lower pressures and have  higher irrigation-water application and distribution  efficiencies.
Minimizes net water loss and energy  use.
Water recovered from domestic, municipal, and industrial  wastewater treatment plants that has been treated to  standards that allow safe reuse for irrigation.
Reduces demand on surface and  ground waters.
Restoration of a previously drained wetland by filling ditches  or removing or breaking tile drains.
Reduces flooding downstream.
Filters sediment, nutrients, and  chemicals.
Provides habitat for wetland plants,  amphibians, and birds.
Strips or small areas of land planted along waterways in  permanent vegetation that help control pollutants and  promote other environmental benefits.
Traps sediment.
Filters nutrients.
Provides habitat and corridors for fish  and wildlife.
A system of management of site-specific inputs (e.g.,  fertilizer, pesticides) on a site-specific basis such as land  preparation for planting, seed, fertilizers and nutrients, and  pest control. Precision agriculture may be able to maximize  farm production efficiency while minimizing environmental  effects. Key technological tools used in this approach  include global positioning systems, geographic information  systems, real-time soil testing, real-time weather  information, etc.
Reduces nutrient runoff and leaching.
Reduces erosion.
Reduces pesticide use.

Appendix III: Comments from the U.S. Department of Agriculture

Appendix IV: Comments from the Department of Energy

Appendix V: Comments from the Department of the Interior

Appendix VI: GAO Contacts and Staff Acknowledgments

	GAO Contacts

	Staff Acknowledgments

In addition to the contact named above, Elizabeth Erdmann, Assistant  Director; JoAnna Berry; Mark Braza; Dave Brown; Muriel Brown; Colleen  Candrl; Miriam Hill; Carol Kolarik; Micah McMillan; Chuck Orthman; Tim  Persons; Nicole Rishel; Ellery Scott; Ben Shouse; Jeanette Soares; Swati  Thomas; Lisa Vojta; and Rebecca Wilson made significant contributions to  this report.

Summary:
Why GAO Did This Study

In response to concerns about the nation's energy dependence on imported oil, climate change, and other issues, the federal government has encouraged the use of biofuels. Water plays a crucial role in all stages of biofuel production--from cultivation of feedstock through its conversion into biofuel. As demand for water from various sectors increases and places additional stress on already constrained supplies, the effects of expanded biofuel production may need to be considered. To understand these potential effects, GAO was asked to examine (1) the known water resource effects of biofuel production in the United States; (2) agricultural conservation practices and technological innovations that could address these effects and any barriers to their adoption; and (3) key research needs regarding the effects of water resources on biofuel production. To address these issues, GAO reviewed scientific studies, interviewed experts and federal and state officials, and selected five states to study their programs and plans related to biofuel production. GAO is not making any recommendations in this report. A draft of this report was provided to the Departments of Agriculture (USDA), Energy (DOE), and the Interior (DOI); and the Environmental Protection Agency (EPA). USDA, DOE, and DOI concurred with the report and, in addition to EPA, provided technical comments, which were incorporated as appropriate.

What GAO Found

The extent to which increased biofuels production will affect the nation's water resources depends on the type of feedstock selected and how and where it is grown. For example, to the extent that this increase is met from the cultivation of conventional feedstocks, such as corn, it could have greater water resource impacts than if the increase is met by next generation feedstocks, such as perennial grasses and woody biomass, according to experts and officials. This is because corn is a relatively resource-intensive crop, and in certain parts of the country requires considerable irrigated water as well as fertilizer and pesticide application. However, experts and officials noted that next generation feedstocks have not yet been grown on a commercial scale and therefore their actual effects on water resources are not fully known at this time. Water is also used in the process of converting feedstocks to biofuels, and while the efficiency of biorefineries producing corn ethanol has increased over time, the amount of water required for converting next generation feedstocks into biofuels is still not well known. Finally, experts generally agree that it will be important to take into account the regional variability of water resources when choosing which feedstocks to grow and how and where to expand their production in the United States. The use of certain agricultural practices, alternative water sources, and technological innovations can mitigate the effects of biofuels production on water resources, but there are some barriers to their widespread adoption. According to experts and officials, agricultural conservation practices can reduce water use and nutrient runoff, but they are often costly to implement. Similarly, alternative water sources, such as brackish water, may be viable for some aspects of the biofuel conversion process and can help reduce biorefineries' reliance on freshwater. However, the high cost of retrofitting plants to use these water sources may be a barrier, according to experts and officials. Finally, innovations--such as dry cooling systems and thermochemical processes--have the potential to reduce the amount of water used by biorefineries, but many of these innovations are currently not economically feasible or remain untested at the commercial scale. Many of the experts GAO spoke with identified several areas where additional research is needed. These needs fall into two broad areas: (1) feedstock cultivation and biofuel conversion and (2) data on water resources. For example, some experts noted the need for further research into improved crop varieties, which could help reduce water and fertilizer needs. In addition, several experts identified research that would aid in developing next generation feedstocks. For example, several experts said research is needed on how to increase cultivation of algae for biofuel to a commercial scale and how to control for potential water quality problems. In addition, several experts said research is needed on how to optimize conversion technologies to help ensure water efficiency. Finally, some experts said that better data on water resources in local aquifers and surface water bodies would aid in decisions about where to cultivate feedstocks and locate biorefineries.