The Effect of Technological Progress, Demand, and Energy Policy on Agricultural and Bioenergy Markets

Abstract

This study investigates the consequences of agricultural technological progress, biofuel policy, and agricultural demand growth on crop, livestock, and bioenergy markets, as well as resource usage and greenhouse gas (GHG) emissions, over data in the United States. We formed scenarios for future technological progress, demand growth, and biofuel policy and carried out a dynamic simulation. The major findings are: (1) Increasing technological progress reduces cropland for biofuel and cropland pasture for livestock but increases cropland for crop production; (2) Reducing corn ethanol requirements causes more cropland to move from cropping to pasture uses for livestock, however, lowering ethanol from corn residue has minor effects on cropland use; (3) Lowering the requirement of ethanol from corn lowers the price for most of the field crops and meat commodities, especially corn, hay, sorghum, and non-fed beef; (4) Technological progress and biofuel policy have significant effects of on GHG emissions. Increasing technical progress reduces overall GHG emissions. A lower corn ethanol level results in much larger GHG emissions as compared with the control case. This implies producing corn ethanol is effective in reducing emissions; and (5) Technological improvement is a key factor in meeting growing global demand for food and energy and reducing emissions.