Abstract

Advanced biofuels such as cellulosic ethanol are of great interest in the USA. With agriculture being the major source of feedstock for advanced biofuels, how farmers would respond to markets and policy incentives in providing such feedstock can directly affect sufficient and sustainable supply of advanced biofuels and their environmental sustainability. In this study, we developed an economic model to examine farmers' production choices in a context where agricultural markets are linked to energy markets. We identified the economic conditions under which farmers could maximize their profits by converting current grain cropland to grow cellulosic biomass crops. An empirical illustration showed that with current technology, farmers are unlikely to grow switchgrass as a dedicated energy crop instead of corn on cropland. The biofuel incentives in the 2008 Farm Bill can improve the competitiveness of switchgrass, but may stimulate corn production as well, with corn residues as an alternative feedstock for advanced biofuels. The continuous, possibly expanding, corn production in future raises the same issues for advanced biofuels as for corn grain-based ethanol. To assure the environmental sustainability of advanced biofuel production, further research is needed to help design environmental policies alongside existing biofuel initiatives.