Food Security Climate Change and Biofuels Madhu Khanna

Food Security, Climate Change and Biofuels Madhu Khanna University of Illinois, Urbana-Champaign

Food Security, Energy and the Environment: Growing Demands • Global demand for crop calories expected to increase by 100% and for crop protein increase by 110% by 2050 (Tilman et al. , 2011) • Yield trends for maize, rice, wheat, and soybean are insufficient to double global production by 2050 without bringing in more land into crop production. Corn Wheat Soybeans Cotton 3, 000 By 2030… • Climate change is anticipated to increase global temperature and reduce crop yields Rice 2, 500 2, 000 1, 500 1, 000 +28% +102% +125% +40% 500 • Growing problem of soil erosion, nitrate pollution 1. 4 B MORE PEOPLE 2 X Global GDP Source: IHS Global Insights, Agriculture 30% INCREASE IN MEAT CONSUMPT ION +76% 0 2000 2015 2020 2030 GLOBAL GRAIN DEMAND (MMT)

Energy Consumption: To double by 2050 • Global demand for energy expected to double by 2050 • Creating an imperative for alternative low carbon and renewable energy sources • 45% of corn production in the US is being diverted to corn ethanol • Concerns about competition for land impact on food prices and effects on water quality Corn use for Ethanol in US

My Research Interests • Sustainable agricultural production: Increasing yields and profitability without contributing to agricultural pollution • Role of technologies such as precision farming • Effect of climate change on crop yields and acreage • Recognizing that observed yields are also affected by behavioral factors • Application to corn and soybean production in the US • Food security and energy security: Trade-offs and complementarities between food and fuel production

Measuring the Intensive and Extensive Margin Impacts of Climate and Prices • Observed yield in a region (county) is an average over many farmers – and depends on • Climate • Acreage cultivated • Crop rotations • Management practices • Farm policy High quality cropland Acreage Marginal/Idle Corn Soybeans prices C • Average crop yield affected by climate conditions, price expectations and policy • Ignoring these other effects can lead to omitted variable bias • Crop price effects positive or negative: improve management practices but bring in marginal land • Fertilizer price effects can be positive or negative: reduce fertilizer use but increase land • Policy effects can also be positive or negative: changes in price support and planting flexibility • Crop acreage likely to be negatively affected by climate and positively by crop price

Our study • Use 30 years of historical county specific data on crop yields, prices and climate variables to: • Examine the impact of climate change on supply of corn and soybeans by considering effects at the intensive and extensive margin • Assess the responsiveness of yield and crop acreage to crop prices • Simulate the medium term and long term impact of climate change on crop production Implications • Potential for adaptation to climate effects in response to rising crop prices • Potential for effect of biofuel induced crop prices increases to be mitigated by increased yields

Key Findings : Effect of Climate Variables on Yield Corn 0 RCP 2. 6 RCP 4. 5 RCP 6. 0 RCP 8. 5 Medium Long term term 0 RCP 2. 6 RCP 4. 5 Medium Long Medium term Soybeans RCP 4. 5 RCP 6. 0 Long term -10 -15 -20 -25 Preci. -30 Temp. Dev. -35 Overheat degree days -40 Overheat degree days -45 Long term -5 -5 -40 Medium term RCP 8. 5 Medium Long term GDD Decomposed Climate Effect on Corn Yield -45 -50 GDD Decomposed Climate Effect on Soybean Yield Miao, Khanna, Huang, 2014

Other Findings • Corn yields are responsive to corn price • 29% of the increase in corn supply caused by an increase in corn price due to yield enhancement at the intensive margin while 71% is due to acreage expansion. • Impact of climate change on decrease in corn acreage relatively small 0. 6 -1. 3% Effect of climate change on corn supply 2050 -2100

Food and Fuel: Not all biofuels are the same Biofuel Yield: Gallons per Acre 1000 800 600 400 200 0 Corn ethanol Sugarcane Wheat straw Stover ethanol Switchgrass ethanol Miscanthus ethanol Energy Cane Average Carbon Intensity of Alternative Fuels g CO 2/MJ 100 75 50 25 0 Miscanthus Energy Cane Switchgrass Corn stover Wheat straw Sugarcane ethanol Corn ethanol Gasoline -25

Key questions • What are the determinants of the mix of biofuels produced? • How much land will be converted from food/feed crops to biofuels? • Which type of land will be converted for biofuel crop production? • What will be the implications for food/feed crop prices?

Research Issues • Potential for energy crops to be grown productively on low quality land; correlation of energy crop yields with those of conventional crops: implications for land allocation • Under perfect certainty, low discount rates and risk neutrality we examine • Breakeven price of energy crops lower on low quality land • Effect of biofuel and climate policies on the mix of biofuels produced • Effect on land use and food crop prices depends on costs of energy crops and availability of marginal land • Effects of risk aversion, high discount rates, credit constraints on potential location and land types for energy crop production

Alternative Fuel Standards Renewable Fuel Standard 36 B gallons by 2022 Biofuel categories based on GHG intensity At least 16 B gallons of cellulosic biofuels Max. cap of 15 B gallons of corn ethanol Low Carbon Fuel Standard Set a standard for reducing GHG intensity of transportation fuel relative to a baseline

Mix of Biofuels Under Alternative Policies that Achieve the Same GHG Reduction as the RFS (2007 -2030) Cellulosic Ethanol (Energy Crops) 12% Cellulosic Ethanol (Crop Residues) 17% Sugarcane Biodiesel Ethanol 3% 6% Sugarcane Ethanol 6% RFS Corn Ethanol 61% RFS Targets Chen, Huang, Khanna and Onal, 2014 Biomass Diesel 1% Biodiesel 1% Corn Ethanol LCFS 16% Cellulosic Ethanol (Energy Crops) 71% Cellulosic Ethanol (Crop Residues) 4% Low Carbon Fuel Standard

Food vs Fuel % Change in Crop Prices in 2030 Relative to No-Biofuel Policy

Spatial Distribution of Biomass RFS Energy Crops Crop Residues LCFS

Effect of risk aversion, high discount rates, credit constraints and subsidies on acreage allocated to miscanthus (b) (a) Legend of Maps (a) and (b) (c) Legend of Map (c) Acres Miao and Khanna, 2015)

Summary and Future Work • Climate change and increasing production of biofuels (even cellulosic biofuels) pose a threat to food/feed production • Potential for adaptation to climate change in response to higher crop prices • Biofuel impacts on food/feed production are largely policy induced. • Potential to design policies to mitigate unintended adverse impacts • More research needed: Impact of climate change and induced variability in yields together with growing global production of biofuels on land use and food/feed production