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More unintended consequences

More unintended consequences

In the January issue article Guns or butter Gasoline or eggs we discussed the fact that the current enthusiasm for ethanol from low biomass sources like corn (the Brazilians use higher mass sugar cane) had unintended consequences. More information has become available, and we thought it should be shared, as it points up the importance of always asking the following five questions before implementing any policy or measure:

1. What problem is the policy or measure trying to solve?

2. How can it fail in practice?

3. Given the failure modes, how well does it solve the problem?

4. What are the costs, both financial and social, associated with it, and flowing from its unintended consequences?

5. Given the effectiveness and costs, is the policy or measure worth it? The problem we are trying to solve is dependence on expensive foreign oil, which is a significant problem, both long and short term. A secondary problem (assuming you have no children and don’t care about the dèluge if it comes après vous) is the reduction of greenhouse gases, which were estimated to be in the neighborhood of 20 percent with increased use of ethanol. An article in last month’s Science magazine entitled Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change (you can read the abstract at http://www.sciencemag.org/cgi/content/abstract/319/5867/1238?maxtoshow =&HITS=10&hits=10&RESULTFORMAT=&fulltext=ethanol&searchid=1 &FIRSTINDEX=0&issue=5867&resourcetype=HWCIT if you don’t get it at home) noted that “corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years.” We don’t claim to be mathematicians, but it seems to us that this looks like the numbers are going in the wrong direction….

To add to the mix, the Organization for Economic Cooperation and Development‘s paper Agricultural market impacts of future growth in the production of biofuels of 1 February 2008 (http://www.oecd.org/dataoecd/58/62/36074135.pdf) estimates that to meet a target of 10% biofuel use 30% of farmland needs to be devoted to growing the biomass. We have additionally read estimates that to meet a 15% target we need to use the entireU.S.corn crop, which represents about 40% of the world’s corn.

The diversion of food to fuel has already had a significant effect on the world’s poor, and has certainly been noticeable in American food budgets.

You can safely expect food prices to continue to escalate.

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