Agricultural Impacts of Biofuels Production

Journal of Agricultural and Applied Economics, Aug 2007 by Walsh, Marie E, De La Torre Ugarte, Daniel G, English, Burton C, Jensen, Kimberly, Et al

Bioenergy Technology Assumptions

The analysis examines the impacts of large increases in the production of ethanol from corn grain and cellulose feedstocks and biodiesel from soybeans. Key technical assumptions (conversion efficiencies and costs) are shown in Table 1.

Forest Sector Residues

In addition to agricultural crop residues and dedicated energy crops, the forest sector can serve as a source of cellulose feedstocks. These resources include logging residues, other forest removals, and mill residues. Logging residues are the unused portion of growing stock trees cut by logging and left behind. Other removals are the unutilized wood volume from cut or otherwise killed growing stock, from cultural operations such as precommerciai thinning, or from timberland diversion to other uses. Primary mill residues are those generated in the conversion of roundwood (logs) into other wood products and include lumber sawmills, pulp mills, and veneer mills.

Supply curves for forest industry resources were estimated and incorporated into the analysis as fixed supplies, exogenous to the POLYSYS model. Logging residue, other removal, and primary mill waste generation data are from the USDA Forest Service. Data are for the survey year 2002. In-forest resources are converted from cubic feet to dry tons using factors in Smith. Projected future logging residue quantities are based on the USDA Forest Service Resource Policy Act assessment (Haynes), which provides regional projections of softwood and hardwood harvest. Other removals consist largely of land clearing operations (urban development), and their projected future quantities are based on projected population and housing growth. Other forest sector materials that could potentially serve as biomass resources include fuel treatment residues that are removed for fire suppression and forest health reasons, but these materials are not included in this analysis.

The cost of collecting logging residues and other removals utilizes a model developed by McQuillan et al., which uses forest inventory data, logging and chipping costs, hauling distances and costs, stocking densities, wood types, and slope and equipment operability constraints to estimate nine regional supply schedules for softwood and hardwood chips for the base year of their study (1983) with projections for future years. This analysis updates the forest inventory, adds a stumpage fee ($2.00/dry ton), factors out the transportation component, and updates prices to $2002. The model is used to estimate regional cost distributions, which are then applied to the projected future quantities. A key limitation of the analysis is the inability to fully update the model and to change some technology and structural assumptions.

An estimated 92 million tons of primary mill residues were produced in 2002, but only 1.86 million tons were not used for fuel, fiber, or other uses (e.g., bedding, mulch). Unlike most analyses that assume mill residues currently used are unavailable for bioenergy use, this analysis assumes that if a sufficiently high price is offered, some mill residues could be attracted away from their existing uses. The minimum prices needed (in $2002) are estimated as the value of the wood in each end product (estimated as a % of the market price), additional processing costs (chipping, handling costs), and a disposal cost for unusable materials (tipping fees). Future quantities are estimated using Haynes and are similar to the logging residue analysis. Table 2 contains the estimated forest sector supplies (combined logging residues, other removals, and primary mill residues) for select prices.