The production of biofuels requires water both in the development of the feedstock—corn, soy, switchgrass, and so on—and in the processing of the feedstock into biofuels. The workshop’s fifth session dealt with the effects that biofuels production has on the water supply, both its quality and its quantity.
The session’s first speaker was Jerald L. Schnoor, professor of civil and environmental engineering at the University of Iowa and co-director of the Center for Global and Regional Environmental Research. Schnoor focused on water quantity issues related to biofuels. There are two main areas in the production of biofuels that involve water, Schnoor said—the agricultural side of biofuels and the production side—and each has implications for water quantity. The main questions, then, are: “How much water does it take to grow the feedstocks for biofuels? And how much water does it take to produce the biofuels for industry?”
The Energy Independence and Security Act of 2007, Schnoor noted, requires that 36 billion gallons of biofuels of various sorts be used in the United States by 2022. According to Schnoor, to many it seems that there is a greater chance of a camel passing through the eye of a needle than of that mandate for cellulosic biofuels being met by 2022.
The U.S. Environmental Protection Agency (EPA) has the power to modify the numbers in the mandate, and it has already done this for cellulosic biofuels, he noted. The number was to be 400 million gallons per year in 2010. “We weren’t able to make that,” Schnoor said. “In fact, we’re at about 25,000 gallons currently, so we’re well below that. And
that calls into question the future, especially for the bottom line.” In response to this situation, some people have talked about trading with Brazil as a means to provide some of the “advanced biofuels” as they are presently defined.
It is the cellulosic biofuels component of the mix—with a mandate for 16 billion gallons by 2022—that seems most in jeopardy of not being achieved, he said. It is both an economic and a technological issue—economic in that the cellulosic biofuels cost too much, and technological because there has not been the breakthrough in technology necessary to produce those cellulosic biofuels efficiently. “It’s really two sides of the same coin,” Schnoor said.
One problem lies in the fermentation process of cellulosic enzyme. “The enzymes alone are costing on the order of a dollar per gallon,” he said, “and we’re trying to produce the fuel for roughly a dollar and a half per gallon, so we’re quite far away from a commercial cellulosic biofuel.” Furthermore, Schnoor noted, if the mandated production for cellulosic biofuels was to be met by 2015 and 2020 and 2022, the plants would have to be built now—and they are not. “So, it’s virtually assured that there’s no way we’re going to make that portion—the 16 billion gallons for cellulosic biofuels of the 36 billion gallon total.”
Background on Corn
Corn has a variety of uses, Schnoor said. A bushel of corn—about 54 pounds—can be used to produce 31.5 pounds of starch or food, 33 pounds of sweetener, or 2.8 gallons of ethanol plus 13.5 pounds of gluten feed plus 2.6 pounds of gluten meal plus 1.5 pounds of corn oil. He pointed out that when making ethanol from corn, the byproducts are important for animal feed and that up to one-third of the original feed value of the corn is still available in the byproducts (dry distillers grains) after the ethanol has been produced.
Ethanol production is also a job creator, Schnoor said. A smaller plant that makes 50 million gallons per year of ethanol has about 40 full-time employees. “When you multiply that by hundreds of plants, it starts to make a significant number of jobs.”
Concerning the economics of ethanol production, he noted that the tax credit for blenders of corn ethanol expired in 2012, but biodiesel and cellulosic ethanol still enjoy a substantial tax credit of $1.01 per gallon.
In 2012 growers planted a record 94 million acres of corn in the United States, and 40 percent of that was used in ethanol production—
more than the 37 percent used for animal feed. In Iowa, he said, the percentage is much more than that—maybe two-thirds or even three-quarters of the total corn planted is converted to ethanol. Indeed, some have suggested that if the production of ethanol continues to expand, Iowa might have to become a corn-importing state in order to feed its animals.
Many people in the ethanol industry say that the food-versus-fuel issue of corn devoted to ethanol is not something to worry about, Schnoor said. They argue that large increases in yield will make it possible to keep up with the growing demand of corn for biofuels. “But I’m sorry to say that I don’t think the figures, at least so far, bear that out,” he said. The trend over the past several decades has certainly been toward growing more and more bushels of corn per acre, as can be seen in Figure 5-1, which shows an average increase of two bushels per acre each year. But history also shows, he said, that the yield is vulnerable to various outside forces. Widespread droughts or floods can reduce the yield dramatically, for example. “And you can’t always depend on your feedstock supply,” he said. “That’s what happened in 2012, when we dropped down to about 123 bushels per acre.”
FIGURE 5-1 U.S. corn yield, 1982–2012.
SOURCE: USDA-NASS, 2013.
Water Requirements for Corn Biofuels
To provide water to grow corn for biofuels, Schnoor said, farmers can use the “green water” provided by natural precipitation or the “blue water” taken from surface water or groundwater and fed through irrigation systems. “The crop might use roughly the same amount of water either way,” he said, “but if it comes from … a groundwater supply that might be being depleted, there are real sustainability issues involved with the irrigation of that crop.”
There is relatively little irrigation needed in Iowa, where there is generally plenty of rain during the growing season, Schnoor said, but farmers growing corn in other parts of the country—particularly the western half—do irrigate. “In California in the Central Valley you might need 4,000 gallons of water per bushel of feedstock, in this case corn,” he said, “and in the High Plains or in the Ogallala Aquifer of Nebraska you might need 2,000 gallons of water per bushel of corn.” The result of such irrigation is a drawing down of the aquifers.
Water is required not only for the feedstock, but also for the production facilities, Schnoor said. The facilities that produce ethanol require high-purity water, which is largely taken from confined aquifers, even in the rain-fed Midwest. He displayed a figure that showed the ethanol facilities and the major aquifers in the United States (see Figure 5-2). In the figure, the larger the dot representing an ethanol facility, the greater the production capacity of that facility.
Given the use of the water from the aquifers, there is clearly a certain amount of unsustainable pumping taking place, he said. This is not unique to the ethanol industry, he said. “Any industry that has a large water requirement would be permitted to do the same thing.” But what is happening here is that there is a large concentration of these ethanol facilities in limited geographical locales, which is a recipe for having a major impact on the aquifers in question. In Iowa, for example, there are a large number of ethanol production plants, and the Cambrian-Ordovician aquifer, known as the Jordan aquifer, has been pumped down by 150 or 200 feet, so eventually future generations will not be able to use that aquifer. “It does recharge,” Schnoor noted, “but it recharges over a much longer time scale than would be of interest.”
FIGURE 5-2 Existing and planned ethanol facilities (2007) and their estimated total water use mapped with the principal bedrock aquifers of the United States and total water use in year 2000.
SOURCE: Janice Ward, U.S. Geological Survey, personal communication, July 12, 2007 (NRC, 2008).
Effects of Biofuels on Water Quality
Growing either corn or soybeans to produce conventional biofuels? ethanol from corn and biodiesel from soybeans—demands large amounts of both fertilizer and pesticides, Schnoor said. Thus, as the amount of cropland devoted to growing corn has increased, there has been greater and greater negative impact on water quality even though the total acreage of land in the United States committed to agriculture has not increased in recent decades. And it is not only the states where corn is being grown for ethanol whose water quality is being affected, he said, because the runoff from the croplands ends up traveling down the Mississippi River all the way to the Gulf of Mexico.
To illustrate the problem, Schnoor described the Lincolnway Energy Plant in Iowa. It is a typical plant for producing conventional biofuels. It produces 50 million gallons of ethanol per year. To do that, it uses about 18 million bushels of corn and about 150–200 million gallons of water each year. “The older facilities, like this one, are averaging about 4 gallons of water per gallon of ethanol produced,” he said. “The newer facilities can get down to maybe 2.5 or even 3 gallons. They are becoming more and more efficient.” The water for such plants is generally pumped from the ground in order to provide the high-purity water that is necessary for the production processes.
To put the water use in perspective, Schnoor noted that a facility that produces 100 million gallons of ethanol per year will use about 300 million or 400 million gallons of water a year, which is roughly equivalent to what a town of 5,000 people uses. “For every black dot on the previous maps [see Figure 5-2], you can think of a new town springing up with water needs for roughly 5,000 people. So, it is a pretty intensive industry in terms of water.”
Given the effects of conventional biofuels production on water quality and quantity, the hope is that cellulosic biofuels would require less water, Schnoor said. Because there are not yet any commercial facilities in operation for producing cellulosic biofuels, it is impossible to be sure what the effects will be, but the expectation is that there will be some real benefits in terms of water quality and, to some extent, water quantity.
The Potential for Cellulosic Biofuels
Cellulosic ethanol could be derived from corn stover—the leaves and stalks of the corn plants left in the field after the harvest—or from wood residues or dedicated bioenergy crops. There are issues facing the development of each.
How, for example, can the corn stover—a “diffuse, light, fluffy material,” as Schnoor described it—be collected efficiently in the field and transported to the production facility? One advantage of using the corn stover is that it is located in the same place as the corn used for ethanol. An ethanol facility that turns out 50 million gallons per year will generally be sited in the middle of 100,000 acres of corn, which it uses for its feedstock. Putting a cellulosic biofuels facility in the same location would allow it to draw from the same 100,000 acres of corn stover. “But you’ve got to get it there, you’ve got to harvest it, and you’ve got to preserve it [because] you need it all year long, and you’re only going to
get it one time per year,” Schnoor said. A plant that produces 40 million gallons per year of cellulosic biofuels will require hundreds of truckloads of corn stover arriving each day.
One basic question concerning the corn stover is how much of it can be efficiently collected. “Most studies indicate that you could take at least 50 percent of it as long as the land isn’t too sloped,” Schnoor said, and that should increase with the new genetically modified crops because they are planted much closer together. “They are producing so much stover, so much residue, that you would almost have to remove some,” he said. Of course, removing the stover means that its nutrients are not returned to the soil, so the fields will need more fertilizer to replace the nutrients from the stover.
One possible alternative to processing corn stover would be to use thermochemical processes with switchgrass and mixed prairie grasses. It has been suggested that this could produce cellulosic biofuels at higher yields with lower water inputs, less fertilizer use, and lower energy inputs than producing ethanol from corn—and with lower greenhouse gas emissions as well—but there is as yet little experience with this process (Tilman et al., 2006). “I have some feeling that we will tend to fertilize much more, maybe irrigate more than one might think which affects the life-cycle assessment,” Schnoor said. “So, the truth is … we need to gain experience if this is going to be an important contribution to the portfolio for biofuels.”
Other dedicated energy crops will likely be important, too, he said. The ones most frequently mentioned are poplar, willow, and southern pine. It is possible that they could use less water, fertilizers, and pesticides, but again, not enough is known.
Can the Cellulosic Biofuels Goal Be Met?
“In our committee, we like to joke that cellulosic ethanol is just 5 years away, and it always has been and it always will be 5 years away. That’s where we stand today as well,” Schnoor said. So, how practical is the goal of producing 16 billion gallons of cellulosic biofuels per year by 2022?
Two studies conducted by the U.S. Department of Energy (DOE) have asked a simpler question: Can we grow enough biomass with existing land for all these needs, both waste energy and for biofuels? “The answer is probably yes,” Schnoor said. According to DOE estimates, there are 500 or 600 million tons of biomass per year available from corn
stover and forest residue. “Certainly the southeastern United States with its wood products would be a source of both wood waste residues and a lot of byproducts for making cellulosic ethanol.”
Unfortunately, although the raw materials may exist, there is an economic problem facing cellulosic ethanol: There is a huge gap between what the producers of the biomass feedstock—such as farmers with corn stover—are willing to accept for the product and what the production facilities are willing to pay. According to one survey, the willingness to accept is in the order of $75 to $100, while the willingness to pay is only about $25 (NRC, 2011). “So, we’re really quite far off from having a meeting of the minds in a commercial venture here,” Schnoor observed.
The EPA’s renewable fuel standards call for 15 billion gallons of conventional biofuels per year being produced by 2022. “We’re almost at the 15 billion gallons now,” Schnoor noted. “Iowa alone is making about 3.7 billion gallons per year.” However, considerable water is required for this fuel, both in the growing of the corn and the processing of the corn into ethanol, and there are already local water problems—drawdown of the aquifers—associated with ethanol production facilities. There are also water quality issues, including the 8 grams of nutrients for every gallon of ethanol that ends up in the Gulf of Mexico and the 20 to 40 pounds of soil that are eroded for every gallon of ethanol produced.
On the other hand, cellulosic biofuels are highly unlikely to meet the EPA’s goal of 16 billion gallons per year by 2022, Schnoor said. The reasons are not simply economic and technological; one major stumbling block is that meeting that goal would require that the plants be built now, “and few are on the horizon.”
Finally, Schnoor offered three recommendations. First, he would not expand conventional biofuels production in the future because of its negative environmental consequences. The EPA’s goal for conventional biofuels has almost been met, and the goal should not be increased.
“Number two, I think we will need to delay and revise our cellulosic biofuels mandate,” he said. “I don’t know if EPA will do that year by year or how it will manifest itself, but definitely that needs to change,” Schnoor said.
And finally, he said, as the cellulosic biofuels industry is developed, it will be important to make sure that its production is as efficient and as environmentally sensitive as possible.
In the discussion session following Schnoor’s presentation, Richard Jackson, University of California, Los Angeles, asked what happens with the water used for ethanol production after it is used. “Is it going to municipal treatment sites, is it going back into the aquifer? Where is it being put?” Schnoor answered that there is generally an onsite treatment facility which discharges the water into streams “in hopefully acceptable quality.”
Responding to a follow-up comment about the amount of effluents that end up in the Gulf of Mexico, Schnoor said that part of the problem is that the corn plants are amazingly good at absorbing nitrogen from the soil and storing it in the grain itself. Thus, it takes a lot of fertilizer to replace that nitrogen. “Theoretically, the crop should take it all up,” he said, “but if it rains after you apply, down the Mississippi it goes.”
Dennis Devlin of ExxonMobil then asked Schnoor whether, given the significant water use and the drawdown of the aquifers, local water districts are getting involved in the permitting process, and whether there have been any cases where water permit applications have been denied.
“I’m told that there have been some denied in Kansas,” Schnoor answered. “But in Iowa I don’t believe any have been denied. It’s a statewide permitting authority, not county.”
An audience member asked Schnoor if corn ethanol plants could be converted to produce cellulosic biofuels, assuming the production of cellulosic biofuels becomes economically feasible. Schnoor responded that cellulosic production would probably be co-located with corn ethanol production at the same sites. Following up, the audience member explained that the original implication of the question was that once cellulosic biofuels became cost-effective to produce, it would drive the corn ethanol producers out of business. In that case, Schnoor replied, it would be very possible to convert the corn ethanol plants into cellulosic biofuel plants. “They share a lot of processes in common.”
The session’s second speaker was Catherine Kling, the head of the Resource and Environmental Policy Division of the Center for Agricultural and Rural Development at Iowa State University, whose
focus was on the effects of biofuels production on water quality as well as some related economics issues.
Overview of Water Quality Problems Associated with Agriculture
To begin, Kling offered a broad overview of the water quality problems that are associated with large-scale agricultural land use, and she explained that she was not talking about large farms. “I mean land that has been intensively used by agriculture,” she said, which describes much of the Midwest as well as many other parts of the country.
One of the major problems with water quality in different areas across the country is the presence of cyanobacteria blooms, which are caused by toxic algae. “This is a problem in the Midwest, in the East Coast in the Chesapeake Bay, and in the western part of the United States,” Kling said, “and it’s largely driven by humans generating too much nutrients.” In particular, the main harmful nutrients are nitrogen and phosphorous. In the Chesapeake Bay many of these nutrients are from urban sources, such as the fertilizers that homeowners put on their lawns, but in the Midwest it comes mainly from the fertilizers used in agriculture and the manure produced by farm animals.
“It drains off into local waters and streams where it does what fertilizer does—it makes stuff grow.” And although that may be desirable in farm fields, she said, in lakes, streams, and rivers it causes algae and other kinds of plants to “grow excessively and create all sorts of havoc,” Kling said.
According to an EPA survey of 43 percent of the lakes, reservoirs, and ponds in the United States, 67 percent of the surveyed bodies of water had impaired water quality to support their designated uses, and more than 12 million acres were impaired. Agriculture was found to be the third-highest cause of the impairment. The same survey looked at 28 percent of the rivers and streams in the United States, and found that 52 percent of them had impaired water quality to support their designated uses, and almost half a million stream miles were impaired. In this case, agriculture was found to be the leading cause of the impairment (EPA, 2013a). Although there are a number of problems with the data, Kling said, the overall picture concerning U.S. bodies of water is clear: “There are far too many nutrients in them. They are growing algae, and that’s creating problems for habitat, and it makes the water smell. There can be fish kills. There can be any number of problems.”
On the other hand, the human health effects of these water quality problems are not particularly large, Kling said. “We don’t drink this water; if the water is bad, it goes through purification plants. All of our water from cities is tested.” There may be some risk to people who get into the water. “Largely, though, most people consider this an ecosystem health problem.” And it is not getting better. That is the main take-home message.
A related problem is the presence of hypoxia or “dead zones” in bodies of water—and, in particular, in the Gulf of Mexico. These occur because of the presence of large amounts of nutrients, particularly nitrogen and phosphorous, in the water. These nutrients tend to sit near the surface and feed the algae to create algae blooms. When the algae die, they sink and decompose, using up all of the oxygen in the water column below the bloom. The result is that the oxygen concentration drops to 2 parts per million or so in large parts of the zone, and this is too little oxygen to support life. “Anything that can move, like the big fish, swim away if they can. Small things die,” Kling said.
The die-off may have major long-term effects on the ecosystem, Kling said, but these are not yet well documented or well understood. “What is pretty well understood is the size of the zone from year to year and the major sources of the problem.” As shown in Figure 5-3, the hypoxic zone is that part of the Gulf of Mexico that has less than 2 parts per million of oxygen. The shaded area represents the Mississippi River Basin, and any water in that area ultimately flows to the Gulf of Mexico. Two parts of the basin that make up only about one-third of its area—the Upper Mississippi Basin and the Ohio–Tennessee Basin—are responsible for about 80 percent of the nitrogen and 70 percent of the phosphorus that end up in the Gulf of Mexico. “So, if you want to target your efforts to solve problems related to the Gulf, you want to be focused on those areas,” Kling said.
It is important to note that the size of the dead zone varies by year. It can be huge. It can also be small. “It’s very much affected by weather in addition to the amount of nutrients that come in,” Kling said. “But it is clearly much larger than it would’ve been without human-induced nutrients flowing into it, and the only way to address it and make it much smaller is to significantly cut back on the amount of nutrients.”
Contribution of Corn Production to Water Quality Problems
Corn is an annual crop, Kling pointed out. “You plant new seed each year, it grows, and it produces this highly valuable product.” To keep the yield high, however, requires adding a great deal of nutrients to the soil, generally in the form of manure and fertilizer high in nitrogen. And even with the best management practices, much of that nitrogen will be carried out of the fields by water and eventually into streams and rivers. A large part of the problem is that the land is bare half of each year. Thus, corn is known as a “leaky” crop—some of the nutrients applied to it inevitably leak out of the fields where it is planted.
In addition to the nitrogen, phosphorous is carried out of the fields in the sediment that is inevitably eroded into surrounding streams and rivers. The nitrogen moves with the water, Kling explained, while the phosphorus moves with the sediment.
The fact that the Corn Belt states of the Midwest get a great deal of rain means that there are fewer problems with water quantity than in other parts of the country because there is less need for irrigation and thus less stress on the aquifers. However, Kling pointed out, this comes at a cost for the Gulf of Mexico, as all that rain washes nutrients from the cornfields downstream.
FIGURE 5-3 The sources of the Gulf of Mexico dead zone.
SOURCE: EPA, 2013b.
In economics terms, Kling said, these consequences are an unpriced externality. The costs of these consequences are not borne by the farmers who grow the corn.
There are various ways that these externalities could be addressed. Farmers could do a better job with fertilizer timing and the amounts they use. They could plant cover crops so that the land is not bare for 6 months. They could change how they till. Or wetlands could be created carefully and strategically in a watershed so that they would capture the nutrients coming off the fields and process them before they move down to rivers and streams. “There are bioreactors. There are tile drains. There are a number of different things that can be done.”
But none of these things is done, she noted. She suggested that nothing is done because it is costly and there is no reason for an individual producer to do it. The externality is not priced. There are few regulations or requirements, and hence there is the predictable situation where too many nutrients are coming off this land.
Experts believe that a 40 to 50 percent reduction in nutrients will be needed to achieve reductions in the hypoxic zone, and this would require not just one or two changes being made, Kling said, but rather widespread adoption of multiple practices. “We’d need a major change in what that landscape looks like.”
Switchgrass as a Potential Solution
This is where switchgrass comes in, Kling said. It is a very tall grass plant, and for environmental purposes what is most important about it is that it is a perennial, not an annual. It has very deep roots that stay in place year after year. Once it has been planted, the top of the plant can be harvested, and the roots and lower part of the plant remain. This is part of the reason that people are excited about its potential for producing biofuels. It has far fewer problems with erosion than corn, and it also appears as though it will need less nitrogen and other nutrients than corn.
Researchers have examined the issue of how the use of switchgrass for biofuels might affect water quality, assuming that switchgrass could be made into an economically viable feedstock, Kling said. In particular, she described a study done in 2008 concerning various land uses in the Raccoon River Watershed in Iowa (Schilling et al., 2008). The baseline was the existing usage of the land in 2004: About 76 percent of it was cropland in a corn/soybean rotation, with corn planted one year and soybeans the next; 2 percent was retired cropland that was in a conservation
program; 17 percent was grassland; 4 percent was forest; and 1 percent was for people and animals.
The researchers calculated how modifying the land use would affect the amounts of nitrogen, phosphorus, and sediment ending up in the watershed. In three scenarios, they expanded the amount of corn being planted—by planting the retired cropland with corn, by transforming all the grassland into cornfields, and by converting all the grassland into cornfields and growing corn all the time instead of alternating with soybeans. In three other scenarios, they planted switchgrass—on 25 percent of the most erodible cropland in the watershed, on 50 percent of the cropland, and on 100 percent of the cropland. The results are shown in Table 5-1.
Expanding the amount of corn production increased the amounts of nitrogen, phosphorus, and sediment going into the watershed from a little to a lot, depending on how much additional corn was planted. Conversely, switching to switchgrass led to a decrease in all three. The decrease in the sediments and phosphorus was particularly dramatic—almost 100 percent reduction when all the cropland was converted to switchgrass. The decrease in nitrogen was much more modest—only 11 percent with total conversion to switchgrass.
TABLE 5-1 Water Quality Effects of Switchgrass Versus Corn
|Scenario||Nitrogen Change||Phosphorus Change||Sediment Change|
|Baseline||76% corn/soybean, 17% grassland, 4% forest, 2% retired cropland, 1% urban||—||—||—|
|Corn Expansion||1. Convert retired cropland to corn (2% increase)||4%||5%||7%|
|2. Convert all current grassland to corn (18% increase)||33%||33%||44%|
|3. Convert all grassland and soybean (96%) to corn||55%||28%||38%|
|Switchgrass (fertilized)||1. 25% of most erodible land converted||–3%||–51%||–63%|
|2. 50% converted||–5%||–71%||–79%|
|3. 100% converted||–11%||–97%||–98%|
NOTE: Data from Schilling et al., 2008.
SOURCE: Kling, 2013.
“The model predicts a relatively small reduction in nitrogen relative to some of the other studies that have been done,” Kling said, “and I think the main difference is the amount of fertilization you assume would be done if switchgrass is being grown for commercial purposes. If you put prairie grasses out there and don’t treat them as a commercial product, of course you wouldn’t fertilize. But if you fertilize them to the amount that is going to be the most efficient for commercial profit making, then you’re still going to put nitrogen fertilizer on, and you’re still going to get some runoff. So, that’s the source of the difference.”
In another study, Kling and her colleagues examined the possibilities of using switchgrass as a way to reduce flood risk. Because it is a perennial, switchgrass is very good at holding water on the land, she said, and the analysis found that planting switchgrass in place of corn over 50 percent or 100 percent of the cropland would reduce the risk of flooding significantly, with a much larger reduction in the 100 percent conversion scenario (Kling et al., 2011).
Kling began her summary by asking, Is switchgrass the answer? That depends, she said, on the question. “If the question is how we best use our land to produce the most valuable mix of food and fuel and environmental services, then we want to think broadly about water quality, greenhouse gases, the value of food, the value of energy, and everything else … and not get focused just on greenhouse gases or just on hypoxia or any particular thing. And in that case the answer is: maybe.”
The bottom line, Kling said, is that in deciding what to grow, where to grow it, and what to use it for, there will always be trade-offs. “We have only a fixed amount of land, and we have to decide what’s the most productive and valuable way of using that land, and we need to account for all of the externalities that are out there. Switchgrass has some good features. Corn has some good features. We’re probably going to end up wanting a mixture of the two if we can ever get second-generation biofuels to be productive.”
Finally, she offered a number of take-home points:
• Water quality is a big problem, and row-crop agriculture (corn and soybeans) is a major cause of water degradation.
• Failure to price or regulate the externality has had the expected results, that is, there is more of the product than there would be if the externality was appropriately priced.
• Second-generation biofuels have great potential, but much is still unknown: Fertilization? Field performance?
• Trade-offs between alternative products coming from fixed land are inevitable.
• Well-functioning markets do a great job of allocating resources to their highest value, but not when unpriced externalities exist, such as greenhouse gases and water pollution.
• Externalities need to be priced (or, equivalently, capped or regulated) to correct the problem.
• It is best not to identify the best specific approach, but instead to create clear market incentives to achieve outcomes.
In the discussion session following Kling’s presentation, an audience member began by asking Kling how she would go about putting a price on the various externalities in order to make sure that the market prices of the various biofuels options reflected their true costs.
Kling responded that she would use economic tools for nonmarket valuation. As an example, she briefly described work she has done in Iowa on the value of reducing the amounts of nutrients in lakes. “The way we’ve done that is to take information from people on how often they visit lakes of low water quality and high water quality,” she said. “They drive further and spend more time and money to go to lakes of high water quality.” From that information, using statistical analyses, she deduced the monetized value of having lakes with better water quality.
James Bartram of the University of North Carolina at Chapel Hill, next asked Kling whether there were generally setbacks between the cornfields and adjacent bodies of water, as the use of setbacks has been one approach to reducing runoff from the fields into the streams and rivers. No, Kling said, there are no setbacks. “Since the price of corn has gone up, you can drive through Iowa and see where people used to keep some distance between rivers and now they plant right on down. There are no requirements of setbacks.”
Bartram followed up by suggesting that it might make sense to reintroduce setbacks but to use them to plant switchgrass so that the land used for switchgrass would still be used for producing feedstock for biofuels. It would be a way of “having the cake and eating it too.”
Kling said such things have been talked about. Once cost-effective ways are found to make biofuels from switchgrass, the question is where to plant
the switchgrass, given that the land there is very productive for growing corn. One approach would be to take land that is marginal for growing corn along with land that should be taken out of production for environmental purposes, such as the setback land, and put switchgrass there. However, she said, “The economics of it are really, really, really hard because not only do you have to figure out how to make the switchgrass work, but then you have to make it work in the hardest circumstance possible—when the feedstock is all spread out.” So, yes, she said, that is the hope, but she thinks that it is not just 5 years away. “I’m afraid that one is 25 years away.”
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EPA. 2013b. The Mississippi-Atchafalaya River Basin (MARB). Available at http://water.epa.gov/type/watersheds/named/msbasin/marb.cfm (accessed July 29, 2013).
Kling, C. 2013. Water quality: Corn vs. switchgrass (and economics too). Presentation at the Institute of Medicine Workshop on the Nexus of Biofuels Energy, Climate Change, and Health, Washington, DC.
Kling, C., P. Gassman, K. Schilling, C. Wolter, M. Jha, and T. Campbell. 2011. The potential for agricultural land use changes in the Raccoon River Basin to reduce flood risk: A policy brief for the Iowa Flood Center. Presentation at the University of Iowa Hydraulics Laboratory, Iowa City, Iowa.
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