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An Exploration of Certain Aspects of CARB’s Approach to Modeling Indirect Land Use from Expanded Biodiesel Production

This report provides insight into four aspects of modeling indirect land use caused by expanded biofuels production. The report was motivated by the National Biodiesel Board's interest in better understanding how the California Air Resources Board (CARB) estimated an indirect land-use factor for soybean-based biodiesel of 66 gCO2e/MJ, which is more than three times greater than the direct emissions from the fuel. Four aspects of CARB's modeling approach were examined: (1) why CARB estimates that more U.S. forest than pasture will be converted to cropland; (2) whether CARB's predicted land-use changes are consistent with observed U.S. land-use changes in the past decade; (3) how CARB could account for double cropping; and (4) whether CARB's assumption that land brought into production has lower yields than land that was already in production. Results indicate that (1) much of the predicted U.S. forestland conversion is likely due to restrictions on cross-price elasticities imposed by use of the Constant Elasticity of Transformation supply function; (2) a stock of idled cropland could have accommodated the increase in U.S. cropland in 2007 and 2008; (3) the soybean yield elasticity with respect to price can be adjusted to account for double-cropped acres; and (4) there is no empirical support for the assumption that yields in Brazil on new land are lower than yields on old land. The analysis shows how much work needs to be done in this area if the models used to estimate indirect land use are to become widely accepted.