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Impact of biofuel demand on land and water use in the Great Plains

Dereje B Megeressa, University of Nebraska - Lincoln


This dissertation examines the impact of the biofuel policy mandate on land and water use in the Great Plains. The study develops an analytical framework and gives estimates of inputs and output price elasticities. It is organized as follows: Chapter 1 of the dissertation analyses the structure and evolution of the agricultural sectors of three Great Plains states, Oklahoma, Kansas and Nebraska. Its particular objective is to estimate agricultural productivity growth and own and cross price elasticities of demand for farm lands. The study allows us to examine the land use change in the region resulting from higher grain prices. Derived demand elasticities for the farm lands ranges between -0.05 and -0.74. Total Factor Productivity (TFP) growth rate for the region was estimated at 2.06% for the period covering 1960-2004. States exhibited variation with respect to TFP growth rates. Chapter 2 examines the impact of grain prices on crop mix and land use, motivated again by interest in the impacts of the Renewable Fuel Standards (RFS), not only the mandates for grain ethanol, but perhaps even more significantly the mandates for advanced biofuels that target crop residuals as feed stock. Our finding suggests that own and cross price acreage response elasticities are different in irrigated and non-irrigated lands. It may lead to erroneous conclusions to use one for the other. The results also demonstrate how changes in crop prices alter crop mix and create incentives to use pasture lands for crop production. Chapter 3 estimates price elasticities for irrigation water in South Dakota, Nebraska and Kansas. This chapter complements the first two by allowing us to examine the indirect impact of biofuel on water use, rather than just land use. Given the alarming prospects of water scarcity over the coming decades, the result will useful in making appropriate water policy decisions. Own and cross price elasticities of water demand are inelastic. At least in the short run producers' use of water is not very much responsive. But, the finding attests how biofuel policy mandate would affect ground water use in the region.

Subject Area

Environmental economics|Agricultural economics|Land Use Planning|Water Resource Management

Recommended Citation

Megeressa, Dereje B, "Impact of biofuel demand on land and water use in the Great Plains" (2013). ETD collection for University of Nebraska - Lincoln. AAI3559163.