Mandates, like the renewable fuel standard (RFS), for biofuels from corn and cellulosic feedstocks, impact the environment in multiple ways by affecting land use, nitrogen (N)-leakage, and greenhouse gas (GHG) emissions. We analyze the differing trade-offs these different types of biofuels offer among these multi-dimensional environmental effects and convert them to a monetized value of environmental damages (or benefits) that can be compared with the economic costs of extending these mandates over the 2016–2030 period. The discounted values of cumulative net benefits (or costs) are then compared to those with a counterfactual level of biofuels that would have been produced in the absence of the RFS over this period. We find that maintaining the corn ethanol mandate at 56 billion l till 2030 will lead to a discounted cumulative value of an economic cost of $199 billion over the 2016–2030 period compared to the counterfactual scenario; this includes $109 billion of economic costs and $85 billion of net monetized environmental damages. The additional implementation of a cellulosic biofuel mandate for 60 billion l by 2030 will increase this economic cost by $69 billion which will be partly offset by the net discounted monetized value of environmental benefits of $20 billion, resulting in a net cost of $49 billion over the 2016–2030 period. We explore the sensitivity of these net (economic and environmental) costs to alternative values of the social costs of carbon and nitrogen and other technological and market parameters. We find that, unlike corn ethanol, cellulosic biofuels can result in positive net benefits if the monetary benefits of GHG mitigation are valued high and those of N-damages are not very high.

Demand for biofuel production driven by the Renewable Fuel Standard (RFS2) has coincided with increased land in corn production and increasing nitrogen (N) loss to the Gulf of Mexico. Diversifying cropland with perennial energy crops (miscanthus and switchgrass) may reduce N loss and improve water quality. However, the extent of these benefits depends on the mix of biomass feedstocks (corn stover, perennials) incentivized by the RFS2 and the extent to which energy crops displace N-intensive row crops. We developed an integrated economic-biophysical model to quantify the water quality impacts of three potential policy scenarios that provided corn ethanol at levels before the RFS2 (RFS1 baseline); 15 billion gallons of corn ethanol (corn ethanol only); or 16 billion gallons of cellulosic ethanol in addition to corn ethanol (corn + cellulosic ethanol). Our results showed that economically optimal locations for perennial energy crop production were distributed across idle cropland with lower intrinsic N loss than active cropland. We found stover removal incentivized by the RFS2 offset N loss benefits of perennial energy crops. This finding suggests that targeted incentives for N loss reduction are needed to supplement the RFS2 to induce displacement of N-intensive row crops with energy crops to reduce N losses.

The student author, whose presentation of the scholarship herein was approved by the program of study committee, is solely responsible for the content of this dissertation. The Graduate College will ensure this dissertation is globally accessible and will not permit alterations after a degree is conferred.

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