Dear Brett,
You are to be commended on selecting an interesting and complicated topic for your research. Some brief, and probably incomplete, answers...
At 12:05 PM 9/3/2008, you wrote:
Dr. Merry - I am a student at the University of Kansas, and am doing an extensive study of the impact of US agricultural subsidies and support. One area that is of keen interest to me is the support to the domestic biofuel sector - specifically, the tariff on imported sugarcane ethanol from Brazil. I'm considering writing a policy proposition, and am hoping that you will have some thoughts or guidance.
First, do you think that lifting the tariff would have a negative impact on the Amazon? Even if farmers don't grow directly on Amazonian land, does expanded demand have the potential to push cattle ranchers or small farmers into the Amazon?
No, I don't think lifting the tariff will have a massive direct negative impact on land use in the Amazon. This is mostly because there are barriers or conflicts that may dampen the direct link between the ethanol tariff and land use in the Amazon.
Some questions that lead to uncertainty in the land use response would be something along the lines of....How much of the US market share can the Brazilian producers expect to capture? How will removal of tariffs affect the demand for ethanol? How will this reflect in local prices for this and alternative products for that land area, as well as for market substitutes?
Secondly, while there will be a strong push in the future for ethanol from sugarcane, there is a large productive area to be used and there are efficiencies in cattle production (in particular) that may increase intensity from 1 to 2 or 3 head per ha. So the impact will not be a replacement of 1 ha of added sugarcane for one ha of forest. While we may see additional pressure, the markets for carbon credits, stronger governance, and better monitoring will all play into determining the eventual land use change (or status).
Second (and probably contingent), should the United States establish a form of quid pro quo with the Brazilian government? I haven't seen much literature on this, but it seems like the United States could make a reasonable demand that: "we will only lift the tariff if you agree to increased protection of the Amazon against agricultural invasion." Do you think that this is feasible, and what do you think the reaction of the Brazilian government would be?
I think that this would be absolutely infeasible. How would you measure it? It is inefficient from an economic perspective and finally, given that the US is the largest emitter of greenhouse gasses, a difficult negotiating position.
best wishes,
Frank
Tuesday, September 16, 2008
Email Conversation #1
Dear Brett:
Lifting the tariff on imported sugarcane ethanol from Brazil could, indeed, result in displacement of cattle ranches in the cane-growing regions, pushing ranching into the Amazon region. However, that also may be happening as a result of US subsidies for corn-ethanol. US soybean production has decreased in the USA in order to meet demand for corn, and Brazil has responded with increased soybean production, which potentially has the same effect on the Amazon as expanding cane production. If the cane-ethanol tariff is removed, would corn-ethanol become less competitive, so that more soybeans would be planted in the USA again? In my opinion, corn-ethanol should not be subsidized either directly, or indirectly through tariffs on cane-ethanol. Removing the tariff would remove at least one contributor to the perverse incentives currently present to grow corn for ethanol. Intensification of cattle production in Brazil is another opportunity to meet current and rising demand for meat without requiring new forest clearing. To some extent, this is already happening. My guess is that the Brazilian government would react very negatively to a quid quo pro. They are very sensitive about sovereignty, and especially about foreign meddling in the Amazon. Modified market forces, such as demand for soybeans and cane products that are grown with best management practices, are emerging now. Also, the Reduced Emissions from Deforestation and Degradation (REDD) process is now developing, that may provide an additional market incentive to maintain forest carbon. Perhaps a negotiating strategy for the new US administration might be to work towards Brazil's cooperation with REDD negotiations in return for reducing cane import tariffs. That may be naive, wishful thinking on my part, but it would make sense. If you are willing to share any of the output of your study, I'd be delighted to see it. Good luck, Eric
Eric A. Davidson Senior Scientist The Woods Hole Research Center 149 Woods Hole Road Falmouth, MA 02540-1644 USA 508-540-9900 ext 132 508-540-9700 (FAX) edavidson@whrc.org http://www.whrc.org
-----Original Message----- From: Bricker, Brett Jacob [mailto:bbricker@ku.edu] Sent: Wednesday, September 03, 2008 12:09 PM To: edavidson@whrc.org Subject: Ethanol and Impacts on the Amazon Dr. Davidson - I am a student at the University of Kansas, and am doing an extensive study of the impact of US agricultural subsidies and support. One area that is of keen interest to me is the support to the domestic biofuel sector - specifically, the tariff on imported sugarcane ethanol from Brazil. I'm considering writing a policy proposition, and am hoping that you will have some thoughts or guidance. First, do you think that lifting the tariff would have a negative impact on the Amazon? Even if farmers don't grow directly on Amazonian land, does expanded demand have the potential to push cattle ranchers or small farmers into the Amazon? Second (and probably contingent), should the United States establish a form of quid pro quo with the Brazilian government? I haven't seen much literature on this, but it seems like the United States could make a reasonable demand that: "we will only lift the tariff if you agree to increased protection of the Amazon against agricultural invasion." Do you think that this is feasible, and what do you think the reaction of the Brazilian government would be?
Lifting the tariff on imported sugarcane ethanol from Brazil could, indeed, result in displacement of cattle ranches in the cane-growing regions, pushing ranching into the Amazon region. However, that also may be happening as a result of US subsidies for corn-ethanol. US soybean production has decreased in the USA in order to meet demand for corn, and Brazil has responded with increased soybean production, which potentially has the same effect on the Amazon as expanding cane production. If the cane-ethanol tariff is removed, would corn-ethanol become less competitive, so that more soybeans would be planted in the USA again? In my opinion, corn-ethanol should not be subsidized either directly, or indirectly through tariffs on cane-ethanol. Removing the tariff would remove at least one contributor to the perverse incentives currently present to grow corn for ethanol. Intensification of cattle production in Brazil is another opportunity to meet current and rising demand for meat without requiring new forest clearing. To some extent, this is already happening. My guess is that the Brazilian government would react very negatively to a quid quo pro. They are very sensitive about sovereignty, and especially about foreign meddling in the Amazon. Modified market forces, such as demand for soybeans and cane products that are grown with best management practices, are emerging now. Also, the Reduced Emissions from Deforestation and Degradation (REDD) process is now developing, that may provide an additional market incentive to maintain forest carbon. Perhaps a negotiating strategy for the new US administration might be to work towards Brazil's cooperation with REDD negotiations in return for reducing cane import tariffs. That may be naive, wishful thinking on my part, but it would make sense. If you are willing to share any of the output of your study, I'd be delighted to see it. Good luck, Eric
Eric A. Davidson Senior Scientist The Woods Hole Research Center 149 Woods Hole Road Falmouth, MA 02540-1644 USA 508-540-9900 ext 132 508-540-9700 (FAX) edavidson@whrc.org http://www.whrc.org
-----Original Message----- From: Bricker, Brett Jacob [mailto:bbricker@ku.edu] Sent: Wednesday, September 03, 2008 12:09 PM To: edavidson@whrc.org Subject: Ethanol and Impacts on the Amazon Dr. Davidson - I am a student at the University of Kansas, and am doing an extensive study of the impact of US agricultural subsidies and support. One area that is of keen interest to me is the support to the domestic biofuel sector - specifically, the tariff on imported sugarcane ethanol from Brazil. I'm considering writing a policy proposition, and am hoping that you will have some thoughts or guidance. First, do you think that lifting the tariff would have a negative impact on the Amazon? Even if farmers don't grow directly on Amazonian land, does expanded demand have the potential to push cattle ranchers or small farmers into the Amazon? Second (and probably contingent), should the United States establish a form of quid pro quo with the Brazilian government? I haven't seen much literature on this, but it seems like the United States could make a reasonable demand that: "we will only lift the tariff if you agree to increased protection of the Amazon against agricultural invasion." Do you think that this is feasible, and what do you think the reaction of the Brazilian government would be?
Subscribe to:
Posts (Atom)