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?