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Opportunities in Energy and Agriculture

Background

Rationale: Shifts in climate that are expected to occur within this century will influence the economy and ecology in Illinois . The DSYNERGY team will work to respond to challenges and opportunities in agriculture that result from global climate change and changing energy markets. Events taking place at the local, national and international level in response to these changes are already influencing our agricultural reality. "Carbon credits are traded on international markets through the Sydney Stock exchange," explained principal investigator, Michelle Wander. "This greatly strengthens the viability of parallel programs to reward carbon sequestration in the United States ." Wander noted timely research and development activities could position Illinois as a leader in agriculturally based carbon sequestration and carbon trading. The ability to sequester carbon in Illinois cropping systems will depend on the identification and development of cropping strategies that are compatible with economic opportunities. Land-use strategies that reduce the frequency of land cultivation and increase crop diversity and the use of rhizomatous perennial grasses have the ability to increase soil carbon sequestration while providing income as a source of biofuel. These strategiesalso provide additional ecosystem services such as decreased movement of sediment and nitrogen to waterways. Creative efforts are needed to document the potential value of perennial biofuels to farmers and to the environment and to commercialize carbon credits.

Description: Miscanthus x giganteus (elephant grass) has been identified as a highly promising biomass crop for energy production. The project will look at its economic potential for Illinois farmers..

Three one-tenth-acre plots of Miscanthus will be planted in the Dudley Smith farming systems project. First-year results from the field comparison will be used in economic feasibility studies and in validating model projections of Miscanthus biomass growth, based on studies throughout Europe . The rhizomes planted for the study were propogated as part of a parallel production study supported by C-FAR, led by Emily Heaton, Steve Long and Tom Voigt.

The biomass projections will serve as critical inputs in a pair of reports on the potential economic impact of Miscanthus x giganteus on Illinois agriculture. The first study will focus on farm-level cost-benefit analysis of planting perennial biofuel crops compared to row-crops and livestock systems. The net value of the biomass will be calculated through published work and communication with local energy companies. The revenues to Miscanthus will be compared to four other land-use options:

  1. corn-soybean rotation
  2. pastures
  3. the potential biofuel switchgrass
  4. the potential biofuels willow and poplar
  5. The second study will examine the environmental benefits of perennial biofuels, namely carbon sequestration, erosion abatement, and improved water quality, and the potential value of those attributes to society. The full value of perennial biofuels to society is not thoroughly internalized in the price paid for biomass. Because of its perennial habit, low fertilization requirements, and its ability to substitute for coal, Miscanthus production generates less environmental pollution than conventional row-crop agriculture.

    Analysis: The project will attempt to answer several questions.

    1. What are the costs and benefits to farmers of growing biofuels such as Miscanthus and switchgrass given existing demand, production techniques, and Illinois growing conditions? "We will compare these to the net profits that farmers can obtain from row-crop agriculture and examine scenarios of output and input prices under which biofuels could be profitable," said Wander. "We will also compare the social costs and benefits of growing biofuels relative to row crops." Benefits include carbon sequestration in soils, while costs include chemical run-off and erosion caused by crop production.
      "Environmental economists have used a number of techniques to try and assign prices to these non-market goods and services, including costs of remediation and individual willingness-to-pay calculations from surveys," said Khanna. "While a wide range of estimates is likely to exist for these social costs and benefits, we will provide appropriate estimates for the state of Illinois based on a review of the literature."
    2. How much are environmental outcomes affected by the conversion of row-crop agriculture to Miscanthus?
      Part of this calculation-CO2 emissions-is straightforward, in that the amount of carbon Miscanthus fixes in biomass, and then burned, offsets an amount of coal that would have contributed new atmospheric CO2. The other parts of the calculation are not straightforward, especially for a poorly studied crop for which few datasets exist. Models such as EPIC are frequently used to generate estimates of changes in erosion, greenhouse-gas emissions, or chemical leaching.
      "We will combine findings from European research on Miscanthus with experimental and modeled data in the literature on soil and pollution changes induced by conversion to perennial grasses to provide reasonable estimates of the off-farm value of adopting biofuels," said Wander. "We will use the results of the studies as the foundation for new proposals to identify the value of marginal increases in organic matter."
    3. Assuming that biofuels are not yet as profitable as row-crops without a carbon credit, what price for carbon will make it as profitable? A rough estimate of this answer will be supplied by the farming system cost-benefit analysis of the first study.

    Education and Outreach: Illinois is becoming a leader in the development of Miscanthus as an alternative crop. To facilitate future breeding and identification efforts, a germplasm collection will be established on campus, the first such collection in the U.S. Fall 2002 Field Days will expose visitors to the potential for Miscanthus.

    1. Dudley Smith Farm
    2. Monticello , led by John Caveny and Steve Long.

    To increase the impact of these two events, the AgriFirst project and DS Energy will share in bringing two of the world's leading experts on the crop, Dr. Michael Jones and John Clifton-Brown, both of Trinity College , Ireland , to speak about the impact Miscanthus is having on European agriculture and its potential here.

    Fall 2002 Conference

    Madhu Khanna is organizing a national Conference on Climate Change and Environmental Policy on the campus of the University of Illinois . With its obvious implications for biofuels, the DS Energy group will be bringing David Zilberman, a leading environmental economist, to present at the conference. Several team members will also give presentations: Madhu Khanna will give a talk on the economics of ethanol policy for CO2 abatement, and Michelle Wander and Todd Nissen will present, "The Value of Soil Organic Carbon." Steve Long and Emily Heaton will present "Herbaceous perennial biomass crops as a source of renewable energy".