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The Economic and Ecosystem Benefits of Biofuels: Insights from Integrated Economic-Ecosystem Models

Madhu Khanna, Distinguished Professor of Environmental Economics, Department of Agricultural and Consumer Economics, University of Illinois, Urbana-Champaign

Oct 12 2020 | 11:00am to 12:00pm PST Online

Madhu Khanna stands in a classroom
Madhu Khanna

Dr. Madhu Khanna has worked on interdisciplinary topics ranging from technology adoption and agro-environmental policy analysis to voluntary approaches to environmental protection. Her work explores the trade-offs of various policy approaches to improve environmental quality and their economic implications for farm profitability, land use, and food and fuel production. Come listen to an amazing interdisciplinary talk that weaves together economic and ecosystem modeling to uncover the environmental and economic implications of biofuels!
— Albert Garcia, Bren School PhD Student


Biofuels from corn and cellulosic feedstocks impact the environment in multiple ways by affecting land use, nitrogen (N)-leakage and greenhouse gas (GHG) emissions. High-resolution satellite imagery and spatially resolved ecosystem models can quantify the potential for achieving these ecosystem benefits. These different types of biofuels also differ in their economic impacts on food and fuel prices and costs on consumers and producers. We analyze the differing trade-offs these different types of biofuels offer among these multi-dimensional environmental and economic effects by integrating an economic and ecosystem model. We convert the ecosystem impacts to a monetized total value of environmental damages (or benefits) that can be compared with the economic costs of meeting biofuel mandates over 2016-2030 period. The 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 mandates.  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 of N-damages are not very high.


Dr. Madhu Khanna is the ACES Distinguished Professor of Environmental Economics in the Department of Agricultural and Consumer Economics and Interim Director of the Institute for Sustainability, Energy, and Environment, at the University of Illinois at Urbana-Champaign. She is also the Theme Leader for the Sustainability Theme in the Center for Advanced Bioenergy and Bioproducts Innovation at the University of Illinois, Urbana-Champaign. She received her PhD from the University of California at Berkeley. She is a Fellow of the Agricultural and Applied Economics Association, a University of Illinois Scholar and a Leopold Leadership Fellow of the Woods Institute at Stanford University. She is also the President-Elect of the Agricultural and Applied Economics Association.

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