Balancing Bio-Energy Cropping Benefits and Water Quality Impacts: A Dynamic Optimization Approach

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1744-7976.2010.01201.x Byline: Mark E. Eiswerth (1), G. Cornelis van Kooten (2) Abstract: The relationship between bio-energy feedstock production and water quality has received little attention from economists. Here, an optimal control model is used to determine the optimal amount of land to convert to the production of energy feedstocks, specifically ethanol corn, taking into account potential impacts on water quality. Based on comparative static analyses of an optimal control model, and a numerical application, we find that the optimal proportion of land to shift into bio-energy production from a baseline use, such as the Conservation Reserve Program, depends on key model parameters, specifically the rate of degradation of the pollutant and the link between the intensity of bio-energy feedstock production and the rate of change in the pollutant stock. Yet, there is a limit to how much land should optimally be converted as society must trade-off its desire to mitigate climate change against its willingness to accept a decline in water quality. Le lien entre la production de matieres premieres bioenergetiques et la qualite de l'eau a attire peu d'attention de la part des economistes. Nous avons utilise un modele de controle optimal pour determiner les superficies optimales a convertir a la production de matieres premieres energetiques, en particulier le mais destinea la production d'ethanol, en tenant compte des repercussions potentielles sur la qualite de l'eau. D'apres une simulation numerique et des analyses de statique comparative obtenues a l'aide d'un modele de controle optimal, nous en sommes venus a la conclusion que les superficies optimales a convertir a la production de matieres premieres bioenergetiques a partir d'un instrument de reference, tel que le Conservation Reserve Program (Programme de reserve des terres sous conservation), depend des parametres cles du modele, particulierement du taux de biodegradation des polluants et du lien entre l'intensite de la production de matieres premieres bioenergetiques et le taux de variation du stock de polluants. Il existe tout de meme une limite quant aux superficies a convertir etant donne que la societe doit faire un choix entre son desir d'attenuer le changement climatique et son acceptation d'une diminution de la qualite de l'eau. Author Affiliation: (1)Department of Economics, University of Northern Colorado, 501 20th Street, Campus Box 101, Greeley, CO 80639 (corresponding author: phone: 970-351-2094; fax: 970-351-4296; e-mail:Mark.Eiswerth@unco.edu). (2)Department of Economics, University of Victoria, P.O. Box 1700, Stn CSC, Victoria, BC, Canada V8W 2Y2 (phone: 250-721-8539; fax: 250-721-6214; e-mail:kooten@uvic.ca).