Results indicate that, as expected, cellulosic-ethanol production increases by a substantial amount as conversion technology improves. Corn production initially increases following the introduction of cellulosic technology because producers enjoy new revenue from sales of corn stover. When cellulosic-ethanol production becomes substantially cheaper, however, land use is shifted from producing corn to producing all other agricultural commodities. Essentially, this new technology could facilitate the exploitation of a previously under-employed resource (corn stover).
In general, the results reveal two competing broad effects: a nationwide increase in US purchasing power as less crude oil is imported, and an expansion of the production frontier. As cellulosic technology is introduced at initially higher costs, the former effect dominates, resulting in increased coarse-grain production. This is due to the fact that the US is a large importer of crude oil and a large exporter of corn, and that cellulosic-ethanol production would provide even more returns to corn producers. Although such a scenario benefits US consumers, it is detrimental to the environment (at least to the extent that it is affected by intensive coarse-grain production) and worldwide food insecurity. As cellulosic technology becomes available at a much lower cost, the latter effect becomes dominant – we are simply able to produce more with less – with beneficial effects for US and worldwide consumers.
That cellulosic-conversion technology could initially exacerbate, rather than relieve, competition between food and fuel uses for agricultural output is a novel result. Additional research will examine the impact of cellulosic-ethanol production on the global agricultural economy as well as the potential implications for worldwide food insecurity.