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Attention Iowa: Your Ethanol Subsidies Have Little Economic or Environmental Justification

1 min readBy: Gerald Prante

As if the massive subsidy checks to farmers (are you listening, Iowa?) that the U.S. government sends out every year needed any more evidence of their stupidity, a new study from Princeton researchers shows that ethanol may actually lead to twice as much greenhouse gas emissions as the fossil fuel energy it is supposed to “replace.” In other words, any positive externalityAn externality, in economics terms, is a side effect or consequence of an activity that is not reflected in the cost of that activity, and not primarily borne by those directly involved in said activity. Externalities can be caused by either production or consumption of a good or service and can be positive or negative. justification for the massive level of ethanol subsidies for allegedly promoting environmental-friendly energy consumption should be viewed with skepticism. Here’s the story courtesy the Associated Press:

The widespread use of ethanol from corn could result in nearly twice the greenhouse gas emissions as the gasoline it would replace because of expected land-use changes, researchers concluded Thursday. The study challenges the rush to biofuels as a response to global warming.

The researchers said that past studies showing the benefits of ethanol in combating climate change have not taken into account almost certain changes in land use worldwide if ethanol from corn — and in the future from other feedstocks such as switchgrass — become a prized commodity.

“Using good cropland to expand biofuels will probably exacerbate global warming,” concludes the study published in Science magazine.

The researchers said that farmers under economic pressure to produce biofuels will increasingly “plow up more forest or grasslands,” releasing much of the carbon formerly stored in plants and soils through decomposition or fires. Globally, more grasslands and forests will be converted to growing the crops to replace the loss of grains when U.S. farmers convert land to biofuels, the study said.

2006 Statistics courtesy of BEA:

Welfare Spending for Farmers (agriculture subsidies) = $16.6 billion
Welfare Spending on TANF (traditional “welfare” program) = $18.2 billion