Biofuels and the Law of Unintended Consquences

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An increasing number of scientists and activists are raising concerns about the impact of biofuel production. The ethanol boom has its roots in a corn surplus that depressed prices – now, shortages of corn are causing food prices to skyrocket and there’s a fear that high commodity prices are pushing farmers to expand cropland. The resulting deforestation is releasing more carbon than the biofuels are saving:

There was just one flaw in the calculation: the studies all credited fuel crops for sequestering carbon, but no one checked whether the crops would ultimately replace vegetation and soils that sucked up even more carbon. It was as if the science world assumed biofuels would be grown in parking lots. The deforestation of Indonesia has shown that’s not the case. It turns out that the carbon lost when wilderness is razed overwhelms the gains from cleaner-burning fuels.

This situation illustrates the Law of Unintended Consequences. This law, which is more like Murphy’s Law than a scientific maxim, states that “for any action one can conceive, there will always be results that were not predicted.” For example, when city planners first came up with suburbs, they expected these housing developments would reduce traffic and overcrowding in downtown areas. Instead, many of these suburbs made traffic worse because they increased the size of the workforce commuting into downtown.

As with anything ethanol related, there’s some controversy about whether ethanol use is what’s driving up the price of corn, or whether the cost rise is driven by population growth and global wealth. As consumers in Asia and India develop disposable income, we’re seeing a sharp rise in the consumption of animal protein. The residents of third-world countries are developing an appetite for more meat, which means that the cost of grains will continue to rise (because raising chickens, pigs, cows, and other farm animals consumes a lot of feed).

There’s some symmetry to the Law of Unintended Consequences – the ethanol boom itself may have been created by accident. According to, corn prices were historically about $2.50 a bushel after adjusting for inflation. It was only after changes in US law drove down the price of corn that it became an affordable feedstock for ethanol plants:

Nominal corn prices have been low and declining since the 1996 Farm Bill shifted U.S. commodity policy to promoting over-production.

The oversupply of corn created a decline in value, which, in turn, led farmers to seek new markets (such as ethanol) and pressure their representatives in Congress to subsidize these markets. So, by this line of reasoning, the 1996 Farm Bill led to a sharp increase in the price of per bushel. There’s some tasty irony for you.

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