Saraly Andrade de Sá (University of Geneva) on "Optimal biofuel promotion with land-use inertia"

Pro-biofuel policies are to cause a large expansion of  "semi-perennial"' energy crops (e.g., sugarcane, switchgrass, miscanthus) that exhibit long harvesting cycles (up to 20 years), unlike annual energy crops that need to be replanted every year (e.g., corn). This article shows that semi-perennials introduce inertia in land conversion to energy crops; although empirically observed, this inertia has never been taken into account in the design of pro-biofuel policies. The scientific debate over the net social benefits of biofuel production is progressing but still unsettled. Therefore, I characterize optimal energy crops land allocations in presence of scientific progress. In this context, inertia in land conversion to semi-perennial crops justifies biofuels to be allocated less land when energy crops are semi-perennial than when they are annual, even when identical returns are assumed.