The dynamics of land use change associated to biobased

products: focus on the economic effects

Diego Marazza1, Enrico Balugani2, Roberto Porcelli2
1
Department of Physics, University of Bologna, Viale B. Pichat 6/2, 40127 Bologna, Italy
2
University of Bologna-CIRSA, Via S.Alberto 163, 40123 Ravenna, Italy

1. Introduction
Biobased products include a vast range of traditional and innovative materials and substances based on
biological base for purposes other than food and energy such as wood, composites, bio-plastics, adhesives,
lubricants, paints and many other material categories feeding large economic activities. There is international
recognition that developing a climate-smart biobased economy is essential to the continuation of economic
development, reduction of greenhouse gas emissions, and adaptation to climatic change. However, as
biobased products are ultimately obtained from land or sea, a specific attention has to be paid when
considering additional exploitation.
Changes of land/sea uses can indeed rebound and cancel out environmental performances and the original
purpose of sustainability. Particular focus has been placed at the time of biofuels expansion upon t he Indirect
land use change (ILUC), an unintentional, negative, displacement effect of commodities in the primary
sector, such as agriculture, causing additional land use changes. Provided that ILUC depends on specific
legacy effects stemming from land condition prior and after land use changes, overall indirect effects are
connected to the 1.1 billion tons of greenhouse gases per year generated because of land use changes.
However the application of ILUC provisions for biofuels has been and stays controversial [1].
The Project STAR-ProBio is a multi-actor collaborative research and innovation action and supports the
European Commission in the full implementation of European policy initiatives, including the Lead Market
Initiative in biobased products, the industrial policy and the European Bio-economy Strategy. One of the
specific goals calls for identifying and mitigating the risks of negative ILUC effects associated to production
routes for biobased products. In order to do so, a dynamic model able to evaluate the ILUC risk related to
future projection of biobased market growth has to be implemented. This model should be flexible and simple
enough to be applied to different case studies and integrated in a certification scheme.
In this contribution the authors present a bespoke system dynamic model, and the results of the identification
of risk factors obtained from the analysis of economic models.

2. Materials and methods

Equilibrium Economic Models (EEM) used to describe changes in supply and demand of displaced
commodities have been analysed and the variables affecting LUC have been identified. Among the first EEM
used to predict LUCs was the economic Global Trade Analysis Project (GTAP), a static computable global
equilibrium model adopting a specific approach reflecting imperfect substitutability of products across regions
[2]. Building on that, cause-effects described in the model have been first identified and then represented
through stock and flow diagrams using the system dynamics convention [3] as shown in Figure 1. Moreover,
since the model developed in this study is a partial equilibrium (PE) model, the cause-effects relationships
were checked against the CAPRI model (PE) [4]. The output of biobased products has been connected to
land transformation and to related economic, biophysical as well as agronomic factors. All stocks are then
represented by differential equations that results from formulating a law of balance in instantaneous form,
augmented by the initial value of the accumulating quantity (Euler form). The conceptual model has been
compared to the state of the art of models used to assess the trade of agricultural commodities to verify that
all cause-effect links are caught. Finally, the conceptual model was implemented in a system dynamic model
by using the Simantics SysDyn software [5], and a specific case study based on production of
PolyButyleneSuccinate - a hard durable bioplastic - from corn has been prepared in order to conduct a
sensitivity analysis to rank the risk factors with respect to the output of the GTAP model.
3. Results and discussion

3.1. Conceptual model

The conceptual model is represented by Figure 1. It consists of 5 main flows and related stocks: 1) biobased
products and optionally co-products, 2) feed, 3) food, 4) raw biomass, 5) land (transformed land). These are
controlled by variables ultimately affecting land consumption and can be related to a specific policy target
and varying conditions such as employing co-products, cascading processing and/or growing novel crops
over abandoned or non-productive agricultural lands. Since the literature review on ILUC modelling for the
biofuel market shown that the main sources of uncertainties are both the proper allocation of the ILUC effect
spatially in the world and the greenhouse gas emission estimates, it was decided to model only the change
in New CropLand Demand (@NCLD) directly related to increase in biobased production. From @NCLD it is
possible to estimate the ILUC risk related to a certain production process for the biobased market.

Figure 1: ILUC risk evaluation conceptual model of biobased products (bb-products), consisting of stocks (rectangles),
variables (circles) and causal links (connections).

1.1. Most relevant processes

Factors influencing ILUC risk have been identified by running the model and performing a sensitivity analysis
on the model; factors are listed in Table 1.
Risk factor Short description u.m. effect
Prospective Predicted trend of the yield for a specific crop (corn) t/ha*y O
yields
Crop Prices Effect of crop prices on the demand of the most representative USD/t O
and interdependent market (feed)
Co-products co-products (by-products) obtained in the processing of tcoproduc/tproduct O
biobased products which may be able to substitute agriculture
commodities in the interdependent markets (food and feed)
Table 1: sample of risk factors included in the model developed and effect on ILUC . 1

The effects of these factors on ILUC – measured as @NCLD - can be either opposite (O) or same (S); e.g.: if
prospective yields are growing the @NCLD decreases (O-opposite effect). Some important assumption made
during the formulation of the model are: that the global market for corn can be considered at equilibrium
when averaged over a year; that the average land price has no effect on the competition between
intensification and extensification of cropland; and that crop price is mainly determined by the global
equilibrium between supply and demand of the specific crop. The elasticities for the crop, raw biomass,
yields, feed and food were calibrated and validated on FAOSTAT data (two subsets) for the period 1961-
2001. The whole model was, then, validated against the data for the period 2001-2016; the latter validation
showed @NCLD estimation errors within a 5% margin.
The sensitivity analysis conducted on the model showed that the main processes influencing @NCLD are: (a)
the projection of future crop yields; (b) the change of crop prices; and (c) the co-product utilization. Global
crop yields are not affected significantly by crop prices; rather, they increase linearly in time. The future
projection of this trend has a strong effect on @NCLD, but it is very difficult to predict: soil erosion, depletion
of soil organic carbon, improvements of the global yield gap, new scientific breakthroughs, and geopolitics all
play a role. Crop price influences the feed sector, which is the main market for the biomass; higher prices
result in lower demands for feed, reducing the ILUC risk. Finally, most of the by-products of crop processing
can be used to fulfil the demand for feed, thus reducing the crop consumed by that sector.

4. Conclusions
The results show that:
1. It was possible to build a simple, flexible system dynamic model with transparent assumptions.
2. The model calibrated and validated reasonably against FAOSTAT data showed estimation errors
within a 5% margin.
3. The risk-based approach allows for the reduction of uncertainty related to ILUC estimates and can
be used for policy-making and certification purposes.
In the future, different land use practices will be included in the model, and then each risk factor will be
assigned a weight and linearised for inclusion in a simplified equation used for certification purposes. The
final result would be an index measuring an ILUC risk on a qualitative base, such as “low-medium-hight” or
on a 1-to-5 scale.

5. References

[1] Muñoz I, Schmidt JH, Brandão M, Weidema BP. 2015. Rebuttal to “Indirect land use change (iLUC) within
life cycle assessment (LCA) - scientific robustness and consistency with international standards.” GCB
Bioenergy.;7(4):565–6.
[2] Hertel TW, Golub AA, Jones AD, O’Hare M, Plevin RJ, Kammen DM. 2010. Effects of US Maize Ethanol
on Global Land Use and Greenhouse Gas Emissions: Estimating Market-mediated Responses.
Bioscience .;60(3):223–31.
[3] Fuchs HU. 2006. System Dynamis Modelling in science. Syst Dyn Conf Univ Puerto Rico.
[4] Britz, W. and Witzke, P. 2014. CAPRI model documentation 2014. Online at https://www.capri-model.org/
docs/capri_documentation.pdf.
[5] http://sysdyn.simantics.org/

Acknowledgement – This project has received funding from the European Union’s Horizon 2020 Research
and innovation action under grant agreement No 727740.