Evaluating sustainability options in an agricultural frontier of the Amazon using multi-criteria analysis

Agricultural expansion and deforestation in the Brazilian Amazon are driven by a complex interaction between economic and demographic drivers and institutional constraints. Land use policies such as Conservation Units and the Forest Code law should conserve biodiversity and other environmental aspects while, on the other hand, increasing commodity prices of beef and soy, driven by world markets provokes economic growth and expansion of the agricultural area. We carried out an impact assessment in eleven municipalities within an agricultural frontier along the road BR-163 that runs in the Brazilian Amazon states of Mato-Grosso and Pará. The impact assessment, covered a period between 2008 and 2020, showed that the autonomous development in the study area results in a strong increase in the performance of economic indicators but a reduction in environmental and some social indicators. The studied conservation policies are able to reduce negative environmental impacts to some extent, while hardly affecting economic and social indicators. The multi-criteria analysis (MCA) showed a trade-off relation between the economic and environmental dimension in such a way that the effect was much stronger in the high commodity price scenario than in the low price scenario. The policy implications of the MCA results are discussed in light of the institutional capacity of the Brazilian States under study, to implement effective conservation policies.     

A model of shifting cultivation: can soil conservation reduce deforestation?

Shifting cultivators manage soil not only by adjusting soil use on already‐cleared lands, as in continuous cultivation, but also by clearing forests to obtain new fertile soils. This study examines the crucial link between on‐farm soil conservation and deforestation in shifting cultivation by modeling forest clearing as an investment in soil for a private farmer. More generally, by doing so the study attempts to integrate deforestation and soil conservation models which have been separately developed in the literature. Our policy goal is to arrest tropical deforestation—as destruction of global commons—caused by land degradation in shifting cultivation while improving the well‐being of poor shifting cultivators. Our integrated approach enables joint policy analyses of deforestation and land degradation. Three welfare‐enhancing policies are considered. The first is agricultural and nonagricultural subsidies affecting farm and nonfarm income opportunities. The second is fiscal and tenure policies affecting discount rates. Our question is whether the link between forest clearing and soil fertility alters the outcomes of these two standard macroeconomic policies commonly found in the literature. The third policy (or program) is various soil conservation measures affecting soil regeneration and erosivity on already‐cleared lands. This article examines a very important question which has received little attention in previous theoretical works: can soil conservation reduce deforestation? This study confirms anti‐deforestation effects of the promotion of nonfarming activities—a common and often emphasized finding in previous works—among shifting cultivators. More importantly, it also demonstrates that improving various soil conservation measures not only discourages forest clearing among shifting cultivators but also tends to have greater effects on forest protection than promoting nonfarming activities. Contrarily, agricultural price subsidy or technological progress gives rise to the opposite outcome, and lowering the farmer's discount rate or improving tenure security encourages him/her to clear more forests just to accumulate soil.     

Compensating for past deforestation: Assessing the legal forest surplus and deficit of the state of Pará, eastern Amazonia

Up to 80% of each private rural property in the Brazilian Amazon is protected by law through the Legal Reserve (LR) mechanism of the federal Forest Code, underlining the conservation importance of forests on private lands in one of the world̿s most important biomes. However, our understanding of the discrepancies in levels of forest protection on private lands as obligated by the law versus what occurs in practice remains very poor. We assessed patterns of forest cover and legal compliance with the Forest Code in the 1.25 Mkm² Brazilian state of Pará, which has the highest deforestation rate in the Amazon. We evaluate the LR deficit and surplus patterns for different sized properties and across 144 municipalities, and found that the total LR surplus (12.6 Mha) was more than five times the total area of deficit (2.3 Mha). Yet, from the total surplus, only 11% can be legally deforested while the remaining 89% is already protected by law but can be used (sold or rented) to compensate for areas that are under deficit. Medium and large-scale properties make up most of the total LR deficit area, while agrarian reform settlements had comparatively large amounts of both compensation-only surplus and deforestable surplus. Most of the municipalities (77%) in the state could compensate their total deficit with surplus areas of LR in the same municipality, while the remainder can be compensate their deficit in one or more neighbouring municipalities, indicating compensation can always take place close to the source of the deficit. Maximising the environmental benefits of achieving Forest Code compliance requires measures that go beyond the existing legal framework, including interventions to avoid further deforestation in places where it is still legal, compensate in close proximity to areas with legal reserve deficit and promote local restoration on degraded lands.     

The opportunity cost of preserving the Brazilian Amazon forest

We estimate the trade‐off between forest preservation and agricultural production for the Legal Amazon region, using census and deforestation data for municipalities in 2006. We use a directional distance function to represent the production possibility frontier, and then calculate the shadow price of reducing deforestation in terms of agricultural income foregone. Results indicate that, on average, to preserve 1 ha of forest, $797 in annual agricultural GDP must be foregone. Using a discount rate of 10% and average forest carbon density of 132 tons per hectare, these results imply an average shadow price of $16 per ton of CO₂ permanently sequestered.     

Forests or fields? A response to the theory that tropical forest conservation poses a threat to the poor

A rebuttal is provided of David Wood's proposal to open up tropical forests to agricultural uses. Concern is raised that his proposal exaggerates the ability of forests to regenerate after agricultural uses, sacrifices tropical forests in the name of alleviating poverty and in support of large land owners, and prevents valuable potential resource use by local populations. There is misunderstanding by Wood of conservationists' postures and the cause of current deforestation. In Brazil, deforestation has occurred primarily for low productivity cattle pasture (62% of all private land in the Amazon region in ranches over 1000 hectares-ha). Only 11% of private Amazonian land was in farms of less than 100 ha; only 30% of this size farm area was involved in 1991 in deforestation, while 70% of deforestation took place on ranches over 100 ha. Mass migrations of Brazil's population from the northeast to the Transamazon Highway and from Parana to Rondonia were impelled by increasing concentration of land tenure in migrant areas, and not by population growth. The rate of deforestation has slowed due to the economic recession. A World Bank study indicates that redistributing unproductive large landholdings in northeastern Brazil would increase agricultural output by 80%. The agricultural productivity of tropic areas is not as assured; Wood's support is based on preliminary findings, which are being revised with more cautionary thinking. Wood also understates the maintenance of soil fertility with fertilizers. The issue of scale also affects the use of agroforestry and perennial crop plantations such as rubber and cacao, which can only absorb the production of small areas, due to marketing constraints and physical resource limitations. Conservationists have not effectively redirected World Bank efforts to protect environments and help the impoverished, as suggested by Wood. Forest recovery has been very slow in large cattle pastures, and would take thousands of years if the land is left undisturbed. Recovery even under traditional shifting cultivation schemes is slower than Wood recognizes. Wood's argument that deforestation is temporary is not sufficient to invalidate the claim for conservation now. Reallocation is really the same as land extensification; current practices in Brazil will not support large human populations. The solution is to develop environmental services and find other means to support rural populations in urban areas.     

Public policies can reduce tropical deforestation: Lessons and challenges from Brazil

Reducing carbon emissions from deforestation and forest degradation now constitutes an important strategy for mitigating climate change, particularly in developing countries with large forests. Given growing concerns about global climate change, it is all the more important to identify cases in which economic growth has not sparked excessive forest clearance. We address the recent reduction of deforestation rates in the Brazilian Amazon by conducting a statistical analysis to ascertain if different levels of environmental enforcement between two groups of municipalities had any impact on this reduction. Our analysis shows that these targeted, heightened enforcement efforts avoided as much as 10,653 km² of deforestation, which translates into 1.44 × 10⁻¹ Pg C in avoided emissions for the 3 y period. Moreover, most of the carbon loss and land conversion would have occurred at the expense of closed moist forests. Although such results are encouraging, we caution that significant challenges remain for Brazil's continued success in this regard, given recent changes in the forestry code, ongoing massive investments in hydro power generation, reductions of established protected areas, and growing demand for agricultural products.     

A country scale analysis revealed effective forest policy affecting forest cover changes in Cambodia

Considerable proportions of the remaining global forest areas are currently harboured in tropical countries. Reducing deforestation in this region is important to help mitigate climate change. Effective forest conservation approach is needed to reduce deforestation and degradation in these countries. Here, we investigated the forest conservation effect of community forests and protected areas using country scale data in Cambodia. In addition to these two forest conservation approaches, we also evaluated the effectiveness of protected forests, which are similar to protected areas but managed by different authorities. We compared deforestation between 2006 and 2016 in areas under the three forest conservation approaches and a non-conserved area by applying the inverse probability of treatment weighting with the propensity score minimizing confounding effects. The results showed that community forest, protected areas, and protected forest significantly decreased deforestation compared with non-conserved forests. Out of the three forest conservation approaches, protected forest was the most effective and community forest was the least effective. We conclude that all of the policies we evaluated are effective for forest conservation but the effectiveness varies depending on the approach. Our findings also suggest that the authority managing the given approach plays an important part in its effectiveness.     

Crossing spatial analyses and livestock economics to understand deforestation processes in the Brazilian Amazon: the case of São Félix do Xingú in South Pará

The Amazon is the largest tropical forest area on Earth, and has been undergoing rapid deforestation for the last four decades. In the Brazilian Amazon, large‐scale pasture for cattle ranching and soybean production are the main land uses, leading to a yearly deforestation rate of 0.5%. These conversions are mostly located in frontier areas distributed along the so‐called “arc of deforestation”. Within this large zone, various land use change processes are interacting through several modes of land valuation and organisation. From several case studies in the State of Pará (Brazil), the current project aims at analysing how landscape dynamics are related to infrastructure development, ecological conditions, zoning policies and to the evolution and the organisation of the production, consumption and marketing chains of livestock products. This paper presents the results for one test site, the region of São Félix do Xingú, South of Pará This region is the focus of land speculation, cattle expansion, and deforestation. Road construction, investments in electrical energy, financial credit for cattle, and the land reform policies have all fuelled this process. All these factors make this region one of the most dynamic agricultural frontiers in the Brazilian Amazon. The main objective of the paper is to improve our understanding of deforestation processes by crossing spatial analyses and 1ivestock economics.studies, and to characterise the role and impact of various natural and anthropic factors in the location and development of the main types of farmers, and their policy implications.     

Amazon forest on the edge of collapse in the Maranhão State,Brazil

The year 2019 in Brazil was marked by environmental setbacks, which catalyzed the increase of illegal deforestation and fire rates in the Brazilian Amazon. In the Amazon region of Maranhão state, original forest cover diminished from 25 % (24,700 km²) in 2016 to 24 % (23,967 km²) in 2019, and 6,038 km² of remaining forests were degraded by fires and/or illegal logging – processes related to high levels of violence against indigenous and rural communities. Almost half of all deforested areas in the region (36,060 km²) are considered a global restoration hotspot, however secondary vegetation remains unprotected and 8,294 km² were cleared between 2014 and 2018. Due to uncontrolled deforestation and fragmentation, Maranhão has no more forest core areas (outside protected areas) with the minimum size to ensure sustainable forest management practices for timber production. New policies at the state level must promote old-growth and secondary forest conservation and restoration. However, the trends point to the opposite direction: the Ecological-Economic Zoning (ZEE) allows the reduction of forest protection and the State Forest Policy reinforces federal legislation setbacks. The Amazon region of Maranhão state has forest aptitude, and forest and agroforestry product chains would bring social and environmental benefits, making them the best opportunity for sustainable economic development in the region. Therefore, the forest must be re-planted for the benefit of people and nature.     

Towards zero deforestation and forest restoration in the Amazon region of Maranhão state,Brazil

The Amazon forest in the state of Maranhão ensures ecosystem services that directly and indirectly affect the life quality of its population and economy, via hydrologic and climatic regulation, among other benefits. Currently, only 25% of the original forest cover (24.7 thousand km²) remains while illegal deforestation persists in a violent process that provokes visible social, economic and environmental harm. Simultaneously, Maranhão has seen record levels of burning, faces a water shortage and fights against the worst social and economic indicators in the country. Conversely, secondary vegetation covers 19.9 thousand km² (27% of deforested area) and is completely unprotected. Contrary to the international commitments assumed by Brazil to combat deforestation and restore forests, some of the political representatives of Maranhão have sought legal mechanisms to further diminish forest cover in public and private areas. To promote the conservation and restoration of Maranhão Amazon Forest, a multi-institutional network of researchers was established in 2015. This viewpoint paper aims to draw attention to this endangered region of the Brazilian Amazon and give science-oriented recommendations to policy makers in order to avoid more setbacks. We argue that Maranhão state must urgently establish a policy of Zero Deforestation, protect secondary forests and comply with the national forest restoration policy, thus ensuring long-term economic sustainability.     

Solving Brazil's land use puzzle: Increasing production and slowing Amazon deforestation

Brazil has become an agricultural powerhouse, producing roughly 30 % of the world’s soy and 15 % of its beef by 2013 – yet historically much of that growth has come at the expense of its native ecosystems. Since 1985, pastures and croplands have replaced nearly 65 Mha of forests and savannas in the legal Amazon. A growing body of work suggests that this paradigm of horizontal expansion of agriculture over ecosystems is outdated and brings negative social and environmental outcomes. Here we propose four strategies that can reduce deforestation, while increasing production and social wellbeing. First, eliminate land grabbing and land speculation through designation of public forests. This would clarify land tenure and limit the pool of land available for uncontrolled expansion of agriculture and ranching. Second, reduce deforestation on private properties by implementing existing mechanisms in Brazil’s Forest Code to facilitate payments for environmental services, with support from market initiatives for sustainable sourcing of agricultural products. Third, incentivize increased productivity on medium and large properties through targeted investments. By stimulating adoption of proven technologies for sustainable intensification, this would help meet Brazil’s production targets and growing international demand for agricultural products, without expanding into new production areas. Finally, foster economic, environmental and social improvements through technical assistance to small farmers. Small farmers occupy a large swath of the Amazon and often lack access to technical assistance, production technology, and markets. Providing quality technical assistance to small farmers could help them better align production practices with local opportunities; increase household income and improve livelihoods; and reduce deforestation pressure. By implementing these four strategies in a coordinated effort between public and private agents, Brazil can show the world how to reduce deforestation while increasing agricultural output, reestablishing its leadership in managing natural resources and mitigating climate change.     

Persistence of cattle ranching in the Brazilian Amazon: A spatial analysis of the rationale for beef production

Fed by demand for beef within Brazil and in global markets, the Brazilian herd grew from 147 million head of cattle in 1990 to ≈200 million in 2007. Eighty-three percent of this expansion occurred in the Amazon and this trend is expected to continue as the industry bounces back from a recent agricultural downturn. Intensification of the cattle industry has been suggested as one way to reduce pressure on forest margins and spare land for soybean or sugarcane production, and is the cornerstone of Brazil's plan for mitigation of greenhouse gas emissions. To this end, federal credit programs and research and development activities in Brazil are aligning to support intensification goals, but there is no guarantee that this push for intensification will decrease the demand for land at the forest margin and as result curb CO₂ emissions from deforestation. In this paper we use a spatially explicit rent model which incorporates the local effects of biophysical characteristics, infrastructure, land prices, and distance to markets and slaughterhouses to calculate 30-year Net Present Values (NPVs) of extensive cattle ranching across the Brazilian Amazon. We use the model to ask where extensive ranching is profitable and how land acquisition affects profitability. We estimate that between 17% and 80% of land in the Amazon would have moderate to high NPVs when ranched extensively if it were settled, i.e. if the rancher does not buy the land but acquires it through land grabbing. In addition, we estimate that between 9% and 13% of land in the Amazon is vulnerable to speculation (i.e. areas with positive NPVs only if land is settled and not purchased), which suggests that land speculation is an important driver of extensive ranching profitability, and may continue to be in the future. These results suggest that pro-intensification policies such as credit provision for improved pasture management and investment in more intensive production systems must be accompanied by implementation and enforcement of policies that alter the incentives to clear forest for pasture, discourage land speculation, and increase accountability for land management practices if intensification of the cattle sector is to deter new deforestation and displace production from low-yield, extensive cattle production systems in frontier regions of the Brazilian Amazon.     

Controlling deforestation in the Brazilian Amazon: Regional economic impacts and land-use change

Brazil confirmed targets for reducing greenhouse gas emissions in 2008, including an 80% reduction in deforestation in the Amazon by 2020. With this in mind, we investigated the trade-off between environmental conservation and economic growth in the Amazon. The aim of this study is to project the economic losses and land-use changes resulting from a policy to control deforestation and the rise in land productivity that is necessary to offset those losses. We developed a Dynamic Interregional Computable General Equilibrium Model for 30 Amazon regions with a land module allowing conversion between types of land. The results have shown that the most affected regions would be soybeans and cattle producers as well as regions dominated by family farms. To offset these impacts, it was estimated that an annual gain of land productivity of approximately 1.4% would be required.     

Identifying deforestation attractors and patterns of fragmentation for seasonally dry tropical forest in central Veracruz,Mexico

Seasonally dry tropical forests (SDTF) are exposed to numerous threats stemming from human activity and are considered a high conservation priority globally. Nevertheless, planning the conservation, management, and restoration of forests requires a detailed regional understanding of current forest distribution, and patterns and attractors of deforestation. We explored SDTF cover in the state of Veracruz, Mexico, where little is known about this type of forest since it was erroneously considered to have been eliminated and thus has not be included in recent conservation planning in Mexico. A time-series of land use and land cover (LULC) maps, based on Landsat imagery from 1973 (MSS), 1990 (TM), and 2000 (ETM+), was used to analyze historical patterns of deforestation and fragmentation of SDTF in a priority watershed in central Veracruz. Stepwise logistic regression was used to identify the main attractors of forest loss. Maps based on higher resolution SPOT imagery (2007–2008) were used to determine the current extent of SDTF. Results from our LULC analysis revealed landscapes that were consistently dominated (>50%) by some combination of intensified land use including cattle pastures, rain-fed and irrigated agricultural lands, with closed SDTF cover fluctuating from 11.3 to 9.26% during the study period (1973–2007). Annualized rates of forest loss between Landsat images (1973 vs. 2000; −2.02%) and between Landsat and SPOT images (1973 vs. 2007; −0.59), were moderate to low, with historical records suggesting that most deforestation occurred more than a century ago before the Mexican revolution. Nevertheless, rates of forest loss varied considerable between different time periods, with slight reforestation initially (1.55%; 1973–1990), followed by a marked decline (−8.08%; 1990–2000), and finally a noticeable increases in forest cover (4.92%; 2000–2007) that corresponds with changes in public policy and trends in population migration. The number of forest patches tripled between 1973 and 2000 and the mean forest patch area decreased almost 80% over the same time period. Logistic regression analysis (1973–2000) indicated that the main attractors of closed forest transformation were proximity to gentle slopes, cattle pastures, and the hydraulic infrastructure needed for crop irrigation. Although SDTF is highly fragmented and perturbed, important remnants of this diverse native forest still persists in the region. Our findings are discussed in the context of future conservation and restoration efforts.     

Potential hazards of land policy: Conservation,rural development and fire use in the Brazilian Amazon

With growing awareness of fire hazard as an environmental threat within tropical rainforests, the state of Brazil initiated a set of fire control policies aimed at monitoring and ameliorating fire hazard in the Amazon region. These policies were developed in the aftermath of large-scale fire events and reflect a conservationist discourse that responded to internal as well as international environmental concerns. In doing so, the policies have framed the “fire problem” around those who use fire in their land use practices, in particular small-scale agriculturalists. Yet, land policy in general has repeatedly failed to address the institutional arrangements which compel small-scale farmers to use fire in their agricultural practices and the underlying development processes that have made the landscape more vulnerable to accidental spread of fire. Using regional level data on small-scale farmers, I suggest that the conservation oriented approach of fire policy may not be enough to curtail accidental fire events and instead that the fire issue needs to be positioned within rural development as well.     

Effects of international shocks and domestic macroeconomic policies upon Brazilian agriculture

An identified vector-autoregressive model is used to analyze the transmission of external commodity shocks to the Brazilian economy. The effects of the interaction between domestic macroeconomic (monetary and exchange rate) policies and external shocks to agricultural commodity (raw material and food) prices and crude oil price upon domestic (agriculture/industry) terms of trade are estimated.     

Land occupations and deforestation in the Brazilian Amazon

Researchers are increasingly interested in understanding the impact of contentious social processes on land change. In the Brazilian Amazon, there are often contentious interactions between landholders defending private property rights and squatters who have the right to occupy land that is deemed unproductive. Previous studies suggest that the contentious social processes inherent in the Brazilian land tenure and land reform system cause a significant amount of deforestation. An environment of insecure land title, and policies that value deforested land over forested land, among other factors, encourage both landholders and squatters to deforest more land than is necessary for pasture or crop production. This paper examines the impact that land occupations have on deforestation at the municipal scale across the Brazilian Legal Amazon, from 2000 to 2009. We show that land occupations have a direct influence on deforestation. We use spatial analysis as well to show that land occupations have a spatial component in the effect on deforestation: occupations in one municipality affect deforestation in adjacent areas.     

Quantifying and understanding land cover changes by large and small oil palm expansion regimes in the Peruvian Amazon

With rapid increases in global food demand and production, oil palm expansion constitutes a major emerging challenge for forest conservation in Amazonia and other tropical forest regions. This threat is evident in the Peruvian Amazon, where local and national incentives for oil palm cultivation along with growing large-scale investments translate into accelerated oil palm expansion. Environmental sustainability of oil palm cultivation in the Peruvian Amazon is contingent on policy incentives for expansion onto already-cleared lands instead of biodiverse, high carbon primary rainforests. Previous research indicates that while industrial plantations use less land area than local smallholders, companies have a higher tendency to expand into primary rainforests. However, the motivations behind these differing expansion scenarios remain unclear. In this study we combine data from optical and radar satellite sensors with training information, field discussions, and review of public documents to examine the policy incentives and spatial patterns associated with oil palm expansion by smallholders and industries in one of Peru’s most rapidly changing Amazonian landscapes: the Ucayali region of the city of Pucallpa. Based on our satellite-based land cover change analysis, we found that between 2010 and 2016, smallholders utilized 21,070 ha more land area for oil palm than industries but industrial expansion occurred predominantly in old growth forests (70%) in contrast to degraded lands for smallholders (56%). Our analysis of national policies related to oil palm expansion reveal policy loopholes associated with Peru’s “best land use” classification system that allow for standing forests to undergo large-scale agricultural development with little government oversight. We conclude that both sectors will need careful, real-time monitoring and government engagement to reduce old-growth forest loss and develop successful strategies for mitigating future environmental impacts of oil palm expansion.     

Knowing but not knowing: Systematic conservation planning and community conservation in the Sierra Norte of Oaxaca,Mexico

Systematic conservation planning (SCP) seeks to propose new reserves through a scientifically rigorous process using databases and research selection algorithims. However, SCP exercises have been criticized for “knowing but not doing”, i.e. not implementing the proposed reserve. But there is an additional problem that can be called “knowing but not knowing”, knowing things from databases, but not knowing crucial contextual information about community-based social processes that have supported the high forest cover and biodiversity detected. Examined here is how a common property region of the Sierra Norte of Oaxaca, Mexico has maintained high forest cover in the absence of public protected areas, while multiple SCP exercises have advocated for the creation of public protected areas in communal tropical montane cloud forests and pine forests as strategies for biodiversity conservation and resilience to climate change. Methods included archival research, review of community documents, focus group interviews, semi-structured interviews, participant observation, land use transects, and GIS analysis and remote sensing. Conservation in the region originally occurred because of low population densities, steep slopes and a lack of agricultural subsidies, supported by locally adapted agricultural practices. In the 1990s, a transition from passive to active conservation took place with land use zoning plans, community conservation rules, community forestry enterprises and payments for environmental service programs that consolidated a trend towards high, unthreatened forest cover. Today, the study communities have an average of 88.3% forest cover, with 61% of that in informal conservation based on community land use zoning and rules and another 14% governed by forest management plans approved by the Mexican government. We argue that truly systematic conservation plans would seek to understand how communities in the region are already managing forests for conservation. It is pointless and uninformed to advocate for top-down conservation interventions of forests that are already robustly conserved and resilient to climate change due to community action.     

Land use and economic effects of alternative biofuel policies in Brazil and the United States

Being the two largest ethanol producers in the world, biofuel policies in Brazil and the United States affect both their domestic markets and the global food and biofuel economy. In this article we develop a price endogenous mathematical programming model to simulate and analyze the impacts of biofuel mandates and trade distortions on land use, agricultural commodity and transportation fuel markets, and global environment. We find that an 80% increase in total biofuel production from its 103 billion liter baseline level to the mandated 183 billion liter level in 2022 can be achieved with less than 2% increase in total cropland use in both countries. In the United States, this would occur with cellulosic biofuels meeting nearly half of the biofuels consumed and produced largely on cropland pasture and corn ethanol meeting the rest of the mandate and resulting in a 2% increase in corn price. In Brazil, the expansion in sugarcane production would be achieved by reducing land under pasture and a marginal increase in intensification of livestock production. In the aggregate, biofuel policies increase economic surplus in both countries by 1% and redistribute the benefits from agricultural consumers to agricultural producers and the fuel sector. Finally, we also find that full implementation of the mandates in North America, China, and the European Union would reduce the global life‐cycle global greenhouse gas emissions by about 5%.