394503 - A Hierarchical Decision Modeling Framework to Meet Environmental Objectives in Biofuel Development
Tuesday, June 5
4:00 PM - 5:30 PM
Location: Northstar B
Mashor Housh, Haifa, Israel – University of Haifa; Ximing Cai, Urbana, IL – University of Illinois at Urbana-Champaign
Biofuel development to comply with the Renewable Fuel Standard (RFS) would alter conventional crop patterns, influencing hydrologic responses of agricultural watersheds. Therefore, although biofuel mandates could be potentially useful for energy security and climate change mitigation, they might have alternative, often opposing impacts on the agro-hydrological systems, specifically, on riverine nitrate-N load, and streamflow. While decision-making in biofuel development should take these externalities into account, conventional modeling approaches treat those externalities as regulatory constraints, which is difficult to be implemented in the real world; furthermore, they fail to consider the hierarchical nature of the decision-making process. This study therefore proposes an alternative decision modeling framework for biofuel development to optimally control the impacts on water quality for different levels of streamflow requirement in the watershed. The framework is developed based on bilevel programming paradigm to mimic the hierarchical decision-making process in environmental regulation, and uses location and type of ethanol bio-refineries as policy instruments. The model is applied to the Sangamon River basin, a typical agricultural watershed in central Illinois. The results show that the proposed instruments can effectively guide the decisions in biofuel development to meet the environmental objectives in the watershed. However, adopting the proposed framework yields a lower profit than the conventional models, which is the “price” of a more realistic solution to the hierarchical decision problem. The results also highlight the importance of spatial heterogeneity and identifying an appropriate spatial scale to design effective environmental policies in biofuel development.