Risky Business: When Safety Regulations Cause Harm

Note from the Digital Editor: In order to highlight the high-level of research and scholarship from the authors who have published in the William & Mary Policy Review’s peer-reviewed print journal, we have reproduced the abstracts from Volume 6, Issue 1 along with a link to an electronic copy of the full form of the piece. 

At the turn of the 21st century, biofuels appeared to be a solution to mounting concerns over greenhouse gas emissions, climate change, skyrocketing fuel prices, and dependence on foreign energy. When Congress passed the Energy Policy Act (EP Act) in 2005 with a renewable fuel standard (RFS) provision mandating producers to add ethanol to gasoline,  it is unlikely that lawmakers thought the act would increase hunger and social unrest in the world’s poorest countries. However, unintended consequences frequently accompany even the most well- intentioned policies. Lawmakers specifically intended for the RFS provision to address both environmental and energy issues. Ethanol is a cleaner fuel with lower carbon emissions than gasoline and is often added to gasoline as an oxygenate, allowing gasoline to burn more completely and thereby reducing carbon emissions. The EP Act simply ramped up the already increasing use of ethanol as a fuel additive with the hope of reducing greenhouse gas emissions. The law’s proponents expected higher ethanol use to offset rising oil prices by filling at least some of the domestic demand for fuel. Further, because most ethanol in the United States comes from domestically produced corn, policy advocates hoped the act would make the country less dependent on imported oil. As an added bonus, the policy would benefit US farmers. At the time, the policy seemed perfect.

As the policy went into effect and was further ramped up in 2007, scholars and environmentalists began to question its environmental and energy benefits. Producing ethanol from corn or other crops consumes energy. For ethanol to be a viable fuel source, it should, on balance, produce more energy than it consumes. Experts, however, disagree about whether this is the case. Beyond ethanol’s questionable viability as a fuel, the negative environmental impacts of corn production undermine ethanol’s benefits. Corn farming leads to greater soil erosion than the farming of other crops. Higher pesticide and fertilizer use in corn farming compared to the farming of other crops increases water pollution. In addition, ethanol production leads to air pollution and greenhouse gas emissions, offsetting some of the environmental gains from its use as a fuel.

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Sherzod Abdukadirovf is a Research Fellow at the Mercatus Center, George Mason University. Parts of this paper were presented at the annual Society for Risk Analysis Conference in December, 2013.