Researchers out of Purdue and Stanford University have found evidence that small temperature increases over the next two decades could have a surprisingly drastic impact on the volatility of corn prices. And federal biofuel mandates may make things worse.
Geothermal, nuclear, wind, natural gas, soybean biodiesel, corn ethanol - these are just some of the possible ways to thwart greenhouse gas emissions that spur global warming. Yet each technological option is far from perfect, and understandably, harbors its own unique complications.
A recent study published in Nature Climate Change, illustrates such a complication for biofuels derived from corn grown in the United States. Scientists found that, over the next two decades, climate change will probably increase the volatility of corn prices, even more so than expected factors like oil prices and trade policies. Biofuel mandates affect volatility too, and the study also suggests that such federal mandates could actually amplify the effect of rising temperature on the pricing of crop from the US corn belt.
"Frankly, I was surprised that climate had the largest effect of these three influences," said Noah Diffenbaugh of the Stanford Woods Institute for the Environment in a recent Stanford Press Release. "These are substantial changes in price volatility that come from relatively moderate global warming."
This research, funded by the Department of Energy, illuminates two interrelated problems. The first: even if climate change stays within the internationally established "safe" limit of 3.6 degrees Fahrenheit above preindustrial temperatures, a smaller temperature change could still drive up the frequency of severe heatwaves in the US, which would in turn sharply increase the volatility of corn yields, the study suggests.
The second is the constraining effect federal biofuel mandates have on the corn market. This has already been demonstrated before, as the mandates encouraged farmers to plant more corn instead of, for example, soybeans, which historically drove up the price of soy. …