Economic Optimization of Sugarcane-livestock Integration for Bioenergy Expansion in Brazil

Abstract

Due to the expansion of ethanol production, debate on conflicting issues regarding land use competition between biofuels and food production is raised. Integrated sugarcane/livestock systems could potentially facilitate the expansion of ethanol production without putting crop and/or livestock production at risk and displacing areas covered with natural vegetation. This study compares and analyses the profitability of (i) a sugarcane ethanol distillery (producing ethanol and bioelectricity) and a typical livestock system without integration and (ii) an integrated system producing the same output of ethanol and beef with half of the area. Therefore, this study developed metamodels to evaluate sugarcane/livestock integration from a techno-economic perspective, aiming to maximize the profitability (Net Present Value relative to investment) of this integrated system. The obtained metamodels adequately represented the proposed systems and proved to be useful tools for simplifying complex models and providing insights into the decision-making process. Considering the assumptions adopted in this study, it was observed that the system with integration presents better economic results. Furthermore, sensitivity analysis of land rent revealed that sugarcane and livestock integration becomes economically attractive and viable under the analyzed conditions for values exceeding 258 US$/ha. The generated metamodels also allow other scenarios to be analyzed to find other economically and environmentally attractive solutions for the expansion of ethanol production in Brazil, utilizing pasture areas.