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SUMMARY: More ethanol might mean less oil use, but net economic and environmental benefits aren't straightforward.

Demand for ethanol has soared, thanks to high oil prices, subsidies and mandates requiring greater use of the alcohol additive to gasoline. Because most of the ethanol in America is distilled from corn, demand for ethanol translates into demand for corn. Happy days are here again for corn producers.

Yet boom times for corn farming offers a helpful reminder that alternative energy production and environmental protection aren't simple matters of addition and subtraction. It requires calculus to account for all the costs and benefits.

We and others previously have discussed on this page the unintended consequence of rising food prices resulting from the diversion of corn for ethanol. The costs have been manageable enough for most Americans, but increasing consumption of corn and other grains for energy production has the potential to inflict real harm in the developing world.

A certain amount of energy goes into growing corn; it takes more energy to distill and distribute it. To intelligently balance the costs and benefits of ethanol, we also need to factor in additional work and energy consumption associated with eating higher priced corn or obtaining suitable alternative food.

Now a flurry of news reports suggest more trade-offs are in the offing. According to the Los Angeles Times, for example, the U.S. Department of Agriculture is looking to scale back the Conservation Reserve Program in order to encourage greater corn production.

Known best as CRP, the 22-year-old program was created as an incentive for farmers to take marginal or sensitive lands and those susceptible to erosion out of cultivation. Under the program, farmers are eligible for long-term contracts paying them to plant native grasses or other stable vegetation, essentially banking the land.

CRP has been wildly successful. It often makes economic sense to prevent erosion, water pollution and other problems by taking lands out of production, rather than trying to correct problems later. CRP has created tremendous benefits for wildlife and water quality. And, not the least of its benefits, it's helped create greater stability in commodity prices by reducing the chronic overproduction that drives farm prices down and increases the clamor for government price supports and other subsidies.

Now, however, in the interest of protecting the environment by using more ethanol and less oil, the government wants to see millions of acres of CRP lands plowed and planted to corn. This will mean more energy for farming, more water used for irrigation, more pollution and erosion to deal with, and less wildlife habitat to boot. American taxpayers have invested billions of dollars in CRP (currently about $2 billion annually), and at least some of that investment may disappear under the plow.

The Department of Agriculture even is talking about possibly releasing farmers from their existing CRP contracts. This further complicates the economics. Those who signed CRP contracts opted for the security of CRP payments, betting they'd make out better than they would by keeping the land in production. Those who've kept farming bet they'd make out better by continuing to grow crops. High corn prices are their reward for taking that risk and being correct. If the government releases farmers from CRP contracts, it'll not only eliminate the risks those farmers took in opting to idle their lands, but, the higher corn production it's stimulating will help dampen market prices to the detriment of those already producing corn.

We don't have many qualms about farmers planting more corn based on market conditions. But it's a little worrisome that market conditions are so influenced by government mandates, subsidies, manipulation of programs and disregard for contracts. The government's efforts to engineer economic and environmental benefits from ethanol make it all the harder to calculate exactly what the net benefit might be.

With U.S. acreage planted to corn increasing to an estimated 90 million acres this spring - up from 78 million acres last year - it's not exactly clear why the Agriculture Department feels compelled to sacrifice CRP to boost production. It's the same kind of logic that keeps USDA subsidizing corn through dozens of food-oriented programs, even as farmers reap record profits through the sale of corn for energy.

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