Biofuel production is hot topic these days, both domestically and around the world. However, a recent study indicates that Biofuel production in poor water scarce countries may have severe negative impacts on water supply.

In India, the Linking of Rivers of project are designed to transfer water to water poor areas to support water intense agriculture. Indian sugarcane is 100% irrigated, the main biofuel crop for ethanol production. The amount of water evaporated is 3500 liters per liter of ethanol. In Brazil, it takes about 2200 liters of water, but that demand is met by rainfall.

Entering the biofuel market will create additional strain on their water supply. Visible signs have already emerged with water tables dropping in Punjab, India as well as increased pollution from irrigation runoff.

Takeaway: Biofuel economic analyses should take water usage into account in water scarce regions.