While biofuel production offers socio-economic opportunities it also presents environmental and social dilemmas. It has been claimed that if biofuel production leads to land degradation and deforestation any potential carbon savings benefits will be compromised (Gamborg et al. 2011). This compromise is illustrated by the clearing of forests to make way for oil palm plantations where it will take up to 150 years for the carbon savings from palm oil harvesting to replace the carbon lost from forests (Friends of the Earth 2010).

Biofuel production has the potential to lead to soil degradation and nutrient depletion (Chap. 10). Chemical inputs including fertilisers and pesticides can contaminate soils and lead to soil erosion. The removal of crop residues for co-firing may cause further declines in soil fertility (Cushion et al. 2010). Land clearing for biofuel plantations can cause considerable topsoil run-off and increase sediment loads in rivers. Soil erosion is five to seven times greater during clearing while sediment loads in rivers increase with a factor of four. Soil erosion is especially problematic when oil palms are planted on steep slopes and at high altitude (Friends of the Earth 2005).

Biofuel has also been described as one of the thirstiest products on the planet because of the amount of water needed to produce fuel. One litre of biodiesel from soya is estimated to require 9,100 L of water. A litre of bioethanol from maize requires 4,000 L of water and a litre of bioethanol from sugarcane can also use as much as 4,000 L of water (Friends of the Earth 2010).

Many bioenergy crops must be produced in large monocultures to be profitable. One of the risks of large scale bioenergy development is that land will be concentrated in the hands of a few wealthy companies or individuals and that small scale farmers will lose their land. Small scale farmers might have limited or no accesses to the capital required for large biofuel operations and as such miss out on investment opportunities and associated profits. The only benefit for many small scale farmers in biofuel production is to lease their land to producers. In Indonesia where 44 % of productive oil palm plantations are managed by small scale farmers there have been persistent reports that such farmers receive minimal compensation for their produce and remain in debt to the palm oil companies (Cushion et al. 2010).

In South Africa a survey amongst communities who could become involved in a potential bioenergy project in the Eastern Cape Province revealed that community members were concerned about the potential environmental, social and ecological risks associated with such a project. Some of the specific concerns included:

• fear of losing control over land seen as their inheritance;

• breakdown or distortion of the social fabric/character of the community;

• enslaving by big business and falling into poverty;

• water pollution and environmental damage;

• migration of other people to the communities; and

• unequal share of benefits from the project (Amigun et al. 2011).

The involvement of rural communities in the production of biofuels cannot be evaluated fully through simplistic proxies such as the number of jobs created and average wages paid to plantation workers. Long established and indigenous rural communities are experienced in living in a highly variable and seasonal environment and their traditional methods of survival are based on managing risk rather than optimising income. A switch from subsistence farming to farming of a cash crop brings with it an increased dependency on outside agents. This may be fine as long as there is a steady stream of income but when the prices of cash crops drop it might lead to food insecurity and increased poverty. It is therefore necessary to consider in much more detail how the livelihood strategies and outcomes of rural communities will change with a change in land ownership, land management and land use associated with a switch from the production of subsistence food crops to biofuel cash crops (Van der Horst and Vermeylen 2011). When there are uncertainties regarding the impacts of biofuels on environmental and social sustainability it is important to consider that changes in land use could significantly outweigh any carbon benefits that may result from planting biofuels (Cushion et al. 2009). The following section will consider ways of improving the benefits that biofuel production can play in the livelihoods of the rural poor.