Abstract An assessing the impact of agricultural energy crop lands on biodiversity in Canada, the implementation of policies dealing with the Ethanol Expansion Program is expected to greatly increase Canada’s ethanol production capacity. This increase in capacity will support current and proposed programs for ethanol in gasoline and is an important step towards the Climate Change Plan for Canada target of having at least 35 percent of our gasoline contain 10 percent ethanol by 2010 (http://www.nrcan-rncan.go.ca/media/newsreleases/2003/200387a_e.htm). The model also attempts to demonstrate that the impact of energy crop on species diversity must be addressed simultaneously in studying sustainable development performance. Changes in the land use and the biodiversity are thought to be five major causes of loss of agricultural biodiversity a) policies that promote/support homogenized monocultural high-chemical-input farming systems (such as subsidies, credit policies, etc..) ; b) agricultural/rural development programs that support conventional industrial patterns of uniform monocultural development and reduce biodiversity; c) pressures by private sector interests that perpetuate the sales and use of uniform seeds and related chemical inputs; d) inequities in the distribution of and access to resources (including genetic resources); e) lack of participation of farmers and stewards of agrobiodiversity in decision-making and program development in agriculture; and f) neglect (or suppression) of local and indigenous knowledge about genetic resources and biodiversity, along with reductionist and uni-disciplinary scientific paradigm that underlies R&D in this arena. The potential impacts of land use on ecosystem functioning and biodiversity have received considerable attention during last decade, but we still lack adequate theories and models to predict and interpret such results. This study uses a system dynamics approach to develop a model for assessing the impact on biodiversity of agricultural land use change drove by bioenergy industry at a regional scale. The model, linking the bioenergy requirement, land use change and ecosystem functioning to biodiversity, can serve as an experimental platform for future policy analysis. The model was validated structurally and behaviorally using the tests suggested by the literature, and then calibrated using last 10 years period Canadian agricultural land use and crop production data. As a result, agricultural ecosystem functioning index declined. Validation and calibration show that the model is capable of capturing essential dynamics of land use change and ecosystem functioning. Simulation results indicate that land for energy crop production will further increase in next decade in order to meet the requirement from bioenergy industry. Agricultural ecosystem functioning index will decline as agricultural land use change. The impact of agricultural land use change on regional biodiversity is limited in a short term, but it will be more pronounce in a long term.