GTAP Resources: Resource Display
| GTAP Resource #3377 |
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"Addressing Indirect Land Use Change Effects of Biofuel Mandates: Insights from and Limits of the CGE Approach" by Alriffai, Perrihan, Betina Dimaranan, David Laborde and Hugo Valin Abstract The last decade has seen the marked development of biofuel programs across countries as bioenergy is supposed to reduce CO2 emissions, foreign-oil dependencies and support farm income. However, with the progress of research and the realization of the initial impacts of the said mandates, the economic as well as the environmental costs of such distortive policies have significantly added to the ensuing debate. Though other quantitative methods have contributed to the overall analysis of the biofuel program, computable general equilibrium (CGE) models, especially global CGEs, are regarded as the most appealing as they capture all inter-sectoral and regional linkages simultaneously. They provide key insights on the fuel vs food vs feed vs forest debate by describing the different substitution and extension effects that can take place. Building on the initial work of Bouet et al (2009), this paper aims to discuss indirect land use change (ILUC) and its measurement using the MIRAGE-Biofuel CGE model. We aim to answer two questions: Is the ILUC notion relevant for policy making? Can we trust CGE estimates to compute this ILUC? In this framework, we discuss and quantify the ILUC coefficients of biofuel mandates in the US, EU and Brazil. Adding to the overall effects of the mandates and the average ILUC discussed in existing literature, we derive the marginal ILUC by crop. This allows us to show that using an average coefficient as is frequently discussed can be very misleading. Finally, as we assume that the ILUC effects of biofuel policies have to be considered in the decision process, we also extend the concept to other policy questions. Are the potential ILUC impacts of the current biofuel mandates worse than other global policies, i.e. global trade liberalization in the agricultural sector? To answer this, we compare the economic and ILUC effects of the biofuel policies to those of global trade liberalization (without biofuel mandates). |
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- Domestic policy analysis - Trade and the environment - European Union - Commonwealth of Independent States |
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Last Modified: 9/15/2023 2:05:45 PM
