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Bioenergy crop production and climate policies: a von Thunen model and the case of reed canary grass in Finland

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  • Jussi Lankoski
  • Markku Ollikainen

Abstract

We examine the potential of bioenergy crops to offset greenhouse gas emissions from fossil fuels, assuming homogeneous agricultural land and distance-dependent transport costs. Variable transport costs define the socially and privately optimal extensive margin of the bioenergy crop production and imply that fertiliser intensity differs across locations. Under current policy, private fertiliser application is suboptimal, requiring location-specific input, transport or output subsidies. The theoretical model is applied to reed canary grass (Phalaris arundinacea L.) in Finland, which offsets emissions from peat in electricity production. If oats is the alternative crop, and taking permit price of CO 2 emissions as the proxy for climate benefits over the life cycle, reed canary grass production is socially optimal even 100 km away from the power plant and still offsets more than 6 tons/ha of CO 2 emissions from peat. Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Jussi Lankoski & Markku Ollikainen, 2008. "Bioenergy crop production and climate policies: a von Thunen model and the case of reed canary grass in Finland," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(4), pages 519-546, December.
    • Handle: RePEc:oup:erevae:v:35:y:2008:i:4:p:519-546
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    File URL: http://hdl.handle.net/10.1093/erae/jbn040
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    Cited by:

    1. Lankoski, Jussi & Ollikainen, Markku, 2011. "Biofuel policies and the environment: Do climate benefits warrant increased production from biofuel feedstocks?," Ecological Economics, Elsevier, vol. 70(4), pages 676-687, February.
    2. Schulze Steinmann, Matthias & Holm-Muller, Karin, 2010. "Thünensche Ringe der Biogaserzeugung – der Einfluss der Transportwürdigkeit nachwachsender Rohstoffe auf die Rohstoffwahl von Biogasanlagen," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 59(1).
    3. Carpentier, Alain & Gohin, Alexandre & Sckokai, Paolo & Thomas, Alban, 2015. "Economic modelling of agricultural production: past advances and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 131-165, March.
    4. Jose M. Vindel & Estrella Trincado & Antonio Sánchez-Bayón, 2021. "European Union Green Deal and the Opportunity Cost of Wastewater Treatment Projects," Energies, MDPI, vol. 14(7), pages 1-18, April.
    5. Yiming Zhang & Rui Yang & Kai Zhao & Xiangzhi Kong, 2023. "Fertilizer Application in Contract Farming: A Risk Analysis," Land, MDPI, vol. 12(8), pages 1-20, July.
    6. Vincent Martinet, 2012. "Effect of soil heterogeneity on the welfare economics of biofuel policies," EconomiX Working Papers 2012-13, University of Paris Nanterre, EconomiX.
    7. Schulze Steinmann, Matthias & Holm-Muller, Karin, 2010. "Thünensche Ringe der Biogaserzeugung – der Einfluss der Transportwürdigkeit nachwachsender Rohstoffe auf die Rohstoffwahl von Biogasanlagen," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 59(01), pages 1-12, March.
    8. Kosenius, Anna-Kaisa & Ollikainen, Markku, 2013. "Valuation of environmental and societal trade-offs of renewable energy sources," Energy Policy, Elsevier, vol. 62(C), pages 1148-1156.
    9. Lankoski, Jussi E. & Ollikainen, Markku, 2009. "Biofuel policies and the environment: the effects of biofuel feedstock production on climate, water quality and biodiversity," 2009 Conference, August 16-22, 2009, Beijing, China 51677, International Association of Agricultural Economists.
    10. Ida Nordin & Katarina Elofsson & Torbjörn Jansson, 2022. "Optimal localisation of agricultural biofuel production facilities and feedstock: a Swedish case study," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(4), pages 910-941.
    11. Cyril Bourgeois & Nosra Ben-Fradj & Mélissa Clodic & Pierre-Alain Jayet, 2011. "How cost-effective is a mixed policy targeting the management of three pollutants from N-fertilizers," Working Papers 2011/03, INRA, Economie Publique.

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