The Downside of Domestic Substitution of Oil with Biofuels: Will Brazil Catch the Dutch Disease?
AbstractIn response to oil price rises and carbon emission concerns, policies promoting increased ethanol usage in gasoline blends are being implemented by many countries, including major energy users such as USA, EU and Japan. As a result, Brazil, as the largest ethanol producer and exporter in the world, can expect growing foreign demand for ethanol exports. Also, the introduction of flex-fuel vehicles in Brazil is causing domestic sales of ethanol to increase steadily. In this paper, we investigate the regional and industrial economic consequences of rapid growth in Brazilian ethanol consumption and exports. For this, we use a disaggregated multi-regional computable general equilibrium (CGE) model with energy industry detail. Our modelling emphasises a number of features of ethanol production in Brazil which we expect to be important in determining the adjustment of its regional economies to a substantial expansion in ethanol production. These include regional differences in ethanol and sugar production technologies, sugarcane harvesting methods and the elasticity of land supply to sugarcane production.
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Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-169.
Date of creation: Dec 2007
Date of revision:
Publication status: Published in 'Brazilian Regional Structural Adjustment to Rapid Growth in Global Ethanol Demand', Studies in Regional Science, 2009, Vol. 39(1), pp. 189-207.
CGE models; energy; ethanol; Brazil;
Find related papers by JEL classification:
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R49 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Other
This paper has been announced in the following NEP Reports:
- NEP-AGR-2007-12-19 (Agricultural Economics)
- NEP-ALL-2007-12-19 (All new papers)
- NEP-CMP-2007-12-19 (Computational Economics)
- NEP-ENE-2007-12-19 (Energy Economics)
- NEP-ENV-2007-12-19 (Environmental Economics)
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- W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 2000.
"Decomposing Simulation Results with Respect to Exogenous Shocks,"
Society for Computational Economics, vol. 15(3), pages 227-249, June.
- W. Jill Harrison & J. Mark Horridge & K.R. Pearson, 1999. "Decomposing Simulation Results with Respect to Exogenous Shocks," Centre of Policy Studies/IMPACT Centre Working Papers ip-73, Victoria University, Centre of Policy Studies/IMPACT Centre.
- Joyce Dargay & Dermot Gately & Martin Sommer, 2007. "Vehicle Ownership and Income Growth, Worldwide: 1960-2030," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 143-170.
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