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Biodiesel vs. ethanol, UE vs. US biofuels: So different in terms of LUC impact?

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Listed:
  • Agneta Forslund
  • Alexandre Gohin
  • Chantal Le Mouël
  • Fabrice Levert

Abstract

Available estimates of biofuel-induced land use change (LUC) and corresponding greenhouse gas (GHG) emissions vary on a wide range while estimations obtained from each model are highly sensitive to certain assumptions and key parameter values. Available studies often suggest that biodiesel and ethanol and/or EU and US biofuels would lead to different LUC and GHG emissions but they don’t agree on the type and/or the origin of the biofuel which would induce the least LUC and GHG emissions. In this paper we investigate the reasons behind this feature. We show that the Armington modeling of trade flows, which is currently used in models, contributes to this pattern. Using both observed data and the partial equilibrium model MATSIM-LUCA, we show that LUC stemming from the development of biofuels is highly dependent on assumptions made on trade: the Integrated World Market (IWM) approach, which relies on the homogenous product assumption, tends to erase differences in estimates of induced LUC from biodiesel and ethanol and from EU and US biofuels as compared to the Armington approach, that postulates that product are differentiated according to their origin and thus less substitutable.

Suggested Citation

  • Agneta Forslund & Alexandre Gohin & Chantal Le Mouël & Fabrice Levert, 2014. "Biodiesel vs. ethanol, UE vs. US biofuels: So different in terms of LUC impact?," Working Papers SMART 14-04, INRAE UMR SMART.
    • Handle: RePEc:rae:wpaper:201404
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    References listed on IDEAS

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    1. Reimer, Jeffrey J. & Zheng, Xiaojuan & Gehlhar, Mark J., 2012. "Export Demand Elasticity Estimation for Major U.S. Crops," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 44(4), pages 501-515, November.
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    3. Alexandre Gohin, 2013. "The land use changes of European biodiesel: sensitivity to crop yield evolutions," Working Papers SMART 13-13, INRAE UMR SMART.
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    6. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
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    8. Gohin, Alexandre, 2013. "The land use changes of European biodiesel: sensitivity to crop yield evolutions," Working Papers 207857, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
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    More about this item

    Keywords

    biofuel; LUC; model; Armington;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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