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The Perverse Effects of Biofuel Public-Sector Policies

Author

Listed:
  • Harry de Gorter

    (Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca, New York 14853-7801)

  • Dusan Drabik

    (Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca, New York 14853-7801)

  • David R. Just

    (Charles H. Dyson School of Applied Economics and Management, Cornell University, Ithaca, New York 14853-7801)

Abstract

Biofuel policies are a subset of policies designed to achieve energy security, an improved environment, enhanced agricultural incomes, technological change, and overall economic benefits, with increased domestic energy production creating green jobs and foreign exchange savings. In assessing this broad spectrum of proclaimed policy goals with the outcome of biofuel mandates, subsidies, import barriers, binary sustainability standards, and indirect land use measures, we identify many perverse and contradictory effects. Most importantly, we show how biofuel policies established the crop-energy price link and hence the food-fuel trade-off, the contradictory effects of combining mandates with different subsidies, the various surprising welfare economic effects, and the various inconsistencies associated with binary sustainability standards and carbon leakages. We conclude with examples of how biofuel policies have generated paradoxical effects in many other different dimensions.

Suggested Citation

  • Harry de Gorter & Dusan Drabik & David R. Just, 2013. "The Perverse Effects of Biofuel Public-Sector Policies," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 463-483, June.
    • Handle: RePEc:anr:reseco:v:5:y:2013:p:463-483
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-091912-151933
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    Citations

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    Cited by:

    1. Johan Swinnen & Alessandro Olper & Senne Vandevelde, 2021. "From unfair prices to unfair trading practices: Political economy, value chains and 21st century agri‐food policy," Agricultural Economics, International Association of Agricultural Economists, vol. 52(5), pages 771-788, September.
    2. Negash, Martha & Swinnen, Johan F.M., 2013. "Biofuels and food security: Micro-evidence from Ethiopia," Energy Policy, Elsevier, vol. 61(C), pages 963-976.
    3. Ji, Xi & Long, Xianling, 2016. "A review of the ecological and socioeconomic effects of biofuel and energy policy recommendations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 41-52.

    More about this item

    Keywords

    biofuels; mandates; subsidies; tariffs; externalities; greenhouse gases; traffic congestion; air pollution; burden of taxation; agriculture; environment; energy;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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