What would happen to the economy when energy crops replace food crops? A case of gasohol production in Thailand

This thesis studies the effects of gasohol production and gasohol consumption on changes of consumer’s real income. It is divided into two parts. First, the price elasticity of demand for energy crops, major crops and some related goods were calculated by using Single demand equation model which has three methods ,i.e.; Seemingly Unrelated Regression, Ordinary Least Squares (OLS), and Point Elasticity. The data from 2000 to 2011 were used in this calculation. Second, the price elasticity of demand from first part were used to construct a partial equilibrium model of the need of expansion of planting areas for sugarcane and cassava by using the data in year 2009 to be the base year. This model will be using to analyze the real income from the reduction of paddy fields and corn fields due to the replacement of sugarcane or cassava in order to produce gasohol. This study found that the case which decreased the paddy fields for gasohol plant fields; the real income will increase when gasohol production from sugarcane or cassava was found to increase not over than 30% as compared to the plant field in 2009. For the both cases of corn field reduction for gasohol plants cultivation and no changed plant area, will result in the increase of gasohol production as can be assumed that the income will increase. Therefore, it can be concluded that the increment of gasohol production can enhance the consumer’s real income.