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Biofuel policies and the environment: Do climate benefits warrant increased production from biofuel feedstocks?

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  • Lankoski, Jussi
  • Ollikainen, Markku

Abstract

We examine whether climate benefits warrant policies promoting biofuel production from agricultural crops when other environmental impacts are accounted for. We develop a general economic-ecological modelling framework for integrated analysis of biofuel policies. An economic model of farmers' decision making is combined with a biophysical model predicting the effects of farming practices on crop yields and relevant environmental impacts. They include GHG emissions over the life cycle, nitrogen and phosphorus runoff, and the quality of wildlife habitats. We apply our model to crop production in Finland. We find that under current biofuel production technology the case for promotion of biofuels is not as evident as has been generally thought. Only reed canary grass for biodiesel is unambiguously desirable, whereas biodiesel from rape seed and ethanol production from wheat and barley cause in most cases negative net impacts on the environment. Suggested policies in the US and the EU tend to improve slightly the environmental performance of biofuel production.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecolec:v:70:y:2011:i:4:p:676-687
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    References listed on IDEAS

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    1. Jussi Lankoski & Markku Ollikainen, 2003. "Agri-environmental externalities: a framework for designing targeted policies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(1), pages 51-75, March.
    2. Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
    3. 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, Foundation for the European Review of Agricultural Economics, vol. 35(4), pages 519-546, December.
    4. Jussi Lankoski & Markku Ollikainen & Pekka Uusitalo, 2006. "No-till technology: benefits to farmers and the environment? Theoretical analysis and application to Finnish agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 193-221, June.
    5. Lichtenberg, Erik, 2002. "Agriculture and the environment," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313 Elsevier.
    6. Sami Myyrä & Elise Ketoja & Markku Yli-Halla & Kyöisti Pietola, 2005. "Land Improvements under Land Tenure Insecurity: The Case of pH and Phosphate in Finland," Land Economics, University of Wisconsin Press, vol. 81(4).
    7. Jussi Lankoski & Erik Lichtenberg & Markku Ollikainen, 2008. "Point/Nonpoint Effluent Trading with Spatial Heterogeneity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 1044-1058.
    8. Muller, Adrian, 2006. "Sustainable Agriculture and the Production of Biomass for Energy Use," Working Papers in Economics 216, University of Gothenburg, Department of Economics, revised 01 Aug 2008.
    9. Ing-Marie Gren, 2001. "International Versus National Actions Against Nitrogen Pollution of the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(1), pages 41-59, September.
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    Citations

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    Cited by:

    1. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
    2. Andreas Meyer-Aurich & Jørgen Olesen & Annette Prochnow & Reiner Brunsch, 2013. "Greenhouse gas mitigation with scarce land: The potential contribution of increased nitrogen input," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(7), pages 921-932, October.
    3. Qiu, Cheng & Colson, Gregory & Wetzstein, Michael, 2014. "An ethanol blend wall shift is prone to increase petroleum gasoline demand," Energy Economics, Elsevier, vol. 44(C), pages 160-165.
    4. 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.
    5. Finco, Adele & Bentivoglio, Deborah & Rasetti, Michele & Padella, Monica & Polla, Piergiuseppe & Cortesi, Davide, 2012. "Sustainability of rapeseed biodiesel using LCA method," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126447, International Association of Agricultural Economists.
    6. repec:eee:rensus:v:81:y:2018:i:p2:p:3159-3177 is not listed on IDEAS
    7. Monica Padella & Adele Finco & Wallace E. Tyner, 2012. "Impacts of Biofuels Policies in the EU," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 3).
    8. Balogh, P. & Bai, A. & Popp, J. & Huzsvai, L. & Jobbágy, P., 2015. "Internet-orientated Hungarian car drivers’ knowledge and attitudes towards biofuels," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 17-26.
    9. Vincent Martinet, 2012. "Effect of soil heterogeneity on the welfare economics of biofuel policies," Working Papers 2012/01, INRA, Economie Publique.
    10. Salazar-Ordóñez, Melania & Pérez-Hernández, Pedro P. & Martín-Lozano, José M., 2013. "Sugar beet for bioethanol production: An approach based on environmental agricultural outputs," Energy Policy, Elsevier, vol. 55(C), pages 662-668.
    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.
    12. Bakhtiyari, Ziba & Yazdanpanah, Masoud & Forouzani, Masoumeh & Kazemi, Navab, 2017. "Intention of agricultural professionals toward biofuels in Iran: Implications for energy security, society, and policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 341-349.
    13. repec:spr:empeco:v:52:y:2017:i:4:d:10.1007_s00181-016-1112-6 is not listed on IDEAS
    14. Cheteni, Priviledge, 2017. "Sustainability development: Biofuels in agriculture," MPRA Paper 80969, University Library of Munich, Germany, revised 24 Jun 2017.

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