Biofuel policies and the environment: Do climate benefits warrant increased production from biofuel feedstocks?
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.
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- 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.
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- 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.
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- 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 22 Apr 2004.
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