Is bioenergy trade good for the environment?
We analyze the impacts of bioenergy trade on greenhouse gas emissions using a two-good, three-factor model. Bioenergy is an agricultural good used as a substitute for fossil fuels in industry. Governments tax domestic pollution without international coordination. We assume that northern countries have higher labor productivity than southern ones and that agriculture is less pollution intensive than industry (after taxation). We show that whereas southern countries impose a lower tax rate than northern ones, they do not necessary have a competitive advantage in industry, and that compared to autarky, trade liberalization either increases or decreases worldwide emissions depending on regional comparative advantages.
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- 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 12881, Iowa State University, Department of Economics.
- Swee Chua, 2003. "Does tighter environmental policy lead to a comparative advantage in less polluting goods?," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 25-35, January.
- Oecd, 2006. "Agricultural Market Impacts of Future Growth in the Production of Biofuels," OECD Papers, OECD Publishing, vol. 6(1), pages 1-57.
- Schipper, Lee & Murtishaw, Scott & Khrushch, Marta & Ting, Michael & Karbuz, Sohbet & Unander, Fridtjof, 2001. "Carbon emissions from manufacturing energy use in 13 IEA countries: long-term trends through 1995," Energy Policy, Elsevier, vol. 29(9), pages 667-688, July.
- Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
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