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Impacts of a United States' biofuel policy on New Zealand's agricultural sector

Listed author(s):
  • Saunders, Caroline
  • Kaye-Blake, William
  • Marshall, Liz
  • Greenhalgh, Suzie
  • de Aragao Pereira, Mariana

The rise in oil prices has spurred interest in biofuels. Policies in the United States like the renewable fuel standard (RFS) have led to an expansion of ethanol production, while the New Zealand government has mandated a minimum level of biofuel sales. The research used a partial equilibrium model of international trade to quantify the price and farmgate income effects of the US RFS policy. The goal was to examine the competition between food and biofuel production and to quantify the impact of the policy on the agricultural sector in New Zealand. The RFS policy has a significant impact on corn prices, but a small effect on livestock prices and production. There thus appears to be little conflict between food and fuel uses for corn at the level of the RFS mandate. New Zealand's pasture-based livestock sector benefits from the use of corn for ethanol production: it receives better prices for its products, but does not face the same input cost increases as competitors. The results suggest that New Zealand faces an interesting decision: it could support investment in biofuels research, or benefit from the biofuels boom through the indirect impacts on demand and prices for meat and milk.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 37 (2009)
Issue (Month): 9 (September)
Pages: 3448-3454

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Handle: RePEc:eee:enepol:v:37:y:2009:i:9:p:3448-3454
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  1. Amani Elobeid & Simla Tokgoz, 2008. "Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 918-932.
  2. Swenson, David A., 2006. "Input-Outrageous: The Economic Impacts of Modern Biofuels Production," Staff General Research Papers Archive 12644, Iowa State University, Department of Economics.
  3. Baker, Allen & Zahniser, Steven, 2007. "Ethanol Reshapes the Corn Market," Amber Waves, United States Department of Agriculture, Economic Research Service, May.
  4. Uwe Schneider & Bruce McCarl, 2003. "Economic Potential of Biomass Based Fuels for Greenhouse Gas Emission Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(4), pages 291-312, April.
  5. Itf, 2008. "Biofuels: Linking Support to Performance," OECD/ITF Joint Transport Research Centre Discussion Papers 2008/7, OECD Publishing.
  6. Westcott, Paul C., 2007. "U.S. Ethanol Expansion Driving Changes Throughout the Agricultural Sector," Amber Waves, United States Department of Agriculture, Economic Research Service, September.
  7. Elobeid, Amani & Tokgoz, Simla, 2008. "AJAE Appendix for “Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?â€," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(4), November.
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