Biofuel economics in a setting of multiple objectives and unintended consequences
This paper examines biofuels from an economic perspective and evaluates the merits of promoting biofuel production in the context of the policies’ multiple objectives, life-cycle implications, pecuniary externalities, and other unintended consequences. The policy goals most often cited are to reduce fossil fuel use and to lower greenhouse gas emissions. But the presence of multiple objectives and various indirect effects complicates normative evaluation. To address some of these complicating factors, we look at a several combinations of policy alternatives that achieve the same set of incremental gains along the two primary targeted policy dimensions, making it possible to compare the costs and cost-effectiveness of each combination of policies. For example, when this approach is applied to U.S.-produced biofuels, they are found to be 14–31 times as costly as alternatives like raising the gas tax or promoting energy efficiency improvements. The analysis also finds the scale of the potential contributions of biofuels to be extremely small in both the U.S. and EU. Mandated U.S. corn ethanol production for 2025 reduces U.S. petroleum input use by 1.75% and would have negligible net effects on CO2 emissions; and although EU imports of Brazilian ethanol may look better given the high costs of other alternatives, this option is equivalent, at most, to a 1.20% reduction in EU, gasoline consumption.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 15 (2011)
Issue (Month): 9 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/bibliographic|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert Hahn & Caroline Cecot, 2009. "The benefits and costs of ethanol: an evaluation of the government’s analysis," Journal of Regulatory Economics, Springer, vol. 35(3), pages 275-295, June.
- Martines-Filho, Joao Gomes & Burnquist, Heloisa Lee & Vian, Carlos Eduardo de Freitas, 2006. "Bioenergy and the Rise of Sugarcane-Based Ethanol in Brazil," Choices, Agricultural and Applied Economics Association, vol. 21(2).
- Tyner Wallace E., 2007. "Policy Alternatives for the Future Biofuels Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-13, December.
- R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," Review of Economic Studies, Oxford University Press, vol. 24(1), pages 11-32.
- Sarah E. West & Roberton C. Williams III, 2005. "The Cost of Reducing Gasoline Consumption," American Economic Review, American Economic Association, vol. 95(2), pages 294-299, May.
- Khanna, Madhu & Isik, Murat & Zilberman, David, 2002.
"Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality,"
Blackwell, vol. 27(2), pages 157-174, August.
- Khanna, Madhu & Isik, Murat & Zilberman, David, 2002. "Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 27(2), August.
- Geoffrey Heal, 2010. "Reflections--The Economics of Renewable Energy in the United States," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 139-154, Winter.
- Newell, Richard G. & Stavins, Robert N., 2000.
"Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration,"
Journal of Environmental Economics and Management,
Elsevier, vol. 40(3), pages 211-235, November.
- Stavins, Robert, 2000. "limate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration," Working Paper Series rwp00-001, Harvard University, John F. Kennedy School of Government.
- Stavins, Robert & Newell, Richard, 1999. "Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration," Discussion Papers dp-99-31-rev, Resources For the Future.
- Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
- Ian W. H. Parry & Kenneth A. Small, 2005.
"Does Britain or the United States Have the Right Gasoline Tax?,"
American Economic Review,
American Economic Association, vol. 95(4), pages 1276-1289, September.
- Parry, Ian & Small, Kenneth, 2002. "Does Britain or the United States Have the Right Gasoline Tax?," Discussion Papers dp-02-12-, Resources For the Future.
- Nathaniel O. Keohane, 2009. "Cap and Trade, Rehabilitated: Using Tradable Permits to Control U.S. Greenhouse Gases," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 3(1), pages 42-62, Winter.
- Harry de Gorter & David R. Just, 2010.
"The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy,"
Applied Economic Perspectives and Policy,
Agricultural and Applied Economics Association, vol. 32(1), pages 4-32.
- Harry de Gorter & David R. Just, 2010. "The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 4-32.
- 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.
- Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
- Stephen Polasky & Jeffrey D. Camm & Brian Garber-Yonts, 2001. "Selecting Biological Reserves Cost-Effectively: An Application to Terrestrial Vertebrate Conservation in Oregon," Land Economics, University of Wisconsin Press, vol. 77(1), pages 68-78.
- Daniel J. Graham & Stephen Glaister, 2002. "The Demand for Automobile Fuel: A Survey of Elasticities," Journal of Transport Economics and Policy, University of Bath, vol. 36(1), pages 1-25, January.
- Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "Cost-Effective Reduction of NOx Emissions from Electricity Generation," Discussion Papers dp-00-55-rev, Resources For the Future.
- Nijkamp, Peter & Rietveld, Piet, 1987. "Multiple objective decision analysis in regional economics," Handbook of Regional and Urban Economics, in: P. Nijkamp (ed.), Handbook of Regional and Urban Economics, edition 1, volume 1, chapter 12, pages 493-541 Elsevier.
- Espey, Molly, 1998. "Gasoline demand revisited: an international meta-analysis of elasticities," Energy Economics, Elsevier, vol. 20(3), pages 273-295, June.
- H. Spencer Banzhaf, 2009. "Objective or Multi-Objective? Two Historically Competing Visions for Benefit-Cost Analysis," Land Economics, University of Wisconsin Press, vol. 85(1), pages 3-23.
- Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, vol. 16(2), pages 91-122, May.
- G. Cornelis van Kooten & Brent Sohngen, 2007.
"Economics of Forest Ecosystem Carbon Sinks: A Review,"
2007-02, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
- van Kooten, G. Cornelis & Sohngen, Brent, 2007. "Economics of Forest Ecosystem Carbon Sinks: A Review," International Review of Environmental and Resource Economics, now publishers, vol. 1(3), pages 237-269, September.
- Dicks, Michael R. & Campiche, Jody L. & Torre Ugarte, Daniel de la & Hellwinckel, Chad M. & Bryant, Henry L. & Richardson, James W., 2009. "Land Use Implications of Expanding Biofuel Demand," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(02), August.
- West, Sarah E. & Williams III, Roberton C., 2007. "Optimal taxation and cross-price effects on labor supply: Estimates of the optimal gas tax," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 593-617, April.
- Benjamin S. Rashford & Richard M. Adams, 2007. "Improving the Cost-Effectiveness of Ecosystem Management: An Application to Waterfowl Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 755-768.
- Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:15:y:2011:i:9:p:4320-4333. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.