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Killing two birds with one stone: US and EU biofuel programmes

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  • Jean-Marc Bourgeon
  • David Tréguer

Abstract

The United States and the European Union have been implementing sizeable biofuel support programmes since the beginning of the decade. Supporting the biofuel industry raises the price of the agricultural feedstock, and hence increases the farmer revenue and reduces the need for direct income support. Thus, for a given objective of agricultural income, the regulator is able to operate a partial substitution between agricultural decoupled payments and the support to the biofuel industry (subsidies or mandatory blending). We detail these effects and derive the biofuel and the environmental policies that maximise social welfare. We also show that for high levels of biofuel production, cross-compliance provisions are a more expensive way of enforcing the environmental policy than fining farmers. Oxford University Press and Foundation for the European Review of Agricultural Economics 2010; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Jean-Marc Bourgeon & David Tréguer, 2010. "Killing two birds with one stone: US and EU biofuel programmes," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 37(3), pages 369-394, September.
    • Handle: RePEc:oup:erevae:v:37:y:2010:i:3:p:369-394
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    File URL: http://hdl.handle.net/10.1093/erae/jbq025
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    1. Konur, Ozcan, 2011. "The scientometric evaluation of the research on the algae and bio-energy," Applied Energy, Elsevier, vol. 88(10), pages 3532-3540.
    2. Basak Bayramoglu & Jean-François Jacques, 2016. "The economic and environmental effects of a biofuel mandate policy: the case of France [Les effets économiques et environnementaux d’une politique d’incorporation obligatoire de biocarburants : le ," Post-Print hal-02877013, HAL.
    3. Bullock, David S. & Couleau, Anabelle, 2012. "The U.S. Ethanol and Commodity Policy Labyrinth: Looking into Welfare Space to Analyze Policies that Combine Multiple Instruments," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126901, International Association of Agricultural Economists.
    4. Juan P. Sesmero & Richard K. Perrin & Lilyan E. Fulginiti, 2016. "A Variable Cost Function for Corn Ethanol Plants in the Midwest," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 565-587, September.
    5. Santos Equihua, Yéssica Yasmín & Espitia Moreno, Irma Cristina, 2017. "Análisis comparativo de la influencia de los factores de eficiencia en la producción de biodiesel a partir de desechos de grasas animales y aceites vegetales," Revista Nicolaita de Estudios Económicos, Universidad Michoacana de San Nicolás de Hidalgo, Instituto de Investigaciones Económicas y Empresariales, vol. 12(1), pages 30-46.
    6. Choudhury, Hari K. & Goswami, Kishor, 2013. "Determinants of expansion of area under jatropha plantation in North East India: A Tobit analysis," Forest Policy and Economics, Elsevier, vol. 30(C), pages 46-52.

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