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Market, Welfare and Land-Use Implications of Lignocellulosic Bioethanol in Hawai�i

Author

Listed:
  • Junko Mochizuki

    (International Institute of Applied Systems Analysis (IIASA))

  • John F. Yanagida

    (University of Hawaii at Manoa, Department of Natural Resources and Environmental)

  • Makena Coffman

    (University of Hawaii at Manoa, Department of Urban and Regional Planning University of Hawaii Economic Research Organization)

Abstract

This article examines land-use, market and welfare implications of lignocellulosic bioethanol production in Hawai?i to satisfy 10% and 20% of the State�s gasoline demand in line with the State�s ethanol blending mandate and Alternative Fuels Standard (AFS). A static computable general equilibrium (CGE) model is used to evaluate four alternative support mechanisms for bioethanol. Namely: i) a federal blending tax credit, ii) a long-term purchase contract, iii) a state production subsidy financed by a lump-sum tax and iv) a state production subsidy financed by an ad valorem gasoline tax. We find that because Hawaii-produced bioethanol is relatively costly, all scenarios are welfare reducing for Hawaii residents: estimated between -0.14% and -0.32%. Unsurprisingly, Hawaii�s economy and its residents fair best under the federal blending tax credit scenario, with a positive impact to gross state product of $49 million. Otherwise, impacts to gross state product are negative (up to -$63 million). We additionally find that Hawaii-based bioethanol is not likely to offer substantial greenhouse gas emissions savings in comparison to imported biofuel, and as such the policy cost per tonne of emissions displaced ranges between $130 to $2,100/tonne of CO2e. The policies serve to increase the value of agricultural lands, where we estimate that the value of pasture land could increase as much as 150% in the 20% AFS scenario.

Suggested Citation

  • Junko Mochizuki & John F. Yanagida & Makena Coffman, 2013. "Market, Welfare and Land-Use Implications of Lignocellulosic Bioethanol in Hawai�i," Working Papers 2013-10, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    • Handle: RePEc:hae:wpaper:2013-10
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    References listed on IDEAS

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