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Potential gains and losses of Biofuel production in Argentina: a computable general equilibrium analysis

Author

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  • Chisari, Omar O.
  • Romero, Carlos A.
  • Timilsina, Govinda

Abstract

Argentina is one of the world's largest biodiesel producers and the largest exporter, using soybeans as feedstock. Using a computable general equilibrium model that explicitly represents the biofuel industry, this study carries out several simulations on two sets of issues: (i) international markets for biofuel and feedstock, such as an increase in prices of soybean, soybean oil, and biodiesel, and (ii) domestic policies related to biofuels, such as an introduction of biofuel mandates. Both sets of issues can have important consequences to the Argentinean economy. The simulations indicate that increases in international prices of biofuels and feedstocks would increase Argentina's gross domestic product and social welfare. Increases in international prices of ethanol and corn also can benefit Argentina, but to a lesser extent. The domestic mandates for biofuels, however, would cause small losses in economic output and social welfare because they divert part of biodiesel and feedstock from exports to lower-return domestic consumption. An increase in the export tax on either feedstock or biodiesel also would lead to a reduction in gross domestic product and social welfare, although government revenue would rise.

Suggested Citation

  • Chisari, Omar O. & Romero, Carlos A. & Timilsina, Govinda, 2012. "Potential gains and losses of Biofuel production in Argentina: a computable general equilibrium analysis," Policy Research Working Paper Series 6124, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6124
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    Cited by:

    1. Debnath, Deepayan & Whistance, Jarrett & Thompson, Wyatt & Binfield, Julian, 2017. "Complement or substitute: Ethanol’s uncertain relationship with gasoline under alternative petroleum price and policy scenarios," Applied Energy, Elsevier, vol. 191(C), pages 385-397.

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    Keywords

    Economic Theory&Research; Energy Production and Transportation; Transport Economics Policy&Planning; Renewable Energy; Food&Beverage Industry;

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