IDEAS home Printed from
   My bibliography  Save this paper

Energy policies and their impact on establishing nature areas in Poland - an AGE analysis


  • Adriana Ignaciuk



Biomass as a source of energy has several advantages over fossil fuels. It delivers energy at low net CO2 emission levels and it contributes to sustaining future energy supplies. However, an often-heard concern is that large-scale biomass plantations might increase pressure on the productive land and might cause a substantial increase of food prices. Johansson and Azar (2004) predict that due to rigid CO2 policy the price of agricultural goods increase substantially. McCarl and Schneider (2001) analyses the impact of carbon price on food and biomass production and they conclude that with a carbon price of 500$/MTCE, US crop prices almost triple. If we can exploit the multi functionality properties of biomass plantation, such as bioremediation, they can contribute to environmental policy by reducing the competition between biomass and agricultural production. In this paper we deal with the trade-off between agricultural and biomass production when such synergies are explicitly taken into account. To assess the impact of environmental policies on greenhouse gas emissions, land use allocation, sectoral production and consumption levels and prices of land, food, electricity and other commodities we present an applied general equilibrium (AGE) model with special attention to biomass and multi-product crops. The model describes the entire economy, with explicit detail in the representation of production of traditional agricultural and biomass crops. The model is an extended version of the model described in Ignaciuk et al. (2004). The model distinguishes 35 sectors, including 6 agricultural and biomass sectors. Moreover, the bioelectricity sector is explicitly described. We include three primary production factors: labor, capital and land. Three land classes are identified to capture differences in productivity from different land types. A representative consumer maximizes utility under the condition that expenditures on consumption goods do not exceed income. Utility is represented by a nested constant elasticity of substitution (CES) function, in order to allow for substitution possibilities between different consumption goods, such as between conventional electricity and bioelectricity. Producers maximize profits subject to the available production technologies. Production technologies are represented by six-level nested CES functions, where also emissions (emission permits) from production processes are incooperated. The emissions of major greenhouse gases are calculated; namely CO2, N2O and CH4. A government sector collects taxes, distributes subsidies and consumes public goods; environmental policy is implemented by reducing the number of emission permits the government auctions. This way of modeling environmental policy ensures that a cost-effective allocation is achieved. The interactions between the various production sectors are relevant, as the agricultural and energy sectors have strong links with the rest of the economy. An economy-wide model, such as the AGE-framework provides, allows us to take these interlinkages fully into account. Moreover, the indirect impacts of environmental policies, that are often ignored but can be highly relevant (cf. Dellink 2005) are incorporated in this way, ensuring a consistent assessment of the economic costs of environmental policy. We calibrate the AGE model using data for Poland for 1997. Poland provides a relevant case as it has a high potential for biomass production, and has a large agricultural sector (Ignaciuk et al.2005). In the empirical application, we focus on bioremediation characteristics of willow plantations and on biodiversity support of forestry. Data are taken from Statistics Poland (GUS 2002) and the GTAP database (Rutherford & Paltsev 2000). The preliminary results show that bioremediation characteristics of willow can substantially increase the potential for bioenergy, thanks to its potential of growing on marginal land. Thus, the costs of climate policy can be substantially reduced and the policy goals set for bioenergy use can be achieved with less effort. However, at current prices, willow and forestry are not economically interesting, and hence stringent environmental policies are needed to ensure that these opportunities are reaped.

Suggested Citation

  • Adriana Ignaciuk, 2005. "Energy policies and their impact on establishing nature areas in Poland - an AGE analysis," ERSA conference papers ersa05p600, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa05p600

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Wolf, J. & Bindraban, P. S. & Luijten, J. C. & Vleeshouwers, L. M., 2003. "Exploratory study on the land area required for global food supply and the potential global production of bioenergy," Agricultural Systems, Elsevier, vol. 76(3), pages 841-861, June.
    2. Victor Ginsburgh & Michiel Keyzer, 2002. "The Structure of Applied General Equilibrium Models," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262571579, January.
    3. Kumbaroglu, Gurkan Selcuk, 2003. "Environmental taxation and economic effects: a computable general equilibrium analysis for Turkey," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 795-810, November.
    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. McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
    6. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
    7. Schneider, Uwe A. & Kumar, Pushpam, 2008. "Greenhouse Gas Mitigation through Agriculture," Choices, Agricultural and Applied Economics Association, vol. 23(1).
    8. Kemfert, Claudia, 1998. "Estimated substitution elasticities of a nested CES production function approach for Germany," Energy Economics, Elsevier, vol. 20(3), pages 249-264, June.
    9. Marie Walsh & Daniel de la Torre Ugarte & Hosein Shapouri & Stephen Slinsky, 2003. "Bioenergy Crop Production in the United States: Potential Quantities, Land Use Changes, and Economic Impacts on the Agricultural Sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(4), pages 313-333, April.
    10. Breuss, Fritz & Steininger, Karl, 1998. "Biomass Energy Use to Reduce Climate Change: A General Equilibrium Analysis for Austria," Journal of Policy Modeling, Elsevier, vol. 20(4), pages 513-535, August.
    11. Gielen, D. J. & de Feber, M. A. P. C. & Bos, A. J. M. & Gerlagh, T., 2001. "Biomass for energy or materials?: A Western European systems engineering perspective," Energy Policy, Elsevier, vol. 29(4), pages 291-302, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa05p600. 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: (Gunther Maier). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.