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on Environmental Economics |
| By: | Truong P. Truong; Claudia Kemfert |
| Abstract: | This paper describes the structure of the World Integrated Assessment model of global Trade, Environmental, and Climate change (WIATEC).The model consists of a multi-regional multi-sectoral core CGE model linked to a climate model. The core CGE is based on an existing global trade and environment model called GTAP-E (Truong, 1999; Burniaux and Truong, 2002). A suite of different and interchangeable 'modules' are then built around this 'core' to enable the model to be able to handle a range of different policy issues such as CO2 emissions, abatement, trading, non-CO2 (CH4 and N2O) emissions, land use land use change and forestry (LULUCF) activities, and changing technologies in the electricity generation sector. The approach which uses a core model structure with different additional modules built around this core structure allows the overall model to be flexible and can be adapted to a range of different policy issues. We illustrate the usefulness of this approach in a policy experiment which looks at the interaction between emissions trading scheme and the promotion of renewable energy targets in the European Union climate policy. |
| Keywords: | Integrated Assessment Model, Technological Change, Climate Policy |
| JEL: | Q O38 C68 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1021&r=env |
| By: | Eloi Lauren (Observatoire Français des Conjonctures Économiques) |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1005&r=env |
| By: | Hampf, Benjamin; Krüger, Jens |
| Abstract: | We conduct an empirical analysis of the technical efficiency of cars sold in Germany in 2010. The analysis is performed using traditional data envelopment analysis (DEA) as well as directional distance functions (DDF). The approach of DDF allows incorporating the reduction of carbon dioxide emissions as an environmental goal in the efficiency analysis. A frontier separation approach is used to gain deeper insight for different car classes and regions of origin. Natural gas driven cars and sports-utility-vehicles are also treated as different groups. The results show that the efficiency measurement is significantly influenced by the incorporation of carbon dioxide emissions. Moreover, we find that there is indeed a trade-off between technological performance and environmental performance. |
| Keywords: | nonparametric efficiency measurement, directional distance function, automobiles, air pollution |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:dar:ddpeco:43177&r=env |
| By: | Dr. Xunpeng SHI (Associate Researcher, Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | This paper argues that coal and its industry is promising. It is found that the Western European (including the British) case has been misunderstood and the US case shows a developing coal industry under increasing levels of environmental pressure. The demonstration of the declining emissions intensity of coal provides an additional mean of reconciling the development of the coal industry with the environment. In the long term the enforcement of environmental regulations can benefit the coal industry in several ways, and the alternatives to coal are not yet available in a sufficiently large scale. Based on the positive prospects of coal, issues related to climate change, clean coal technology and energy policy are discussed. |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2009-19&r=env |
| By: | Blankespoor, Brian; Dasgupta, Susmita; Laplante, Benoit; Wheeler, David |
| Abstract: | Global climate models predict a rise in extreme weather in the next century. To better understand future interactions among adaptation costs, socioeconomic development, and climate change in developing countries, observed losses of life from floods and droughts during 1960-2003 are modeled using three determinants: weather events, income per capita, and female education. The analysis reveals countries with high female education weathered extreme weather events better than countries with equivalent income and weather conditions. In that case, one would expect resilience to increase with economic growth and improvements in education. The relationship between resilience in the face of extreme weather events and increases in female education expenditure holds when socioeconomic development continues but the climate does not change, and socioeconomic development continues with weather paths driven by"wet"and"dry"Global Climate Models. Educating young women may be one of the best climate change disaster prevention investments in addition to high social rates of return in overall sustainable development goals. |
| Keywords: | Hazard Risk Management,Population Policies,Climate Change Economics,Climate Change Mitigation and Green House Gases,Climate Change Impacts |
| Date: | 2010–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5342&r=env |
| By: | Dirk Rübbelke; Stefan Vögele |
| Abstract: | Anthropogenic emissions of greenhouse gases cause climate change and this change in turn induces various direct impacts, e.g., changes in regional weather patterns. The frequency of heat waves and droughts in Europe is likely to rise. Yet, beyond these immediate effects of climate change, there are more indirect effects: Droughts may cause water scarcity and a lack in water supply which in turn would affect further sectors and critical infrastructures. An arising lack in water supply for cooling purposes, for example, will negatively affect the electricity generation in power plants. <br /> In this paper we analyse such interplays between climate-change affected sectors. We investigate whether and to which extent power generation and supply in Europe is threatened by climate change because of the higher risk of water supply shortages due to more frequent drought and heat-wave incidences. Our proposed approach cannot only be applied to analyse the climate change effects on individual power plant sites or the overall economy but also on electricity exchanges between countries.<br /> |
| Keywords: | adaptation, climate change, critical infrastructures, electricity trading, energy security, nuclear power plants, vulnerability |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:bcc:wpaper:2010-08&r=env |
| By: | Yu-Fu Chen; Michael Funke |
| Abstract: | The possibility of low-probability extreme events has reignited the debate over the optimal intensity and timing of climate policy. In this paper we therefore contribute to the literature by assessing the implications of low-probability extreme events on environmental policy in a continuous-time real options model with “tail risk”. In a nutshell, our results indicate the importance of tail risk and call for foresighted pre-emptive climate policies. |
| Keywords: | Climate Policy, Extreme Events, Real Options, Levy process |
| JEL: | D81 Q54 Q58 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:dun:dpaper:236&r=env |
| By: | Daniela Marconi (Bank of Italy) |
| Abstract: | The relocation of more polluting industries in poorer countries due to gaps in environmental standards is known as the pollution haven effect, whereby the scale and the composition of output change across countries. Changes in the composition of the output mix might translate into changes of comparative advantages across countries, as revealed by trade flows. This paper focus on this issue and looks at the changes of bilateral revealed comparative advantages (RCAs) in the last decade between China and the major fourteen EU countries (EU14). Using industry level data on bilateral trade, air pollution, water pollution and several measures of environmental stringency, we find that, controlling for other factors that may have affected RCAs, such as labor costs, on average our EU14 countries have kept or improved their advantages with respect to China in both water polluting industries (such as paper and agro-based industries) and air polluting industries (such as basic metals and chemicals), while they have lost competitiveness in the more clean industries (such as machinery and fabricated metals). |
| Keywords: | revealed comparative advantages, environmental regulation, industrial pollution |
| JEL: | F14 F18 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_67_10&r=env |
| By: | John P. Tang |
| Abstract: | Does increased environmental protection decrease the emission of pollutants or merely displace them? Using newly available trade data, this study examines the flows of a panel of chemicals designated as toxic by the U.S. Environmental Protection Agency’s Toxics Release Inventory (TRI). Estimates from a differences-in-differences model indicate a significant increase in net imports when a chemical is listed on TRI, which suggests production offshoring. Furthermore, I find that increased imports due to this “pollution haven effect” are sourced disproportionately from poorer countries, which are likely to have lower environmental protection standards. At the same time, I observe the bulk of American trade in toxic chemicals occurs with other wealthy countries, which may be attributed to the capital intensity of chemical production. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:10-12&r=env |
| By: | Dietrich Earnhart; Lubomir Lizal |
| Abstract: | We empirically assess whether firms face economies and/or diseconomies of scale with respect to air pollution control by evaluating the effects of production on firmlevel air emission levels using a panel of Czech firms during the country’s transitional period of 1993 to 1998. By estimating a separate set of production-related coefficients for each individual sector, the analysis permits economies/diseconomies of scale to differ across sectors. More important, the analysis allows these scale effects to vary over time, which seems critical in the context of a transition economy, as the Czech government was tightening air protection polices by imposing more stringent emission limits and escalating emission charge rates. To assess whether these tighter policies expanded economies of scale, the analysis controls for heterogeneity across individual firms by examining intrafirm variation in emissions and production |
| Keywords: | Czech Republic, environmental protection, pollution, production, economies of scale. |
| JEL: | D21 D62 Q53 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp405&r=env |
| By: | Evens Salies (Observatoire Français des Conjonctures Économiques) |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1003&r=env |
| By: | Eloi Lauren (Observatoire Français des Conjonctures Économiques); Jacques Le Cacheux (Observatoire Français des Conjonctures Économiques) |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1010&r=env |
| By: | Douglas Gollin (Williams College); Christian Zimmermann (University of Connecticut) |
| Abstract: | We study the impact of global climate change on the prevalence of tropi- cal diseases using a heterogeous agent dynamic general equilibrium model. In our framework, households can take actions (e.g., purchasing bednets or other goods) that provide partial protection from disease. However, these actions are costly and households face borrowing constraints. Parameterizing the model, we explore the impact of a worldwide temperature increase of 3 degrees Celsius. We find that the impact on disease prevalence and especially output should be modest and can be mitigated by improvements in protection efficacy. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2010-04&r=env |
| By: | Gilbert E. Metcalf; Aparna Mathur; Kevin A. Hassett |
| Abstract: | This paper provides a simple analytic approach for measuring the burden of carbon pricing that does not require sophisticated and numerically intensive economic models but which is not limited to restrictive assumptions of forward shifting of carbon prices. We also show how to adjust for the capital income bias contained in the Consumer Expenditure Survey, a bias towards regressivity in carbon pricing due to underreporting of capital income in higher income deciles in the Survey. Many distributional analyses of carbon pricing focus on the uses-side incidence of carbon pricing. This is the differential burden resulting from heterogeneity in consumption across households. Once one allows for sources-side incidence (i.e. differential impacts of changes in real factor prices), carbon policies look more progressive. Perhaps more important than the findings from any one scenario, our results on the progressivity of the leading cap and trade proposals are robust to the assumptions made on the relative importance of uses and sources side heterogeneity. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0752&r=env |
| By: | Eva Conraud Koellner; Luis Arturo Rivas Tovar |
| Abstract: | Este artículo analiza la cultura nacional en México mediante los modelos de Hofstede y de relaciones personales de Trompenaars y compara los valores culturales entre los países de mayor comportamiento verde en el mundo. Si bien, los resultados son coincidentes en cuanto a que la cultura mexicana es claramente tradicional y colectivista, y que presenta los niveles más bajos de comportamiento verde, en los últimos años se percibe una evolución que hace relevante emprender campañas de marketing ambiental en medios masivos de comunicación. ABSTRACT: This article analyzes the national culture in Mexico by the models of Hofstede and Trompenaars personal relationships and compares the cultural values of most countries in the world green behavior. While the findings are consistent in that Mexican culture is clearly traditional, collectivist, and presents the lower levels of green behavior, in the last year there was an evolution that makes relevant environmental undertake marketing campaigns in mass media communication. |
| Date: | 2010–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:col:000385:007142&r=env |
| By: | Arnold, S |
| Abstract: | The daily commute is an important element of transport and travel behaviour in the UK, and as such is relevant to discussions about the environment and sustainability, as well as social well-being. Economic research on the matter focuses on cost and structural factors, with preferences being given, whilst the psychological literature looks at how preferences are formed from attitudes and values, but tends to underplay the role of structural variables. This paper develops a simple structure of how attitudes, values and behaviours are linked, and tests them with multinomial and ordered regressions using data from Defra’s 2007 Survey of Attitudes and Behaviours in Relation to the Environment. The results found that attitudes towards cars and driving were a significant factor in transport choices, but environmental beliefs were only mildly significant, and only for some travel choices. Structural variables, here proxied by distance to work, were influential in most travel choices, as was age. Stated environmental behaviours however, were almost entirely insignificant. The results were robust, and suggest that policies aimed at structural or attitudinal change would be more effective than policies aimed at changing people’s environmental values. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:eid:wpaper:07/10&r=env |
| By: | Sebastian Rausch; Gilbert E. Metcalf; John M. Reilly; Sergey Paltsev |
| Abstract: | We analyze the distributional and efficiency impacts of different allowance allocation schemes for a national cap and trade system using the USREP model, a new recursive dynamic computable general equilibrium model of the U.S. economy. The USREP model tracks nine different income groups and twelve different geographic regions with the United States. Recently proposed legislation include the Waxman-Markey House bill, the similar Kerry-Boxer bill in the Senate that has been replaced by a Kerry-Lieberman draft bill, and the Cantwell-Collins Senate bill that takes a different approach to revenue allocation. We consider allocation schemes motivated by the recent proposals applied to a comprehensive national cap and trade system that limits cumulative greenhouse gas emissions over the control period to 203 billion metric tons. The policy target approximates national goals identified in pending legislation. We find that the allocation schemes in all proposals are progressive over the lower half of the income distribution and proportional in the upper half of the income distribution. Scenarios based on the Cantwell-Collins allocation proposal are less progressive in early years and have lower welfare costs due to smaller redistribution to low income households and consequently lower income-induced increases in energy demand and less savings and investment. Scenarios based on the other three allocation schemes tend to overcompensate some adversely affected income groups and regions in early years but this dissipates over time as the allowance allocation effect becomes weaker. Finally we find that carbon pricing by itself (ignoring the return of carbon revenues through allowance allocations) is proportional to modestly progressive. This striking result follows from the dominance of the sources over uses side impacts of the policy and stands in sharp contrast to previous work that has focused only on the uses side. The main reason is that lower is that lower income households derive a large fraction of income from government transfers and, reflecting the reality that these are generally indexed to inflation, we hold the transfers constant in real terms. As a result this source of income is unaffected by carbon pricing, while wage and capital income is affected. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0753&r=env |
| By: | Iain Fraser (University of Kent); Robert Waschik (Department of Finance, La Trobe University) |
| Abstract: | In this paper we use a Computable General Equilibrium (CGE) model to exam- ine the Double Dividend (DD) hypothesis. Using the general equilibrium GTAP model data for Australia and the UK, we incorporate endogenous production taxes to achieve targeted abatement policies in the production of energy goods (coal, oil, gas, petroleum, electricity). Following Bento and Jacobsen (2007), we examine the role played specific factors in the production of energy goods. In particular, we employ a novel approach to model the impact of specific factors on the existence and magnitude of the DD. We also incorporate endogenous labour supply, which allows us to illustrate the size of the labour market effect of targeted abatement policies. Our results indicate that with abatement tax revenue offset by reductions in other government distortions, we can identify which specific forms of revenue recycling yield a DD. For Australia we find that the magnitude of the DD is signif- icantly larger when we employ the specific factor characterisation of an economy and we recycle the revenue through reductions in consumption taxes. However, we find no evidence of a DD for Australia when we employ income tax as the recycling instrument. Finally, we find virtually no evidence of a DD for the UK for either recycling instrument regardless of the specific factors characterisation we employ. |
| Keywords: | environmental taxes, double dividend, specific factors |
| JEL: | Q52 Q48 C68 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ltr:wpaper:1837-2198/978-0-9807041-4-3&r=env |
| By: | Nikolaos Georgantzis (Universitat Jaume I); Aitor Ciarreta (Universidad de Alicante); Carlos Gutiérrez-Hita (Universidad de Alicante) |
| Abstract: | Este artículo trata el problema de cómo la competencia oligopolística es afectada por el desarrollo de las tecnologías que utilizan energías renovables dentro del marco de reducción de emisiones de CO2 y seguridad en el mercado eléctrico. En un modelo oligopolístico donde las empresas poseen plantas que utilizan recursos tanto renovables como no renovables, mostramos que los precios en el mercado mayorista decrecen a medida que las tecnologías que utilizan recursos renovables incrementan su eficiencia, hecho que también depende de la subvención fijada por el regulador. Sin embargo, encontramos que un subsidio excesivo puede distorsionar la competencia cuando la madurez tecnológica de los recursos renovables es lo suficientemente alta comparada con el coste de los recursos no renovables. Por último, contrastamos las predicciones del modelo utilizando datos del mercado eléctrico español. The paper addresses the question of how oligopolistic competition is affected by the development of renewable source technologies within the new framework of electricity supply security and reduction of emissions of CO2. In an oligopoly model where firms own renewable as well as non-renewable source technologies, we show that wholesale prices tend to decline the larger the efficiency achieved by renewable technologies depending also on the feed-in-tariff fixed by regulators. We found however that a high subsidy can distort competition when technical maturity of renewables is large as compared with the costs incurred by fossil sources. Finally, we test the predictions of the model using data from the Spanish electricity market. |
| Keywords: | electricity technology mix, renewable energy sources, technical maturity, feed-in tariffs. mix tecnológico eléctrico, recursos energéticos renovables, madurez tecnológica, subvenciones |
| JEL: | L13 L51 L94 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasec:2010-06&r=env |
| By: | Renée Alicia Anschau; Noelia Flores Marco; Stella Maris Carballo; Jorge Hilbert |
| Abstract: | En el presente trabajo se muestran los resultados obtenidos a partir de la evaluación del cultivo de Caña de Azúcar; La puesta en vigencia de las leyes argentinas, que fija incentivos específicos para este cultivo, reabren las posibilidades de retomar la producción de bioetanol anhidro para uso como combustible. El objetivo final del presente estudio es entonces, contribuir al uso ordenado del territorio a partir de las potencialidades agroecológicas que ofrece el mismo, considerando también variables de índole ambiental, económico y social. Con análisis confiables sobre las posibilidades de expansión de los cultivos que vayan a ser destinados a la producción de biocombustibles y con estudios que contabilicen la disponibilidad de recursos biomásicos que puedan ser orientados a la producción de energía. ABSTRACT: The current work shows the results obtained from the evaluation of the Sugar Cain crop; the activation of the Argentinean laws that fixes specific incentives for this crop, reopen the possibilities to restart the production of unhydro bioethanol for use as fuel. The final objective of this current study is then to contribute to the organized use of the territory based on the agro-ecological potentialities that it self offers, considering also environmental, economic and social variables. With reliable analysis about the expansion possibilities of crops that are destined for the production of bio-fuels, and with studies that account for the availability of biomass resources that could be oriented towards energy production. |
| Date: | 2010–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:col:000385:007148&r=env |
| By: | Sruthijith K K |
| Abstract: | It has been more than a decade since the debate on the feasibility of plastics started at the international level. The environmentalists and the plastics industry have slugged it out on whether plastics are good or bad and the debate has become extremely convoluted. Nevertheless, there are some points of agreement that have emerged from this debate. A significant segment of the antiplastics movement has accepted the unavoidability of plastics and recognised their benefits to mankind. At the same time, the plastic industry has by and large agreed that there are certain ecological effects caused by plastics in various stages of its life cycle. With such admissions and acknowledgements being made, the focus now shifts to how the banes of plastics should be addressed. It is this that forms the subject matter of this paper. This paper examines the viability of the command-and-control approach and that of the market-based alternatives in addressing the environmental problems caused by plastics.[Working Paper No. 0033] |
| Keywords: | international level, environmentalists, slugged, antiplastics, mankind |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2603&r=env |
| By: | Emili Tortosa Ausina (Universitat Jaume I); Diego Prior Jiménez (Universidad Autónoma de Barcelona); María Teresa Balaguer-Coll (Universitat Jaume I) |
| Abstract: | Over the last few years, many studies have analyzed the productive efficiency of local governments in different countries. An accurate definition of their output bundles -i.e., the services and facilities they provide to their constituencies- is essential to this research. However, several difficulties emerge in this task. First, since in most cases the law only establishes the minimum amount of services and facilities to provide, it may well be the case that some municipalities go beyond the legal minimum and, consequently, might be labeled as inefficient when compared to other municipalities which stick to the legal minimum. Second, municipalities face very different environmental conditions, which raises some doubts about the plausibility of an unconditional analysis. This study tackles these problems by proposing a metafrontier analysis in which the efficiency of municipalities is evaluated after splitting them into clusters according to various criteria (output mix, environmental conditions, size). We perform our estimations using order-m frontiers, given their robustness to outliers and immunity to the curse of dimensionality. We provide an application to Spanish municipalities, and results show that both output mix and, more especially, environmental conditions, should be controlled for, since efficiency differences between municipalities in different groups are notable. Durante los últimos años muchos trabajos han venido analizando la eficiencia productiva de las corporaciones locales de una gran variedad de países. Para este tipo de estudios resulta crucial una definición precisa de los servicios e infraestructuras que los municipios proporcionan a sus ciudadanos. Sin embargo, esta tarea presenta varias dificultades. En primer lugar, dado que en muchas circunstancias la ley únicamente establece los servicios mínimos que debe proporcionar un municipio, puede darse el caso de que algunos municipios vayan más allá de este mínimo legal y, consecuentemente, sean clasificados como ineficientes al compararlos con otros municipios que se ciñen al mínimo. En segundo lugar, las corporaciones locales operan en condiciones ambientales muy dispares, lo cual genera dudas acerca de la factibilidad de un análisis incondicional. Este trabajo aborda estas cuestiones proponiendo un análisis metafrontera en el que la eficiencia de las corporaciones locales se evalúa tras clasificarlas en distintos grupos de acuerdo con criterios múltiples (output mix, condiciones ambientales, tamaño). Las estimaciones son llevadas a cabo utilizando fronteras orden-m, debido a la robustez que presentan frente a observaciones atípicas y la inmunidad a la ¿maldición de la dimensionalidad¿ (curse of dimensionality). Llevamos a cabo una aplicación a los municipios españoles, y los resultados indican que tanto el output mix como, sobre todo, las condiciones ambientales, deberían ser tenidas en cuenta al evaluar la eficiencia, pues las diferencias en la eficiencia de los municipios en los distintos grupos son notables. |
| Keywords: | eficiencia, condiciones ambientales, gobierno local, metafrontera, orden-m efficiency, environmental conditions, local government, metafrontier, order-m |
| JEL: | D24 D60 H71 H72 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasec:2010-02&r=env |
| By: | Andrea Conte; Ariane Labat; Janos Varga; Žiga Žarnić |
| Abstract: | The aim of this paper is to analyse options for reforming the fragmented Chinese pension system that covers only 55 % of urban employees and a very small part of the rural population. After a brief history of pensions in China we present recent reform proposals and then discuss principles of pension reforms, with particular attention to reducing the pension contribution rates so that compliance could improve and coverage increase. As the Chinese population is ageing fast, we are presenting transition to a notional defined contribution (NDC) system as a model for adjusting the pension rules for increasing longevity. Transforming the accrued pension rights into NDC accounts and starting to apply the new NDC-inspired rules on indexation is not necessarily a jump into the unknown for the Chinese pensions system. Rather, it could be a useful and long-awaited clarification to the rules and a way to move towards a more uniform system nationwide. With the help of a simulation model based on Chinese data we produce scenarios for a range of pension reforms and assess their properties. |
| Keywords: | Oksanen,China, population ageing, pension reforms, notional defined contribution scheme,NDC |
| JEL: | H11 H55 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0413&r=env |
| By: | Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)) |
| Abstract: | This report provides insight into four aspects of modeling indirect land use caused by expanded biofuels production. The report was motivated by the National Biodiesel Board's interest in better understanding how the California Air Resources Board (CARB) estimated an indirect land-use factor for soybean-based biodiesel of 66 gCO2e/MJ, which is more than three times greater than the direct emissions from the fuel. Four aspects of CARB's modeling approach were examined: (1) why CARB estimates that more U.S. forest than pasture will be converted to cropland; (2) whether CARB's predicted land-use changes are consistent with observed U.S. land-use changes in the past decade; (3) how CARB could account for double cropping; and (4) whether CARB's assumption that land brought into production has lower yields than land that was already in production. Results indicate that (1) much of the predicted U.S. forestland conversion is likely due to restrictions on cross-price elasticities imposed by use of the Constant Elasticity of Transformation supply function; (2) a stock of idled cropland could have accommodated the increase in U.S. cropland in 2007 and 2008; (3) the soybean yield elasticity with respect to price can be adjusted to account for double-cropped acres; and (4) there is no empirical support for the assumption that yields in Brazil on new land are lower than yields on old land. The analysis shows how much work needs to be done in this area if the models used to estimate indirect land use are to become widely accepted. |
| Keywords: | CET supply function, double cropping, idle cropland, indirect land use. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ias:fpaper:10-sr105&r=env |