Modelling the competition for land between traditional agriculture and biofuel production

Luciana Porfirio, Yiyong Cai and David Newth

No 332650, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Since the industrial revolution, human actions have driven rapid growth in greenhouse gas emissions, to the point where we have modified the Earth’s atmospheric composition and are changing the climate. This poses a significant threat to our economic development, prosperity and well-being. As fossil fuel burning accounts for 90% of all anthropogenic emissions, global mitigation efforts will mainly involve policies to target the production and consumption of fossil fuels. Introducing a carbon price on fossil fuel consumption, either in the form of a direct tax, or via a permit price under a cap and trade scheme, is widely considered to be an essential component of any cost-effective policy to decarbonise the economy. However, imposing a carbon price incurs ancillary costs to economic activities and can potentially reduce economic outputs. It is important to recognise that not all the burden of mitigation need to be assumed by reducing industrial emissions. Some mitigation can be achieved by producing Bio-fuels that can substitute fossil fuels and sequestering carbon to generate ‘negative’ emissions. However, the growth of Bio-fuels implies a new competitor for land that would be otherwise used for traditional agricultural activities, in particular, food production. The Food and Agriculture Organization of the United Nations (FAO) estimates that the global food production must increase by 60% by 2050 in order to keep up with the pace of population growth. Therefore, the production of Bio-fuels for global climate mitigation will be primarily a compromise between the benefits of reducing global climate change and the costs of feeding the growing world population. Finding an optimal global balance between the uses of land for growth of Bio-fuels and production of food requires us to quantify the associated trade-offs. In this paper, we apply the dynamic version of the GTAP Bio-fuel model (GDyn-Bio) to investigate the climate and socioeconomic implications of B...

Keywords: Land Economics/Use; Crop Production/Industries (search for similar items in EconPapers)
Date: 2015
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