EconPapers    
Economics at your fingertips  
 

Efficiency of second-generation biofuel crop subsidy schemes: Spatial heterogeneity and policy design

Bo Pieter Johannes Andrée, Vasco Diogo and Eric Koomen ()

Renewable and Sustainable Energy Reviews, 2017, vol. 67, issue C, 848-862

Abstract: Policy schemes that aim to stimulate the cultivation of biofuel crops typically ignore the spatial heterogeneity in costs and benefits associated with their production. Because of spatial heterogeneity in biophysical, and current agricultural production factors, potential gains from stimulating biofuel crops are non-uniformly distributed across space. This paper explores implications of this type of heterogeneity for the net benefits associated with different subsidy schemes. We present a simple framework based on discounted cash flows, to assess potential gains from introducing the notion of heterogeneity into stimulation schemes. We show that agricultural subsidy spending can be reduced in a Pareto efficient way and simultaneously improve the total stimulation potential of biofuel policies, when schemes: 1) are production based instead of land based; 2) accommodate differences in opportunity costs, and 3) target sites where subsidies for conventional agricultural land-use types are high. These results are robust for a range of different bioenergy prices and the relative gains of addressing these key elements in policy compared to conventional stimulation schemes increase with lower bioenergy prices, and are largest when low prices coincide with high emission reduction ambitions.

Keywords: Spatial heterogeneity; Biofuels; Subsidy schemes; Spatial model; Cost efficiency; Net present value; Agricultural land use (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1364032116305391
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:rensus:v:67:y:2017:i:c:p:848-862

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/bibliographic
http://www.elsevier. ... 600126/bibliographic

DOI: 10.1016/j.rser.2016.09.048

Access Statistics for this article

Renewable and Sustainable Energy Reviews is currently edited by L. Kazmerski

More articles in Renewable and Sustainable Energy Reviews from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-12-21
Handle: RePEc:eee:rensus:v:67:y:2017:i:c:p:848-862