Impact of Biofuel Production on World Agricultural Markets: A Computable General Equilibrium Analysis
Dileep Birur (),
Thomas Hertel () and
Wallace Tyner ()
GTAP Working Papers from Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University
This paper introduces biofuels sectors as energy inputs into the GTAP Data Base and to the production and consumption structures of the GTAP-Energy model developed by Burniaux and Truong (2002), and further modified by McDougall and Golub (2008). We also incorporate Agro-ecological Zones (AEZs) for each of the land using sectors in line with Lee et al. (2005). The GTAP-E model with biofuels and AEZs offers a useful framework for analyzing the growing importance of biofuels for global changes in crop production, utilization, commodity prices, factor use, trade, land use change etc. We begin by validating the model over the 2001-2006 period. We focus on six main drivers of the biofuel boom: the hike in crude oil prices, replacement of MTBE by ethanol as a gasoline additive in the US, and subsidies for ethanol and biodiesel in the US and EU. Using this historical simulation, we calibrate the key elasticities of energy substitution between biofuels and petroleum products in each region. With these parameter settings in place, the model does a reasonably good job of predicting the share of feedstock in biofuels and related sectors in accordance with the historical evidence between 2001 and 2006 in the three major biofuel producing regions: US, EU, and Brazil. The results from the historical simulation reveal an increased production of feedstock with the replacement of acreage under other agricultural crops. As expected, the trade balance in oil sector improves for all the oil exporting regions, but it deteriorates at the aggregate for the agricultural sectors.
New Economics Papers: this item is included in nep-agr, nep-cmp, nep-ene and nep-env
Note: GTAP Working Paper No. 53
References: Add references at CitEc
Citations: View citations in EconPapers (53) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:gta:workpp:2413
Access Statistics for this paper
More papers in GTAP Working Papers from Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University Contact information at EDIRC.
Bibliographic data for series maintained by Jeremy Douglas ().