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FOOD PRODUCTION VS. BIOMASS EXPORT VS. LAND-USE CHANGE: A CGE ANALYSIS FOR ARGENTINA

Miles Perry

MPRA Paper from University Library of Munich, Germany

Abstract: World trade in biomass is likely to increase in the years up to 2020 as imports are required to meet the demand created (directly or indirectly) by policy measures such as the EU Biofuels Directive. This paper assesses the macroeconomic consequences such large-scale trade for the exporting country, using a computable general equilibrium (CGE) model of Argentina. Given an exogenous increase in world prices for biomass, the model finds that production shifts towards biomass and away from other sectors. Implications of this include changes in the relative prices of goods and the purchasing power of labour. Price rises are largest in land-intensive sectors of the economy and the overall purchasing power of labour is adversely affected since biomass sectors are among the least labour intensive. When expansion of the agricultural area is permitted, relative price changes become less pronounced. However, expansion of the agricultural frontier may have adverse environmental impacts, including lowering the net GHG savings attributable to the biomass produced.

Keywords: CGE; Biofuels; Argentina (search for similar items in EconPapers)
JEL-codes: D58 F18 Q17 Q5 (search for similar items in EconPapers)
Date: 2008-06-05, Revised 2009-02-16
New Economics Papers: this item is included in nep-agr, nep-cmp and nep-ene
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