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Biofuel policies and the environment: the effects of biofuel feedstock production on climate, water quality and biodiversity

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  • Lankoski, Jussi E.
  • Ollikainen, Markku

Abstract

In this paper we examine the multiple environmental effects of policies promoting biofuel production from agricultural crops. We develop theoretical and empirical frameworks and provide an integrated economic and ecological modelling approach: an economic model of farmers’ decision making is combined with a biophysical model predicting the effects of farming practices on crop yields and multiple environmental effects. The analysed environmental effects include GHG emissions over the life cycle, nitrogen and phosphorus runoff, herbicide runoff and the quality of wildlife habitats. Model is applied to crop production in Finland. We found that the overall environmental performance of alternative land use types is mainly driven by the value of CO2-eq emissions and nutrient runoff damage. Herbicide use intensity and resulting herbicide runoff damage have only a marginal effect on the environmental performance of alternative land use types. Incorporation of biodiversity benefits favour rape and reed canary grass over cereals. Social welfare ranking of alternative land use types is mainly driven by profitability of land use rather than the social valuation of environmental effects.

Suggested Citation

  • Lankoski, Jussi E. & Ollikainen, Markku, 2009. "Biofuel policies and the environment: the effects of biofuel feedstock production on climate, water quality and biodiversity," 2009 Conference, August 16-22, 2009, Beijing, China 51677, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51677
    DOI: 10.22004/ag.econ.51677
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    References listed on IDEAS

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    1. Jussi Lankoski & Markku Ollikainen, 2008. "Bioenergy crop production and climate policies: a von Thunen model and the case of reed canary grass in Finland," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(4), pages 519-546, December.
    2. Jussi Lankoski & Markku Ollikainen & Pekka Uusitalo, 2006. "No-till technology: benefits to farmers and the environment? Theoretical analysis and application to Finnish agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(2), pages 193-221, June.
    3. Yrjola, Tapani & Kola, Jukka, 2004. "Consumer Preferences Regarding Multifunctional Agriculture," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 7(2), pages 1-13.
    4. Sami Myyrä & Elise Ketoja & Markku Yli-Halla & Kyöisti Pietola, 2005. "Land Improvements under Land Tenure Insecurity: The Case of pH and Phosphate in Finland," Land Economics, University of Wisconsin Press, vol. 81(4).
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