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What is the social value of second-generation biofuels ?

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  • Hertel, Thomas W.
  • Steinbuks, Jevgenijs
  • Tyner, Wallace E.

Abstract

What is second-generation biofuel technology worth to global society? A dynamic, computable partial equilibrium model (called FABLE) is used to assess changes in global land use for crops, livestock, biofuels, forestry, and environmental services, as well as greenhouse gas emissions, with and without second-generation biofuels technology. The difference in the discounted stream of global valuations of land-based goods and services gives the value of second-generation technology to society. Under baseline conditions, this to amounts to $64.2 billion at today's population or an increase of roughly 0.3 percent in the valuation of the world's land resources. This gain arises despite the fact that, in the baseline scenario, the technology does not become commercially viable until 2035. Alternative scenarios considered include: diminished crop yield growth owing to adverse climate impacts, flat energy prices, low economic growth, and high population growth, as well as greenhouse gas regulation. The most important factor driving second-generation valuation is greenhouse gas regulation, which more than doubles the social value of this technology. Flat energy prices essentially eliminate the value of second-generation technology to society, and high population growth reduces its value because of the heightened competition for land for food production.

Suggested Citation

  • Hertel, Thomas W. & Steinbuks, Jevgenijs & Tyner, Wallace E., 2014. "What is the social value of second-generation biofuels ?," Policy Research Working Paper Series 7142, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7142
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    References listed on IDEAS

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    1. Jevgenijs Steinbuks & Thomas Hertel, 2016. "Confronting the Food–Energy–Environment Trilemma: Global Land Use in the Long Run," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(3), pages 545-570, March.
    2. Steinbuks, Jevgenijs & Thomas Hertel, 2012. "Forest, Agriculture, and Biofuels in a Land use model with Environmental services (FABLE)," GTAP Working Papers 3988, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Havlík, Petr & Schneider, Uwe A. & Schmid, Erwin & Böttcher, Hannes & Fritz, Steffen & Skalský, Rastislav & Aoki, Kentaro & Cara, Stéphane De & Kindermann, Georg & Kraxner, Florian & Leduc, Sylvain & , 2011. "Global land-use implications of first and second generation biofuel targets," Energy Policy, Elsevier, vol. 39(10), pages 5690-5702, October.
    4. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2002. "Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model," Journal of Development Economics, Elsevier, vol. 68(2), pages 289-307, August.
    5. Paltsev, Sergey, 2012. "Implications of Alternative Mitigation Policies on World Prices for Fossil Fuels and Agricultural Products," WIDER Working Paper Series 065, World Institute for Development Economic Research (UNU-WIDER).
    6. Antoine Blandine & Gurgel Angelo & Reilly John M, 2008. "Will Recreation Demand for Land Limit Biofuels Production?," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(2), pages 1-29, December.
    7. Jeffrey Reimer & Thomas Hertel, 2004. "Estimation of International Demand Behaviour for Use with Input-Output Based Data," Economic Systems Research, Taylor & Francis Journals, vol. 16(4), pages 347-366.
    8. repec:unu:wpaper:wp2012-65 is not listed on IDEAS
    9. Steinbuks, Jevgenijs & Thomas Hertel, 2012. "Forest, Agriculture, and Biofuels in a Land use model with Environmental services (FABLE)," GTAP Working Papers 3988, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    10. Sergey Paltsev, 2012. "Implications of Alternative Mitigation Policies on World Prices for Fossil Fuels and Agricultural Products," WIDER Working Paper Series wp-2012-065, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. Cai,Yongyang & Steinbuks,Jevgenijs & Judd,Kenneth L. & Jaegermeyr,Jonas & Hertel,Thomas W., 2020. "Modeling Uncertainty in Large Natural Resource Allocation Problems," Policy Research Working Paper Series 9159, The World Bank.

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    More about this item

    Keywords

    Environmental Economics&Policies; Climate Change Mitigation and Green House Gases; Climate Change Economics; Energy Production and Transportation; Energy and Environment;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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