Biotech Updates

Economic Cost-Benefit Analysis of Biofuel Policies in Relation to Energy, Environment and Agric Policy

December 10, 2010
http://aepp.oxfordjournals.org/content/32/1/4.abstract?sid=051ade23-6f63-4654-a12f-6a5bd14e2529
(complete access to paper may require paid subscription) http://www.sciencedaily.com/releases/2010/02/100215130339.htm

The effects of biofuel policies and associated interactions with other policies (i.e., environmental, energy and agricultural policies) were analyzed by economic cost-benefit methods by Harry de Gorter and David R. Just of Cornell University (United States). Their paper is published in the journal, Applied Economics Perspectives and Policy (URL above). Biofuel policies are often motivated by concerns related to energy security, environmental protection and agricultural development, and these interactions (from an economic point of view) can be "complex". One reason cited was "the intricate interrelationships between energy and commodity markets and the varied environmental consequences". In their analysis, they attempted to "disentangle the key interactions in this [complex] system of policy instruments by analyzing each biofuel policy on its own merits, in relation to each other, as well as to other environmental, energy and agricultural policies". One of the findings of the analysis shows that "regulations that mandate an increase in the amount of biofuels incorporated into current energy supplies are superior to all other policies; [but] as soon as policies are combined, there can be negative economic interactions". As an example, if the biofuel-consumption mandate is added with a biofuel subsidy, the combined policies would result in failure to increase ethanol consumption and would instead subsidize oil consumption. The study recommends for a more effective policy that would rely on "specific taxes and subsidies targeted directly at achieving specific environmental, energy and agricultural policy goals".