Reseach Paper: "Review of Environmental, Economic and Policy Aspects of Biofuels"

By reading this article, in theory, you can cut your desire to read 101 newspaper articles or blog posts on this issue, the majority of which will fall down on the economics.

I am sceptical about the whole biofuel business - this article discusses a wide range of issues and arrives at the standard economist conclusion: Biofuels could be good, they could be bad - it depends on a combination of 101 different factors. There is no right answer as all students should know.

The conclusions of the article are:

1. The current generation of biofuels, which is derived from food crops, is intensive in land, water, energy, and chemical inputs.

Not surprising.

2. The environmental literature is dominated by a discussion of net carbon offset and net energy gain, while indicators relating to impact on human health, soil quality, biodiversity, water depletion, etc., have received much less attention.

In this direction, an interesting research agenda lies.

3. Third, there is a fast expanding economic and policy literature that analyzes the various effects of biofuels from both micro and macro perspectives, but there are several gaps.

Find those gaps and start writing.

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"Review of Environmental, Economic and Policy Aspects of
Biofuels"
World Bank Policy Research Working Paper No. 4341


Contact: DEEPAK RAJAGOPAL
University of California, Berkeley - Energy and
Resources Group
Email: deepak@berkeley.edu
Auth-Page: http://ssrn.com/author=861695

Co-Author: DAVID ZILBERMAN
University of California, Berkeley - The Richard &
Rhoda Goldman School of Public Policy
Email: ZILBERMAN@ARE.BERKELEY.EDU
Auth-Page: http://ssrn.com/author=45553

Full Text: http://ssrn.com/abstract=1012473

ABSTRACT: The world is witnessing a sudden growth in production of biofuels, especially those suited for replacing oil like ethanol and biodiesel. This paper synthesizes what the environmental, economic, and policy literature predicts about the possible effects of these types of biofuels. Another motivation is to identify gaps in understanding and recommend areas for future work. The analysis finds three key conclusions. First, the current generation of biofuels, which is derived from food crops, is intensive in land, water, energy, and chemical inputs. Second, the environmental literature is dominated by a discussion of net carbon offset and net energy gain, while indicators relating to
impact on human health, soil quality, biodiversity, water depletion, etc., have received much less attention. Third, there is a fast expanding economic and policy literature that analyzes the various effects of biofuels from both micro and macro
perspectives, but there are several gaps. A bewildering array of policies - including energy, transportation, agricultural, trade, and environmental policies - is influencing the evolution of biofuels. But the policies and the level of subsidies do not reflect the marginal impact on welfare or the environment. In summary, all biofuels are not created equal. They exhibit considerable spatial and temporal heterogeneity in production. The impact of biofuels will also be heterogeneous, creating winners and losers. The findings of the paper suggest the importance of the role biomass plays in rural areas of developing countries. Furthermore, the use of biomass for producing fuel for cars can affect access to energy and fodder and not just access to food.