The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy

Open Access
Publisher Website
Google Scholar
Abstract
The efficacy of alternative biofuel policies in achieving energy, environmental and agricultural policy goals is assessed using economic cost‐benefit analysis. Government mandates are superior to consumption subsidies, especially with suboptimal fuel taxes and the higher costs involved with raising tax revenues. But subsidies with mandates cause adverse interaction effects; oil consumption is subsidized instead. This unique result also applies to renewable electricity that faces similar policy combinations. Ethanol policy can have a significant impact on corn prices; if not, inefficiency costs rise sharply. Ethanol policy can increase the inefficiency of farm subsidies and vice‐versa. Policies that discriminate against trade, such as production subsidies and tariffs, can more than offset any benefits of a mandate. Sustainability standards are ineffective and illegal according to the WTO, and so should be re‐designed.
Funding Information
  • Cornell University Agricultural Experiment Station (NYC‐121‐7438)
  • Cooperative State Research, Education, and Extension Service
  • U.S. Department of Agriculture

This publication has 28 references indexed in Scilit: