Market, Welfare and Land-use Implications of Lignocellulosic Bioethanol in Hawaii

Mochizuki J, Yanagida JF, & Coffman M (2013). Market, Welfare and Land-use Implications of Lignocellulosic Bioethanol in Hawaii. Working Paper No. 2013-10, UHERO - The Economic Research Organization at the University of Hawaii (November 2013)

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Abstract

This article examines land-use, market and welfare implications of lignocellulosic bioethanol production in Hawaii to satisfy 10% and 20% of the State's gasoline demand in line with the State's ethanol blending mandate and Alternative Fuels Standard (AFS). A static computable general equilibrium (CGE) model is used to evaluate four alternative support mechanisms for bioethanol. Namely: (i) a federal blending tax credit, (ii) a long-term purchase contract, (iii) a state production subsidy financed by a lump-sum tax and (iv) a state production subsidy financed by an ad valorem gasoline tax. We find that because Hawaii-produced bioethanol is relatively costly, all scenarios are welfare reducing for Hawaii residents: estimated between -0.14% and -0.32%. Unsurprisingly, Hawaii.s economy and its residents fair best under the federal blending tax credit scenario, with a positive impact to gross state product of $49 million. Otherwise, impacts to gross state product are negative (up to -$63 million). We additionally find that Hawaii-based bioethanol is not likely to offer substantial greenhouse gas emissions savings in comparison to imported biofuel, and as such the policy cost per tonne of emissions displaced ranges between $130 to $2,100/tonne of CO2e. The policies serve to increase the value of agricultural lands, where we estimate that the value of pasture land could increase as much as 150% in the 20% AFS scenario.

Item Type: Other
Uncontrolled Keywords: Computable general equilibrium modeling; Lignocellulosic bioethanol; Land use impact; Welfare impact; Greenhouse gas emissions
Research Programs: Risk, Policy and Vulnerability (RPV)
Risk & Resilience (RISK)
Bibliographic Reference: Working Paper No. 2013-10, UHERO - The Economic Research Organization at the University of Hawaii (November 2013)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:49
Last Modified: 04 Apr 2016 10:15
URI: http://pure.iiasa.ac.at/10645

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