Biofuel Development : Institutional Design Across the World

Biofuel – biodiesel and bioethanol – is primarily made from biomass obtained from variety of plants and agriculture crops. The biomass availability varies across countries/region. Biofuel is used as an alternative to the petroleum fuel. For this study biofuel is operationalized as production of biodiesel and bioethanol from – land-intensive – plants and agriculture crops.Institutions are humanly devised informal and formal constrains that structures the social, political, and economic interaction, to create order and reduce uncertainty in exchange (North 1991). Institutions can be defined as the sets of working rules that are used to determine who is eligible to make decisions in some arena, what actions are allowed or constrained, what aggregation rule will be used, what procedures must be followed, what information must or must not be provided, and what payoffs will be assigned to individuals dependent on their actions (Ostrom 1991).Institutional design (ID) is thought to be as creation of specifications of components and rules of engagement (Weimer 1995). The understanding of ID facilitates institutional actors to formulate effective strategies for program formalization, resource allocation, and policy implementation. These strategies of ID are outcome of technologies interface with nature of natural resources, community collectivization, state’s policy environment, and market characteristics