Killing two birds with one stone: US and EU biofuel programmes
The United States and the European Union have been implementing sizeable biofuel support programmes since the beginning of the decade. Supporting the biofuel industry raises the price of the agricultural feedstock, and hence increases the farmer revenue and reduces the need for direct income support. Thus, for a given objective of agricultural income, the regulator is able to operate a partial substitution between agricultural decoupled payments and the support to the biofuel industry (subsidies or mandatory blending). We detail these effects and derive the biofuel and the environmental policies that maximise social welfare. We also show that for high levels of biofuel production, cross-compliance provisions are a more expensive way of enforcing the environmental policy than fining farmers. Oxford University Press and Foundation for the European Review of Agricultural Economics 2010; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.
Year of publication: |
2010
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Authors: | Bourgeon, Jean-Marc ; Tréguer, David |
Published in: |
European Review of Agricultural Economics. - European Association of Agricultural Economists - EAAE, ISSN 1464-3618. - Vol. 37.2010, 3, p. 369-394
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Publisher: |
European Association of Agricultural Economists - EAAE |
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