Replaced with revised version of paper on 10/26/10.

This paper analyzes carbon leakage due to reduced emissions from deforestation (RED). We find that leakage with RED is good because the policy induces afforestation that contributes to a further carbon sequestration. By ignoring the domestic component of carbon leakage, the literature can either...

This revised version replaces a previous one titled: "Optimal Ethanol Policies for the U.S. in a General Equilibrium Framework"

Biofuel policies are a subset of policies designed to achieve energy security, an improved environment, enhanced agricultural incomes, technological change, and overall economic benefits, with increased domestic energy production creating green jobs and foreign exchange savings. In assessing...

We show how leakage differs, depending on the biofuel policy and market conditions. Carbon leakage is shown to have two components: a market leakage effect and an emissions savings effect. We also distinguish domestic and international leakage. International leakage is always positive, but...

This paper analyzes carbon leakage due to reduced emissions from deforestation (RED). We find that leakage with RED is good because the policy induces afforestation that contributes to a further carbon sequestration. By ignoring the domestic component of carbon leakage, the literature can either...