Chapter 6 Modeling Biofuels Policies in General Equilibrium: Insights, Pitfalls, and Opportunities

Over the past decade, biofuels production in the European Union and the United States has boomed – much of this due to government mandates and subsidies. The United States has now surpassed Brazil as the world's leading producer of ethanol. The economic and environmental impact of these biofuel programs has become an important question of public policy. Due to the complex intersectoral linkages between biofuels and crops, livestock as well as energy activities, CGE modeling has become an important tool for their analysis. This chapter reviews recent developments in this area of economic analysis and suggests directions for future research.