Biofuels and Economic Development: A Computable General Equilibrium Analysis for Tanzania

TY - JOUR

T1 - Biofuels and Economic Development

T2 - A Computable General Equilibrium Analysis for Tanzania

AU - Arndt, Channing

AU - Pauw, Karl

AU - Thurlow, James

N1 - JEL classification: D58; O13; Q42

PY - 2012/11

Y1 - 2012/11

N2 - Biofuels could offer new economic opportunities for low-income countries. We use a recursive dynamic computable general equilibrium model of Tanzania to evaluate different biofuels production options and estimate their impacts on growth and poverty. Our results indicate that maximizing the poverty-reducing effects of biofuels production in countries like Tanzania will require engaging and improving the productivity of smallholder farmers. Evidence shows that cassava-based ethanol production is more profitable than other feedstock options. Cassava also generates more "pro-poor" growth than sugarcane-based systems. However, if smallholder yields can be improved rather than expanding cultivated land, then both sugarcane and cassava out-grower schemes generate similar pro-poor outcomes. We conclude that, in so far as the public investments needed to establish a biofuels industry are consistent with other development needs, then producing biofuels will enhance economic development in countries like Tanzania.

AB - Biofuels could offer new economic opportunities for low-income countries. We use a recursive dynamic computable general equilibrium model of Tanzania to evaluate different biofuels production options and estimate their impacts on growth and poverty. Our results indicate that maximizing the poverty-reducing effects of biofuels production in countries like Tanzania will require engaging and improving the productivity of smallholder farmers. Evidence shows that cassava-based ethanol production is more profitable than other feedstock options. Cassava also generates more "pro-poor" growth than sugarcane-based systems. However, if smallholder yields can be improved rather than expanding cultivated land, then both sugarcane and cassava out-grower schemes generate similar pro-poor outcomes. We conclude that, in so far as the public investments needed to establish a biofuels industry are consistent with other development needs, then producing biofuels will enhance economic development in countries like Tanzania.

U2 - 10.1016/j.eneco.2012.07.020

DO - 10.1016/j.eneco.2012.07.020

M3 - Journal article

SN - 0140-9883

VL - 34

SP - 1922

EP - 1930

JO - Energy Economics

JF - Energy Economics

IS - 6

ER -