WEAI/AERE 2009 - Individual Paper Abstract
Title: Is Bioenergy Trade Good for the Environment?
Author(s): Jean-Marc Bourgeon, INRA, Paris, France; Helene OLLIVIER, EHESS - umr CIRED, Marne, France.
Abstract: International negotiations on climatic change as well as national poli- cies favor the production and trade of bioenergies, which are considered as part of the solution to reduce greenhouse gas (GHG) emissions. This paper extends the framework of Copeland and Taylor (1994, 1995) on North-South trade and production patterns to assess the potential im- pacts of bioenergy, assuming that the only difference between North and South is the higher level of effective labor in North. We develop a two- good, three-factor model with an intermediate product, bioenergy, which is produced by the agricultural sector and used by industry when sub- stituting for fossil fuels. We analyze the impacts of trade on the envi- ronment, assuming both regions impose an optimal taxation on pollution that comes from industrial emissions and from agricultural use of natural capital. We assume that agriculture is less pollution intensive than in- dustry (after taxation) and that Northern countries have a comparative advantage in the industrial sector, due to their lower effective labor cost that compensates the higher level of taxation. Under autarky, pollution levels are identical whatever the region. With free trade and no interna- tional regulation, we find that i) factor prices do not equalize; ii) North is more industrialized and South more agricultural than under autarky; iii) and the level of global pollution is reduced, which argues in favor of bioenergy trade as an efficient way to reduce emissions. Finally, we investigate the case of Northern countries adopting a tariff on bioenergy to limit over-exploitation of natural capital in South.