RED vs. REDD: Biofuel Policy vs. Forest Conservation

Factor Markets Working Paper No. 41

22 Pages Posted: 7 Jun 2013

See all articles by Peter B. Dixon

Peter B. Dixon

Monash University - Centre of Policy Studies

Hans van Meijl

Wageningen UR - Agricultural Economics Research Institute (LEI)

Maureen T. Rimmer

Monash University - Centre of Policy Studies

Lindsay Shutes

Wageningen UR - Agricultural Economics Research Institute (LEI)

Andrzej Tabeau

Wageningen UR - Agricultural Economics Research Institute (LEI)

Date Written: May 7, 2013

Abstract

This paper assesses the complex interplay between global Renewable Energy Directives (RED) and the United Nations programme to Reduce Emissions from Deforestation and forest Degradation (REDD). We examine the interaction of the two policies using a scenario approach with a recursive-dynamic global Computable General Equilibrium model. The consequences of a global biofuel directive on worldwide land use, agricultural production, international trade flows, food prices and food security out to 2030 are evaluated with and without a strict global REDD policy. We address a key methodological challenge of how to model the supply of land in the face of restrictions over its availability, as arises under the REDD policy. The paper introduces a flexible land supply function, which allows for large changes in the total potential land availability for agriculture. Our results show that whilst both RED and REDD are designed to reduce emissions, they have opposing impacts on land use. RED policies are found to extend land use whereas the REDD policy leads to an overall reduction in land use and intensification of agriculture. Strict REDD policies to protect forest and woodland lead to higher land prices in all regions. World food prices are slightly higher overall with some significant regional increases, notably in Southern Africa and Indonesia, leading to reductions in food security in these countries. This said, real food prices in 2030 are still lower than the 2010 level, even with the RED and REDD policies in place. Overall this suggests that RED and REDD are feasible from a worldwide perspective, although the results show that there are some regional problems that need to be resolved. The results show that countries directly affected by forest and woodland protection would be the most economically vulnerable when the REDD policy is implemented. The introduction of REDD policies reduces global trade in agricultural products and moves some developing countries to a net importing position for agricultural products. This suggests that the protection of forests and woodlands in these regions reverses their comparative advantage as they move from being land-abundant to land-scarce regions. The full REDD policy setting, however, foresees providing compensation to these countries to cover their economic losses.

Keywords: RED, REDD, Renewable Energy Directives, Reduce Emissions from Deforestation and Forest Degradation

Suggested Citation

Dixon, Peter B. and van Meijl, Hans and Rimmer, Maureen T. and Shutes, Lindsay and Tabeau, Andrzej, RED vs. REDD: Biofuel Policy vs. Forest Conservation (May 7, 2013). Factor Markets Working Paper No. 41, Available at SSRN: https://ssrn.com/abstract=2275246 or http://dx.doi.org/10.2139/ssrn.2275246

Peter B. Dixon

Monash University - Centre of Policy Studies ( email )

Clayton, Vic 3800
Australia
+61 3 990 52398 (Phone)

Hans Van Meijl (Contact Author)

Wageningen UR - Agricultural Economics Research Institute (LEI) ( email )

Burgemeester Patijnlaan 19
The Hague, 2502 LS
Netherlands
+31 70 335 8169 (Phone)
+31 70 361 5624 (Fax)

Maureen T. Rimmer

Monash University - Centre of Policy Studies ( email )

Clayton, Vic 3800
Australia
+61 3 990 55464 (Phone)

Lindsay Shutes

Wageningen UR - Agricultural Economics Research Institute (LEI) ( email )

Burgemeester Patijnlaan 19
The Hague, 2502 LS
Netherlands

Andrzej Tabeau

Wageningen UR - Agricultural Economics Research Institute (LEI) ( email )

Burgemeester Patijnlaan 19
The Hague, 2502 LS
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
45
Abstract Views
585
PlumX Metrics