Publication: What is the Social Value of Second-Generation Biofuels?
Loading...
Date
2014-12
ISSN
Published
2014-12
Editor(s)
Abstract
What is second-generation biofuel technology worth to global society? A dynamic, computable partial equilibrium model (called FABLE) is used to assess changes in global land use for crops, livestock, biofuels, forestry, and environmental services, as well as greenhouse gas emissions, with and without second-generation biofuels technology. The difference in the discounted stream of global valuations of land-based goods and services gives the value of second-generation technology to society. Under baseline conditions, this to amounts to $64.2 billion at today's population or an increase of roughly 0.3 percent in the valuation of the world's land resources. This gain arises despite the fact that, in the baseline scenario, the technology does not become commercially viable until 2035. Alternative scenarios considered include: diminished crop yield growth owing to adverse climate impacts, flat energy prices, low economic growth, and high population growth, as well as greenhouse gas regulation. The most important factor driving second-generation valuation is greenhouse gas regulation, which more than doubles the social value of this technology. Flat energy prices essentially eliminate the value of second-generation technology to society, and high population growth reduces its value because of the heightened competition for land for food production.
Link to Data Set
Citation
“Hertel, Thomas W.; Steinbuks, Jevgenijs; Tyner, Wallace E.. 2014. What is the Social Value of Second-Generation Biofuels?. Policy Research Working Paper;No. 7142. © http://hdl.handle.net/10986/21137 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Asymmetric Bank Distress Amplifier of Recessions(Washington, DC: World Bank, 2025-07-11)One defining feature of financial crises, evident in U.S. and international data, is asymmetric bank distress—concentrated losses on a subset of banks. This paper proposes a model in which shocks to borrowers’ productivity dispersion lead to asymmetric bank losses. The framework exhibits a “bank distress amplifier,” exacerbating economic downturns by causing costly bank failures and raising uncertainty about the solvency of banks, thereby pushing banks to deleverage. Quantitative analysis shows that the bank distress amplifier doubles investment decline and increases the spread by 2.5 times during the Great Recession compared to a standard financial accelerator model. The mechanism helps explain how a seemingly small shock can sometimes trigger a large crisis.Publication From Tailwinds to Headwinds(Washington, DC: World Bank, 2025-07-10)The first quarter of the twenty-first century has been transformative for emerging market and developing economies (EMDEs). These economies now account for about 45 percent of global GDP, up from about 25 percent in 2000, a trend driven by robust collective growth in the three largest EMDEs—China, India, and Brazil (the EM3). Collectively, EMDEs have contributed about 60 percent of annual global growth since 2000, on average, double the share during the 1990s. Their ascendance was powered by swift global trade and financial integration, especially during the first decade of the century. Interdependence among these economies has also increased markedly. Today, nearly half of goods exports from EMDEs go to other EMDEs, compared to one-quarter in 2000. As cross-border linkages have strengthened, business cycles among EMDEs and between EMDEs and advanced economies have become more synchronized, and a distinct EMDE business cycle has emerged. Cross-border business cycle spillovers from the EM3 to other EMDEs are sizable, at about half of the magnitude of spillovers from the largest advanced economies (the United States, the euro area, and Japan). Yet EMDEs confront a host of headwinds at the turn of the second quarter of the century. Progress implementing structural reforms in many of these economies has stalled. Globally, protectionist measures and geopolitical fragmentation have risen sharply. High debt burdens, demographic shifts, and the rising costs of climate change weigh on economic prospects. A successful policy approach to accelerate growth and development should focus on boosting investment and productivity, navigating a difficult external environment, and enhancing macroeconomic stability.Publication Intergenerational Income Mobility around the World(Washington, DC: World Bank, 2025-07-09)This paper introduces a new global database with estimates of intergenerational income mobility for 87 countries, covering 84 percent of the world’s population. This marks a notable expansion of the cross-country evidence base on income mobility, particularly among low- and middle-income countries. The estimates indicate that the negative association between income mobility and inequality (known as the Great Gatsby Curve) continues to hold across this wider range of countries. The database also reveals a positive association between income mobility and national income per capita, suggesting that countries achieve higher levels of intergenerational mobility as they grow richer.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Biochar Systems for Smallholders in Developing Countries : Leveraging Current Knowledge and Exploring Future Potential for Climate-Smart Agriculture(Washington, DC: World Bank, 2014-06-23)Biochar is the carbon-rich organic matter that remains after heating biomass under the minimization of oxygen during a process called pyrolysis. There are a number of reasons why biochar systems may be particularly relevant in developing-country contexts. This report offers a review of what is known about opportunities and risks of biochar systems. Its aim is to provide a state-of-the-art overview of current knowledge regarding biochar science. In that sense the report also offers a reconciling view on different scientific opinions about biochar providing an overall account that shows the various perspectives of its science and application. This includes soil and agricultural impacts of biochar, climate change impacts, social impacts, and competing uses of biomass. The report aims to contextualize the current scientific knowledge in order to put it at use to address the development climate change nexus, including social and environmental sustainability. The report is organized as follows: chapter one offers some introductory comments and notes the increasing interest in biochar both from a scientific and practitioner's point of view; chapter two gives further background on biochar, describing its characteristics and outlining the way in which biochar systems function. Chapter three considers the opportunities and risks of biochar systems. Based on the results of the surveys undertaken, chapter four presents a typology of biochar systems emerging in practice, particularly in the developing world. Life-cycle assessments of the net climate change impact and the net economic profitability of three biochar systems with data collected from relatively advanced biochar projects were conducted and are presented in chapter five. Chapter six investigates various aspects of technology adoption, including barriers to implementing promising systems, focusing on economics, carbon market access, and sociocultural barriers. Finally, the status of knowledge regarding biochar systems is interpreted in chapter seven to determine potential implications for future involvement in biochar research, policy, and project formulation.Publication Bioenergy Development : Issues and Impacts for Poverty and Natural Resource Management(World Bank, 2010)These report overviews recent developments in the consumption and production of bioenergy. It examines the main issues and possible economic implications of these developments and assesses their potential impact on land use and the environment, especially with respect to forests. The report examines both solid biomass and liquid biofuels, identifying opportunities and challenges at the regional and country levels. The development of bioenergy presents both opportunities and challenges for economic development and the environment. It is likely to have significant impacts on the forest sector, directly, through the use of wood for energy production, and indirectly, as a result of changes in land use. The impact of bioenergy on poverty alleviation in developing countries will depend on the opportunities for agricultural development, including income and employment generation, the potential to increase poor peoples' access to improved types of bioenergy; and the effects on energy and food prices. Five main messages emerge from this report: solid biomass will continue to be a principal source of energy; developments in bioenergy will have major implications for land use; tradeoffs, including those related to poverty, equity, and the environment, must be evaluated when choosing a bioenergy system; there is considerable potential for making greater use of forestry and timber waste as a bioenergy feedstock; and the climate benefits of bioenergy development are uncertain and highly location and feedstock specific.Publication Advanced Biofuel Technologies : Status and Barriers(2010-09-01)Large-scale production of crop based (first generation) biofuels may not be feasible without adversely affecting global food supply or encroaching on other important land uses. Because alternatives to liquid fossil fuels are important to develop in order to address greenhouse gas mitigation and other energy policy objectives, the potential for increased use of advanced (non-crop, second generation) biofuel production technologies has significant policy relevance. This study reviews the current status of several advanced biofuel technologies. Technically, it would be possible to produce a large portion of transportation fuels using advanced biofuel technologies, specifically those that can be grown using a small portion of the world's land area (for example, microalgae), or those grown on arable lands without affecting food supply (for example, agricultural residues). However, serious technical barriers limit the near-term commercial application of advanced biofuels technologies. Key technical barriers include low conversion efficiency from biomass to fuel, limits on supply of key enzymes used in conversion, large energy requirements for operation, and dependence in many cases on commercially unproven technology. Despite a large future potential, large-scale expansion of advanced biofuels technologies is unlikely unless and until further research and development lead to lowering these barriers.Publication Second-Generation Biofuels : Economics and Policies(2010-08-01)Recent increases in production of crop-based (or first-generation) biofuels have engendered increasing concerns over potential conflicts with food supplies and land protection, as well as disputes over greenhouse gas reductions. This has heightened a sense of urgency around the development of biofuels produced from non-food biomass (second-generation biofuels). This study reviews the economic potential and environmental implications of production of second-generation biofuels from a variety of various feedstocks. Although second-generation biofuels could significantly contribute to the future energy supply mix, cost is a major barrier to increasing commercial production in the near to medium term. Depending on various factors, the cost of second-generation (cellulosic) ethanol can be two to three times as high as the current price of gasoline on an energy equivalent basis. The cost of biodiesel produced from microalgae, a prospective feedstock, is many times higher than the current price of diesel. Policy instruments for increasing biofuels use, such as fiscal incentives, should be based on the relative merits of different types of biofuels.Publication Biofuels and Climate Change Mitigation : A CGE Analysis Incorporating Land-Use Change(2011-06-01)The question of whether biofuels help mitigate climate change has attracted much debate in the literature. Using a global computable general equilibrium model that explicitly represents land-use change impacts due to the expansion of biofuels, this study attempts to shed some light on this question. The study shows that if biofuel mandates and targets currently announced by more than 40 countries around the world are implemented by 2020 using crop feedstocks, and if both forests and pasture lands are used to meet the new land demands for biofuel expansion, this would cause a net increase of greenhouse gas emissions released to the atmosphere until 2043, since the cumulative greenhouse gas emissions released through land-use change would exceed the reduction of emissions due to replacement of gasoline and diesel until then. However, if the use of forest lands is avoided by channeling only pasture lands to meet the demand for new lands, a net increase of cumulative greenhouse gas emissions would occur but would cease by 2021, only a year after the assumed full implementation of the mandates and targets. The study also shows, contrary to common perceptions, that the rate of deforestation does not increase with the rate of biofuel expansion; instead, the marginal rate of deforestation and corresponding land-use emissions decrease even if the production of biofuels increases.
Users also downloaded
Showing related downloaded files
Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.