de Gorter, HarryDrabik, DusanTimilsina, Govinda R.2013-09-262013-09-262013-06https://hdl.handle.net/10986/15857Facing a huge fiscal burden due to imports of entire petroleum despite the availability of a surplus of agricultural land to produce biofuels, Zambia, a country in Sub-Saharan Africa, has recently introduced a biofuel mandate. But, a number of questions, particularly those related to the economics of biofuels, have not been fully investigated yet. Using an empirical model this study analyzes the economics of meeting the biodiesel mandate through soybean feedstock. The study finds that meeting the biodiesel mandate with biodiesel from soybeans would reduce social welfare because the country's soybean imports would cost more than the expected reduction in petroleum imports. However, if Zambia increases its domestic soybean supply along with its capacity to convert soybean to biodiesel, as well as oil yield, soybean based biodiesel is likely to be welfare-beneficial, even if biodiesel prices are above diesel prices. The study also finds that under current market prices and transportation costs and constraints, the same amount of biodiesel can be produced most cost-effectively with a tax exemption. A blend mandate would be less cost effective, while a biodiesel production subsidy represents the least efficient policy option.en-USCC BY 3.0 IGOAGRICULTUREAIR POLLUTIONAVAILABILITYBALANCEBIODIESELBIOFUELBIOFUELSBIOFUELS INDUSTRYCARBON OFFSETSCHARCOALCLIMATIC CONDITIONSCOMMODITIESCOMMODITYCOMMODITY PRICESCONSUMER FUELCONSUMER PRICECONSUMER SURPLUSCONSUMERSCROPDEFORESTATIONDEMAND ELASTICITYDEMAND FOR GASOLINEDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT AGENCYDEVELOPMENT POLICYDIESELDIESEL CONSUMPTIONDIESEL FUELDIESEL FUEL CONSUMPTIONDOMESTIC MARKETDOMESTIC PRICEDOMESTIC PRICESENERGY DEMANDENERGY ECONOMICSENERGY NEEDSENERGY POLICIESENERGY SECTORENVIRONMENTAL PROTECTIONETHANOLEXPENDITURESEXTERNALITIESFEEDSTOCKFEEDSTOCKSFINANCIAL SUPPORTFIXED SHAREFOREIGN EXCHANGEFOSSILFUELFUEL CONSUMPTIONFUEL COSTFUEL DEMANDFUEL MARKETFUEL PRICEFUEL PUMPFUEL TAXFUEL WOODGOVERNMENT INTERVENTIONGRAIN PRICESHYDROPOWERIMPORTS OF PETROLEUMINTERNATIONAL MARKETSJATROPHAMARGINAL REVENUEMARKET CONDITIONSMARKET DEMANDMARKET DEVELOPMENTMARKET EQUILIBRIUMMARKET PRICEMARKET PRICESMARKETINGNATIONAL ENERGY POLICYNET EXPORTSOILOIL EXPORTSOIL EXTRACTIONOIL IMPORTSOIL PRICEOIL PRICESOIL PRODUCTIONOIL YIELDOPEN ECONOMYOPPORTUNITY COSTOPPORTUNITY COSTSPETROLEUMPETROLEUM DEMANDPETROLEUM IMPORTSPETROLEUM PRODUCTSPOSITIVE EFFECTSPRICE DECREASESPRICE ELASTICITYPRICES OF FUELSPRODUCTION COSTSPURCHASINGRETAILRETAIL PRICESMALL COUNTRYSOYBEAN MEALSOYBEAN OILSOYBEAN PRODUCERSSOYBEAN PRODUCTIONSOYBEANSSUBSTITUTIONSUGARSUGARCANESUPPLIERSSUPPLY CURVESUPPLY CURVESSUPPLY ELASTICITYSURPLUSTAX CREDITTAX EXEMPTIONTAX REVENUETAX REVENUESTAXATIONTRADE BALANCETRADE BARRIERSWELFARE ECONOMICSWORLD MARKETWORLD MARKETSWorld Bank10.1596/1813-9450-6498