Impacts of EU biofuels directives on global markets and EU environmental quality: An integrated PE, global CGE analysis

Abstract

As policy makers become increasingly aware of the impact of their decisions on the global economy, as well as the impact of developments in the global economy on regional and national resource use, the demand for cross-scale analysis of economic and environmental policies has become a high priority. This paper contributes to this literature by developing a new methodology to link two widely used policy models in order to provide an integrated assessment of the environmental impacts of EU biofuels mandates. By combining the CAPRI model of EU agricultural production and resource use with the GTAP model of global trade and land use, we are able to estimate both the global impacts of EU biofuels policies as well as the detailed, regional changes in land use and nutrient surplus. The applicability of this combined modeling approach extends well beyond biofuels. It could offer important insights into the global impacts of EU agricultural policy reforms, as well as analysis of the EU-regional impacts of global agreements on trade policy or climate change mitigation. In short, the methodology developed in this paper holds great promise for future, cross-scale analysis of global issues bearing on agriculture, land use and the environment.