CEPS © 2020

The European Green Deal after Corona Implications for EU climate policy
Project Report

Will improved access to capital dampen the need for more agricultural land? A CGE analysis of agricultural capital markets and world-wide biofuel policies

by Martin Banse / Andrea Rothe / Andrzej Tabeau / Hans van Meijl / Geert Woltjer
03 June 2013

Will improved access to capital dampen the need for more agricultural land? A CGE analysis of agricultural capital markets and world-wide biofuel policies

Martin Banse / Andrea Rothe / Andrzej Tabeau / Hans van Meijl / Geert Woltjer

Download Publication

887 Downloads

This paper analyses the consequences of enhanced biofuel production in regions and countries of the world that have announced plans to implement or expand on biofuel policies. The analysis considers biofuel policies implemented as binding blending targets for transportation fuels. The chosen quantitative modelling approach is two-fold: it combines the analysis of biofuel policies in a multi-sectoral economic model (MAGNET) with systematic variation of the functioning of capital and labour markets.

This paper adds to existing research by considering biofuel policies in the EU, the US and various other countries with considerable agricultural production and trade, such as Brazil, India and China. Moreover, the application multi-sectoral modelling system with different assumptions on the mobility of factor markets allows for the observation of changes in economic indicators under different conditions of how factor markets work.

Systematic variation of factor mobility indicates that the ‘burden’ of global biofuel policies is not equally distributed across different factors within agricultural production. Agricultural land, as the pre-dominant and sector-specific factor, is, regardless of different degrees of inter-sectoral or intra-sectoral factor mobility, the most important factor limiting the expansion of agricultural production. More capital and higher employment in agriculture will ease the pressure on additional land use – but only partly. To expand agricultural production at global scale requires both land and mobile factors adapted to increase total factor productivity in agriculture in the most efficient way.

M. Banse and A. Rothe are researcher at the Thünen-Institute, Braunschweig, Germany. A. Tabeau, H. van Meijl and G. Woltjer are researchers at LEI, The Hague, The Netherlands.


About the Authors


  • Author
    Martin Banse
    Martin Banse
  • Author
    Andrea Rothe
    Andrea Rothe
  • Author
    Andrzej Tabeau
    Andrzej Tabeau
  • Author
    Hans van Meijl
    Hans van Meijl
  • Author
    Geert Woltjer
    Geert Woltjer
Will improved access to capital dampen the need for more agricultural land? A CGE analysis of agricultural capital markets and world-wide biofuel policies
Download Publication

887 Downloads