Scandinavian Working Papers in Economics

CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

No 2011:11: Assessing the welfare effects of promoting biomass growth and the use of bioenergy – A simple back-of-an-envelope calculation

Tommy Lundgren () and Per-Olov Marklund ()
Additional contact information
Tommy Lundgren: CERE, Postal: Dept. of Forest Economics, SLU, S-901 83 Umeå, Sweden
Per-Olov Marklund: CERE, Postal: Dept. of Economics, University of Umeå, S-901 87 Umeå, Sweden

Abstract: Using a growth model that accounts for environmental and climate externalities, we take a closer look at the welfare e¤ects of promoting biomass growth and the use of bioenergy. As an illustration, a forest hypothetical intensive forest cultivation project is simulated. Costs and benefi…ts of the project show that we need not only determine the postive effects of promoting biomass growth and the use of bioenergy, such as substitution away from fossil fuels and carbon sequestration. But more importantly, to achieve a balanced measure of the e¤ects on the climate, we must also incorporate all carbon emissions that is associated with bioenergy. Not doing so will overestimate the positive climate e¤ects of increasing the use of bioenergy.

Keywords: Bioenergy

JEL-codes: Q23; Q42

16 pages, August 22, 2011

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