Promoting bio-based products is one oft-proposed solution to reduce GHG emissions because the feedstocks capture carbon, offsetting at least partially the carbon discharges resulting from use of the products. However, several life cycle analyses point out that while biofuels may emit less life cycle net carbon emissions than fossil fuels, they may exacerbate other parts of biogeochemical cycles, notably nutrient loads in the aquatic environment. In three essays, this dissertation explores the tradeoff between GHG emissions and nitrogen leaching associated with biofuel production using general equilibrium models. The first essay develops a theoretical general equilibrium model to calculate the second-best GHG tax with the existence of a nitrogen leaching distortion. The results indicate that the second-best GHG tax could be higher or lower than the first-best tax rates depending largely on the elasticity of substitution between fossil fuel and biofuel. The second and third essays employ computable general equilibrium models to further explore the tradeoff between GHG emissions and nitrogen leaching. The computable general equilibrium models also incorporate multiple biofuel pathways, i.e., biofuels made from different feedstocks using different processes, to identify the cost-effective combinations of biofuel pathways under different policies, and the corresponding economic and environmental impacts.
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Bioproducts and environmental quality: biofuels, greenhouse gases, and water quality