Modelling the interaction between policies and international trade flows for liquid biofuels

Abstract

World biofuel production and trade have grown exponentially in the last decade. Nevertheless, the interaction between the markets for oilseeds (food/feed/bioenergy) and liquid vegetable oil-based biofuels is overwhelmingly complex and thus not well understood. In this study, we developed a spatially explicit agent-based model to provide insights into the effect of farmers' behaviour on trade flows and biodiesel production and to shed light on the influence of import tariffs for both palm oil and biodiesel on system behaviour. This new approach enables us to assess different types of rational economic behaviour for the adoption of crops by farmers. Results show that model outcomes can vary substantially based on the assumptions made concerning the behaviour of farmers. Moreover, we found that biodiesel trade and production are more sensitive to a change in the EU-28's biodiesel import tariff than to a change in the EU-28's palm oil import tariff. Overall, our results show that social processes, actors' heterogeneity, and institutions play an important role in the behaviour of the system.