Journal of Applied Mathematics and Decision Sciences 
Volume 2006 (2006), Article ID 81071, 12 pages
doi:10.1155/JAMDS/2006/81071

Modelling key market impacts and land allocation for biofuel production and forestry

A. Korobeinikov,1 P. Read,2 A. Parshotam,3 and J. Lermit4

 1Research Institute for Electronic Sciences, Hokkaido University, Sapporo 060-0821, Japan
2Department of Applied and International Economics, Massey University, Palmerston North, New Zealand
3Department of Mathematics, Institute of Fundamental Sciences, Massey University, Palmerston North, New Zealand
4Energy Consultant, 2/109 Hill Street, Thorndon, Wellington, New Zealand
Received 10 December 2004; Accepted 19 April 2005

Abstract

It has been suggested that the large scale use of biofuel, that is, fuel derived from biological materials, especially in combination with reforestation of large areas, can lead to a low-cost reduction of atmospheric carbon dioxide levels. In this paper, a model of three markets: fuel, wood products, and land are considered with the aim of evaluating the impact of large scale biofuel production and forestry on these markets, and to estimate the cost of a policy aimed at the reduction of carbon dioxide in the atmosphere. It is shown that the costs are lower than had been previously expected.