Energy policy analysis in a global context: Applications to biofuels, livestock, and feed

The recent rapid increase in biofuels production has brought about large-shocks to global food and agricultural systems. None of the impacts are known with certainty, and with the desire to procure more domestic and renewable sources of energy, biofuels production will likely continue its rapid accession. This dissertation examines the food, fuel, and feed tradeoffs of biofuels production, paying particular interest to the role of biofuels co-products. The first issue undertaken is strengthening the econometric underpinnings of the simulation model used later for global analysis of biofuels policies. To do so, energy elasticities embedded in the model are checked against those calculated in the literature. Furthermore, validation of the CGE model is carried out to ensure confidence that the model replicates historical volatility in oil and gasoline prices. The methodology presented in this work provides a detailed analysis of examining and improving simulation models. The second essay provides estimates of livestock feed demand response using a combination of farm-level feed ration simulation and sector-level econometric modeling to better understand feed markets. The results indicate that DDGS and energy-based inputs are more substitutable than DDGS and protein-based inputs. Another important conclusion is that DDGS quality is important in feed decisions, as results substantially differ when heterogeneous DDGS quality is considered. The validated simulation model is then used to analyze the global impacts from biofuels production, focusing on the role of biofuels co-products; particularly how they impact livestock producers in an economy-wide context. A comprehensive examination of the impacts from a historical experiment is first given, followed by an analysis of the impacts from medium-term biofuels mandates. Results indicate that the majority of co-products will be utilized by cattle and dairy; however, all livestock sectors face increasing feed costs in the face of these mandates. This feed cost increase ultimately raises the price of livestock for food consumption; however, these impacts are less than the impacts without considering biofuels co-products. Results also demonstrate that virtually all CGE studies have overstated the impact of liquid biofuels on agricultural markets due to the fact that they have ignored the role of co-products