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Should Zambia Produce Biodiesel from Soybeans? Some Insights from an Empirical Analysis

AGRICULTURE AIR POLLUTION AVAILABILITY BALANCE BIODIESEL BIOFUEL BIOFUELS BIOFUELS INDUSTRY CARBON OFFSETS CHARCOAL CLIMATIC CONDITIONS COMMODITIES COMMODITY COMMODITY PRICES CONSUMER FUEL CONSUMER PRICE CONSUMER SURPLUS CONSUMERS CROP DEFORESTATION DEMAND ELASTICITY DEMAND FOR GASOLINE DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT AGENCY DEVELOPMENT POLICY DIESEL DIESEL CONSUMPTION DIESEL FUEL DIESEL FUEL CONSUMPTION DOMESTIC MARKET DOMESTIC PRICE DOMESTIC PRICES ENERGY DEMAND ENERGY ECONOMICS ENERGY NEEDS ENERGY POLICIES ENERGY SECTOR ENVIRONMENTAL PROTECTION ETHANOL EXPENDITURES EXTERNALITIES FEEDSTOCK FEEDSTOCKS FINANCIAL SUPPORT FIXED SHARE FOREIGN EXCHANGE FOSSIL FUEL FUEL CONSUMPTION FUEL COST FUEL DEMAND FUEL MARKET FUEL PRICE FUEL PUMP FUEL TAX FUEL WOOD GOVERNMENT INTERVENTION GRAIN PRICES HYDROPOWER IMPORTS OF PETROLEUM INTERNATIONAL MARKETS JATROPHA MARGINAL REVENUE MARKET CONDITIONS MARKET DEMAND MARKET DEVELOPMENT MARKET EQUILIBRIUM MARKET PRICE MARKET PRICES MARKETING NATIONAL ENERGY POLICY NET EXPORTS OIL OIL EXPORTS OIL EXTRACTION OIL IMPORTS OIL PRICE OIL PRICES OIL PRODUCTION OIL YIELD OPEN ECONOMY OPPORTUNITY COST OPPORTUNITY COSTS PETROLEUM PETROLEUM DEMAND PETROLEUM IMPORTS PETROLEUM PRODUCTS POSITIVE EFFECTS PRICE DECREASES PRICE ELASTICITY PRICES OF FUELS PRODUCTION COSTS PURCHASING RETAIL RETAIL PRICE SMALL COUNTRY SOYBEAN MEAL SOYBEAN OIL SOYBEAN PRODUCERS SOYBEAN PRODUCTION SOYBEANS SUBSTITUTION SUGAR SUGARCANE SUPPLIERS SUPPLY CURVE SUPPLY CURVES SUPPLY ELASTICITY SURPLUS TAX CREDIT TAX EXEMPTION TAX REVENUE TAX REVENUES TAXATION TRADE BALANCE TRADE BARRIERS WELFARE ECONOMICS WORLD MARKET WORLD MARKETS
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World Bank, Washington, DC
Africa | Zambia
2013-09-26T15:42:54Z | 2013-09-26T15:42:54Z | 2013-06

Facing a huge fiscal burden due to imports of entire petroleum despite the availability of a surplus of agricultural land to produce biofuels, Zambia, a country in Sub-Saharan Africa, has recently introduced a biofuel mandate. But, a number of questions, particularly those related to the economics of biofuels, have not been fully investigated yet. Using an empirical model this study analyzes the economics of meeting the biodiesel mandate through soybean feedstock. The study finds that meeting the biodiesel mandate with biodiesel from soybeans would reduce social welfare because the country's soybean imports would cost more than the expected reduction in petroleum imports. However, if Zambia increases its domestic soybean supply along with its capacity to convert soybean to biodiesel, as well as oil yield, soybean based biodiesel is likely to be welfare-beneficial, even if biodiesel prices are above diesel prices. The study also finds that under current market prices and transportation costs and constraints, the same amount of biodiesel can be produced most cost-effectively with a tax exemption. A blend mandate would be less cost effective, while a biodiesel production subsidy represents the least efficient policy option.

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