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Abstract
In the context of ever-increasing petroleum prices
combined with concerns about climate change, timing of
adoption and rate of diffusion of land-based fuels and backstop
technologies for transportation use are examined in this paper.
A global model of land allocation joined with a Hotelling
model has been developed. Using this framework, effects of
climate and energy policies on world agricultural and energy
markets have been explored. Further, their regional impacts
are also analyzed. Whereas mandatory blending bio-fuels have
substantial effects on world food prices and do not succeed in
curbing down carbon emissions fluxes, carbon targets are
expected to speed up date of adoption of backstop technologies.
Then, sensitivity scenarios with regards to technological
parameters reveal that higher is the rate of technological
change, earlier backstop technologies are adopted and lower is
the stock of carbon accumulated into the atmosphere. Finally,
interplay between land-based fuels and deforestation has been
studied. Results show that land-based fuels production speeds
up world deforestation and causes substantial carbon
emissions due to conversion of forests into agricultural lands.