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2006

Iowa State University

CARD Working Papers

Biofuels

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Removal Of U.S. Ethanol Domestic And Trade Distortions: Impact On U.S. And Brazilian Ethanol Markets, Amani E. Elobeid, Simla Tokgoz Oct 2006

Removal Of U.S. Ethanol Domestic And Trade Distortions: Impact On U.S. And Brazilian Ethanol Markets, Amani E. Elobeid, Simla Tokgoz

CARD Working Papers

We analyze the impact of trade liberalization and removal of the federal tax credit in the United States on U.S. and Brazilian ethanol markets using a multi-market international ethanol model calibrated on 2005 market data and policies. The removal of trade distortions induces a 23.2 percent increase in the price of world ethanol on average between 2006 and 2015 relative to the baseline. The U.S. domestic ethanol price decreases by 14.1 percent, which results in a 7.5 percent decline in production and a 3.2 percent increase in consumption. The lower domestic price leads to ...