Economic ripple effects of bioethanol production in asean countries: Application of inter-regional input-output analysis

Bioethanol has great potential to reduce greenhouse gas emissions, improve energy security, and help revitalize agriculture. Accordingly, an E10 policy that substitutes bioethanol for 10% of all gasoline consumed will be globally popular. The present study aims to analyze the economic effects of bioethanol production for an E10 policy in nine ASEAN countries (except Brunei), with efforts to minimize CO2 emissions. We consider two self-sufficient bioethanol production policies, i.e. self-sufficiency within each countryand that within the ASEAN region under the scheme of a production quota. The optimization model, based on Takahashi et al.20, and the inter-regional Input- Output Table, as estimated from the GTAP-7 (Global Trade Analysis Project, ver. 7) database, are used for consistent policy evaluation. The results demonstrated initially that the E10 policy under the scheme of a regional production quota elicited about 20% more environmental and economic effects than self-sufficient production within each country. Second, Singapore, Japan, China and the USA increased their production through bioethanol plant construction and annual production, even though this study assumed they did not increase bioethanol production. Approximately half the total induced production emerged in these countries. Third, induced production in agriculture accounted for half the total induced production. Based on these merits, several policy implications relating to the E10 policy with policy coordination are discussed.