Browsing by Subject "Economic viability"

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Opportunities and constraints for agrofuels in developing countries : case studies on economic viability and employment effects of Jatropha production
(2010) Grass, Martin; Zeller, Manfred
This dissertation was motivated by controversial statements of politicians and lobby groups for and against first-generation agrofuel production. Therefore this thesis contributes to a more realistic view on opportunities and constraints for agrofuel production based on first-generation technologies. The findings are based on an intensive literature review covering the following topics: current production trends of ethanol and agrodiesel, their potential for fossil energy substitution and greenhouse gas reduction including related costs, rural development and poverty alleviation. This more general overview on agrofuels was deepened by own research on Jatropha seed production in India and Madagascar. In this context the economic viability of Jatropha seed production and possible income effects for households living in the vicinity of a Jatropha plantation were analyzed. For this special agrofuel feedstock the findings allowed shedding some light on important aspects of the much broader topic concerning the production of agrofuels. To cover the above mentioned topics this dissertation is structured around three research papers. The first paper identifies and discusses the opportunities and constraints of first-generation agrofuel production in developed and developing countries and is based on an intensive literature review. Therefore this paper contrasts arguments used by politicians to justify agrofuel support measures like energy security, greenhouse gas reduction potential, income generation and possible rural development with new scientific findings on each argument. Furthermore data on worldwide trends in ethanol and agrodiesel production were presented. The second paper focuses on one possible option to lower competition between food and agrofuel production at least partially. This option is seen in the production of Jatropha seeds on marginal land not suitable for food production. In this context an Indian case study revealed the economic viability of Jatropha seed production on marginal land. The database for this study includes data derived from literature as well as experimental field data provided by the ?International Crops Research Institute for the Semi-Arid Tropics?. The third paper addresses possible income effects for rural households offering their labour force to a Jatropha plantation in central Madagascar. The econometric impact assessment is based on a socio-economic household survey undertaken by the author in 2009. To account for possible selection bias the propensity score matching approach was used to estimate the average treatment effect on the treated by comparing the average income of Jatropha plantation households and control households. The findings for 336 households reveal positive income effects for households working at the Jatropha plantation. The dissertation concludes that more investments in research are needed to gain a potential win-win situation for rural households, investors and the environment especially for the case of developing countries. The results lead to the conclusion, that smallholder based Jatropha seed production should not be promoted in developing countries. Therefore this dissertation concludes further that it would be far better for developing countries to let international investors set up Jatropha plantations, hence in this case the economic risk is borne by the foreign investors. Furthermore abundant labour in rural areas could find employment opportunities with such plantations and therefore would be able to generate some income for their families. Nevertheless the implementation of Jatropha projects financed by international investor?s needs regulations set up by national governments. Those regulations should cover each aspect within the entire value chain of Jatropha agrofuel production and should be embedded in a national energy and rural development policy. Furthermore institutional frameworks such as land tenure security and labour rights have to be enforced. Setting up aforementioned regulations and institutional frameworks can prevent possible constraints such as, land grabbing, exploitation of rural labourers, loss of biodiversity and competition between Jatropha seed and food production e.g. for scarce water, which could occur due to foreign investment in local Jatropha (and other agrofuel feedstocks) cultivation in the worst case.