RED versus REDD: Biofuel policy versus forest conservation Peter Dixon a, ⁎, Hans van Meijl b , Maureen Rimmer a , Lindsay Shutes b , Andrzej Tabeau b a Victoria University, Centre of Policy Studies, PO Box 14428, Melbourne, VIC 8001, Australia b LEI, Wageningen University and Research Centre, PO Box 29703, 2502 LS The Hague, The Netherlands abstract article info Article history: Accepted 8 September 2015 Available online 18 October 2015 Keywords: Land-supply function Computable general equilibrium Land use changes REDD Renewable Energy Directives We examine the interplay between Renewable Energy Directives (RED) and the United Nations Programme to Reduce Emissions from Deforestation and Forest Degradation (REDD) using a scenario approach with a recursive–dynamic global computable general equilibrium model. A methodological issue addressed in the paper is the speciﬁcation of the supply of agricultural land in the face of restrictions over its availability, as arises under REDD. By giving magnitudes to the effects of REDD and RED, our simulations provide a defense against en- vironmental skeptics who, in the absence of such estimates, can dismiss these policies as being exorbitantly ex- pensive. Although REDD and RED are in tension with respect to land use, the paper shows that they could be implemented simultaneously without signiﬁcant global problems for food supply. The paper does however pin- point some regional problems. Implementation of RED and REDD would cause large increases in food prices in Indonesia and Southern Africa. The methodology used in this paper, if implemented at a more detailed level, could be the basis of working out compensation packages that would be needed to make pervasive RED and REDD policies politically feasible. © 2015 Elsevier B.V. All rights reserved. 1. Introduction Renewable Energy Directives (RED) have been adopted by many countries. These schemes seek to reduce greenhouse gas emissions and dependence on oil by imposing minimum levels for the use of biofuels such as ethanol. The schemes have been implemented in a va- riety of ways but generally impose a requirement on oil reﬁners to pur- chase minimum speciﬁed quantities of biofuels. There are increasing concerns, however, that the demand for land for biofuel production may be leading to increased deforestation (Banse et al., 2008; Banse et al., 2011; Hertel et al., 2010), resulting in biodiversity losses and higher GHG emissions. Deforestation and forest degradation, together with peatland emissions, have been shown to account for between 15% (Werf, van der, et al., 2009) and about 20% (Myers Madeira, 2008) of greenhouse gas emissions, a total that is higher than the entire contribution of the transportation sector. The United Nations REDD Programme seeks to reduce emissions from deforestation and forest degradation by protecting and managing forests and woodlands (UN-REDD Programme Secretariat, 2011). It is reasonable to hypothesize that limiting deforestation is likely to limit the land available for agricultural production, including biofuel produc- tion stemming from RED policies. REDD restrictions of land availability are also likely to change the pattern of comparative advantage in agricultural production between countries, leading to changes in land use, agricultural prices and food availability. There are many studies that address aspects of RED and REDD. For example, the pressure on land from biofuel policies is highlighted in the Eliasch Review (Eliasch, 2008, the follow up to the Stern Review) and in Searchinger et al. (2008). Killeen et al. (2011) consider specifying ratios of forest area to land for biofuel cultivation as an alternative to mandates and Persson (2012) assesses separately forest conservation under REDD and land conversion for biofuel production. These studies do not consider worldwide biofuel mandates in combination with REDD and the impact on land markets and agricultural prices. Several authors recognize the potential for RED and REDD conﬂict. For example, Persson (2012, pp. 81–2) comments that: “There is a looming conﬂict between these two opposing effects of cli- mate policy: REDD+ payments incentivizing forest conservation and increased bioenergy demand incentivizing forest conversion.” In a similar vein, Kanninen et al. (2007, p. 33) note the potential con- ﬂict and call for an integrated study. This paper provides such a study. We assess the interplay between RED and REDD policies using a scenario approach with a global comput- able general equilibrium (CGE) model. The consequences of RED for worldwide land use, returns to land, agricultural production, agricultur- al prices, food prices and food consumption are evaluated with and without the global REDD policy. The advantage of such a modeling ap- proach is that the feedback effects between agricultural, biofuel, energy and other markets are captured (Rajagopal and Zilberman, 2007). If a Economic Modelling 52 (2016) 366–374 ⁎ Corresponding author. E-mail address: Peter.Dixon@vu.edu.au (P. Dixon). http://dx.doi.org/10.1016/j.econmod.2015.09.014 0264-9993/© 2015 Elsevier B.V. All rights reserved. Contents lists available at ScienceDirect Economic Modelling journal homepage: www.elsevier.com/locate/ecmod