Modelling regional markets for co-produced timber and biofuel

It has been suggested that the large scale use of biofuel, that is fuel derived from biological materials, instead of traditional fossil fuels, especially in combination with reforestation of large areas, can lead to a low-cost reduction in atmospheric carbon dioxide levels. In this paper, we attempt to estimate the cost of a policy aimed at the reduction of carbon in the atmosphere. We model an economical system of n geographical regions with inter-regional trade, with the aim of evaluating the impacts of large scale biofuel production and forestry on regional and global energy, wood and land markets. It is shown that the costs under these policies are lower than has been previously expected.