Abstract
Ethanol production in the United States has been steadily growing and is expected to continue growing. Many politicians see increased ethanol use as a way to promote environmental goals, such as reducing greenhouse gas emissions, and energy security goals. This paper provides a benefit-cost analysis of increasing ethanol use based on an analysis by the Environmental Protection Agency. We find that the cost of increasing ethanol production to almost ten billion gallons a year is likely to exceed the benefits by about three billion dollars annually. We also suggest that earlier attempts aimed at promoting ethanol would have likely failed a benefit-cost test, and that Congress should consider repealing ethanol incentive programs, such as the ethanol tariff and tax credit.
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Hahn, R., Cecot, C. The benefits and costs of ethanol: an evaluation of the government’s analysis. J Regul Econ 35, 275–295 (2009). https://doi.org/10.1007/s11149-008-9080-1
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DOI: https://doi.org/10.1007/s11149-008-9080-1