The New Frontier: Welfare Effects of Foreign Biofuel Investments in Africa (Case Study: Sierra Leone)

This research analyzes the market and welfare effects of foreign biofuel investments into Sierra Leone. A log-linear comparative static displacement model is used to carry out the analysis. A 30% demand shock was introduced into the equilibrium system to represent an increase in biofuel demand as a result of increased foreign biofuel investments. Results revealed large welfare enhancing gains for consumers of inedible biofuels but resulted in welfare losses in the staples and edible biofuel consumer markets. Producers (farmers) generally reported welfare gains by virtue of owning factor inputs (land and other). Equilibrium quantities of inedible biofuels, edible biofuels and food increased by about 8.8%, decreased by 0.22% and increased by 0.6% respectively. Prices for both inputs and outputs increased while quantities of inputs also increased.

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 Record created 2017-04-01, last modified 2020-10-28

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