The Energy Market Regulation Agency in Turkey has targeted the bio-diesel (produced by domestic agricultural products) content of fuel use at least to be 1% in 2014, 2% in 2015 and 3% in 2016. In this study, an impact analysis is carried out to reveal the impacts of the determined targets on agricultural sector and incomes in rural areas. A multi-country, multi-commodity agricultural bilateral trade model and price multipliers derived from a social accounting matrix of year 2010 are used to derive the impacts. The scenario findings suggest that the bio-diesel demand should be supplied by a rise mostly in sunlower and in soya. Further, according to empirical findings, if the supply increase is achieved simultaneously by providing price premium for domestic production and by liberalizing imports of both raw products and their oils, the policy cost would be relatively low. Factor and household incomes in the rural areas can be arranged by adjusting the rates of premium rise and tariff reduction. As a result of the analyses however, we may conclude that substituting fuel use in Turkey by bio-ethanol rather than bio-diesel would be a more rational choice.
Key words: Bio-diesel, Partial equilibrium, Agricultural bilateral-trade model, Social accounting matrix, Price multipliers. JEL Classification: C63, C67, Q16, Q18. Article Language: EnglishTurkish
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