Market and government failures in the competition for land for biofuel production in Canada

Abstract

Feedstocks for biofuels in Canada compete for private and public land that is used for agriculture and forest products. Therefore, the production of biofuels is subject to both market and government failures with respect to energy, crops and forest products. Market failures include external negative effects of production on the environment, and social concerns about the security of product supplies. Government failures differ markedly between public and private lands and whether the product in question is energy, crops, or forest products. Whereas historically, tradeoffs between market and government failures have been weighed in each of these sectors individually, the emergence of competition for land between these sectors will require a more coordinated approach to policy formulation.