Biofuels trade and sustainable development: the case of Costa Rica

Dec 2007

The significant rise in oil prices and uncertainty about the future behaviour of this product has given viability to alternative sources of energy which were not profitable in the past or did not have the right conditions for major development.
What is the impact of increased bioethanol production on sustainable development? To what extent could the rise of bioethanol production affect food security or food cost? How could an increase in sugarcane cultivation affect the environment due to greater use of agro-chemicals, higher water demands and air pollution from fires?
These concerns are at the heart of the definition of energy policies for a small non-oil producing country like Costa Rica, with high dependency on energy imports. Nevertheless, the country has the appropriate weather and soil conditions for the production of alternative sources of energy such as bioethanol from sugarcane. The present study analyses the accumulated experience in the bioethanol sector of Costa Rica, its lessons and constraints, and explores – starting from government policies and availability of natural, financial and institutional resources - how to develop the bioethanol sector, as well as the possible social, environmental and economic implications of such a decision.
The case study begins with a brief description of the Costa Rica’s trade policy, followed by a section that sums up the country’s experience with bioethanol production during the eighties. Then there is a review of the energy policies of the former and current administration, and the promotion of the bioethanol sector.
Then follows an analysis of this sector in Costa Rica, contemplating production costs, trade trends and supply capacity, amongst other factors. The case study continues with a section analysing sustainability of the activity in its economic, social and environmental aspects, and finally the article ends with some conclusions.

By: C. Murillo R. (IIED)

 
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