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Naureen, Asma, 2013. Cost benefit and risk analysis of biofuel production in Pakistan. Second cycle, A2E. Uppsala: SLU, Dept. of Economics

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Abstract

To meet rising demand of energy, bioenergy is getting great attention in an energy-deficient
country; Pakistan. In this respect, food and non-food feedstocks are being examined
economically, environmentally and in terms of energy balance. Work in this thesis deals with
supply side analysis of liquid bioenergy options in Pakistan. The main purpose is to measure
net economic returns by computing costs and benefits of 1st and 2nd generation biofuels
production from the perspectives of private producer. For this purpose, four types of
feedstocks i.e. jatropha, switchgrass, corn and sugarcane were selected in accordance with the
specific agrarian facts, soil properties and climatic conditions of Pakistan. Due to constrain of
unavailability of reliable data for efficient conversion standards in Pakistan, data requirements
of biofuel production procedures were adapted from neighbouring and efficiently producing
countries. Standard cost-benefit technique was applied to analyze and compare net returns of
all the four feedstock-based biofuels in monetary terms. For risk assessment in all biofuels
production, Monte Carlo simulation was applied. The results indicated positive net returns
only for jatropha. Hence all other feedstocks possessed negative profits and shown economic
inefficiency. The major reason was found to be the high feedstock price. A sensitivity analysis
was conducted to check the break-even price of feedstock. It indicated that 8%, 30% and 44%
decrease in prices of switchgrass, cane molasses and corn, respectively, could make net
returns for biofuels positive. Furthermore, a risk analysis was conducted to evaluate the level
of risk for each fuel source. The results indicated that there is a trade-off between net returns
and risk; high net profits possess high level of risk. Choices of production level in the case of
uncertainty vary depending upon the requirement of different criteria. In conclusion, this
study favours the production of jatropha biodiesel.

Main title:Cost benefit and risk analysis of biofuel production in Pakistan
Authors:Naureen, Asma
Supervisor:Gren, Ing-Marie
Examiner:Elofsson, Katarina
Series:Examensarbete / SLU, Institutionen för ekonomi
Volume/Sequential designation:767
Year of Publication:2013
Level and depth descriptor:Second cycle, A2E
Student's programme affiliation:NM005 Environmental Economics and Management - Master's Programme 120 HEC
Department:(NL, NJ) > Dept. of Economics
Keywords:biofuel, cost benefit analysis, Pakistan, feedstock, Jatropha, Corn, Switchgrass, Sugarcane
URN:NBN:urn:nbn:se:slu:epsilon-s-2037
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-s-2037
Subjects:Economics and management
Language:English
Deposited On:11 Feb 2013 09:25
Metadata Last Modified:11 Feb 2013 09:25

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