The impacts of biodiesel feedstock production systems in South Africa: An application of a Partial Equilibrium Model to the Eastern Cape Social Accounting Matrix

Abstract

In this paper the impacts of biodiesel feedstock production in the Eastern Cape Province of South Africa is assessed through the application of a Partial Equilibrium Model to the Eastern Cape Social Accounting Matrix, using canola production in the Province as an ‘external shock’. Six economic indicators were estimated. The results show that investment in biodiesel production in the Eastern Cape will generate, in 2007 terms, an additional GDP of R18.1 million and 410 employment opportunities per annum, R24.3 million per annum over an assumed lifetime of 20 years in capital formation, R2.1 million additional income generated in low income households, increase in government revenue, and a positive balance of payment. These indicators imply that, given the parameters that are accounted for in a Partial Equilibrium Model, every Rand invested in canola projects in the Eastern Cape will, overall, be of socio-economic advantage to the Province. It is envisaged that further applications of such models may lead to a better understanding of the implications of biofuels in the South African economy, and thereby inform decision- and policy-making in terms of the sustainability of biofuels production systems in general.