Economic Impacts of Thailand’s Biofuel Subsidy Reallocation Using a Dynamic Computable General Equilibrium (CGE) Model

For two decades, the Thai government has been promoting ethanol and biodiesel consumption through tax measures price subsidies. Although this policy substantially increased production of biofuels, there is concern regarding its future fiscal burden. Due to constraints, planned completely terminate biofuel subsidy by 2022. This study aims at examining economy-wide impacts removing also conducting simulations alternative scenarios, i.e., improving yield energy crops reallocating burden expand capital investment in crop plantations. A recursive dynamic computable general equilibrium (CGE) model was used as main quantitative method conduct four simulation scenarios. validated comparing results with actual 2015–2019 data showed low values root mean square error (RMSE). The indicate that solely terminating would lead contraction. Meanwhile, eliminating along influencing improvement expanding plantations lowest negative impacts. Therefore, termination should be simultaneously implemented supply-side expansions.