can the fijian economy be saved by ethanol production ?

Pacific Economic Bulletin Volume 24 number 3 october 2009 © the australian national university Fiji is totally dependent on imported fossil fuel for its transport sector and options for alternative motor fuels are limited. In the past, when petroleum prices soared, there were discussions at various levels about alternatives. These discussions might have been sporadic but the seriousness of the issue should not be understated. The economic viability of options such as the production of ethanol from sugar or other bio-fuels needs detailed economic analysis to give direction to future discussions. This article analyses the economics of ethanol production from sugar cane. The analysis is influenced by the experiences of countries such as Brazil, where ethanol is produced and used as a transport fuel on a commercial level. The foreign exchange savings potential of this fuel option is also explored briefly. The framework for economic analysis is based on the Dutch Sustainable Development Group’s study of 2005. Peter J. Stauvermann is Senior Lecturer in the School of Economics, University of the South Pacific, Suva, Fiji.