Will Biofuel Mandates Raise Food Prices?
AbstractBiofuels have received a lot of attention as a substitute for gasoline in transportation. They have also been blamed for recent increases in food prices. Both the United States and the European Union have adopted mandatory blending policies that require a sharp increase in the use of biofuels. In this paper, we examine the effect of these mandates on food prices and carbon emissions. The model we use considers future world population growth and income-driven changes in dietary preferences towards higher meat and dairy consumption as well as heterogenous land quality. We find that food prices increase anyway because of increased demand for food, especially due to the higher consumption of meat products, and scarcity of fertile arable lands. The contribution of the biofuel mandates to food prices is quite small, about 5% at most. However, biofuel mandates actually increase global emissions due to land conversion and terms of trade effects, undermining the main reason for imposing the mandates.
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 653.
Date of creation: Dec 2010
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Other versions of this item:
- Chakravorty, Ujjayant & Hubert, Marie-Hélène & Moreaux, Michel & Nostbakken, Linda, 2010. "Will Biofuel Mandates Raise Food Prices?," TSE Working Papers 10-212, Toulouse School of Economics (TSE).
- Chakravorty, Ujjayant & Hubert, Marie-HÃ©lÃ¨ne & Moreaux, Michel & Nostbakken, Linda, 2010. "Will Biofuel Mandates Raise Food Prices?," LERNA Working Papers 10.20.326, LERNA, University of Toulouse.
- Chakravorty, Ujjayant & Hubert, Marie-Helene & Moreaux, Michel & Nostbakken, Linda, 2011. "Will Biofuel Mandates Raise Food Prices?," Working Papers 2011-1, University of Alberta, Department of Economics, revised 01 May 2011.
- Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
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- Koliai, Lyes & Avouyi-Dovi, Sanvi & Ano Sujithan, Kuhanathan, 2014. "On the determinants of food price volatility," Economics Papers from University Paris Dauphine 123456789/12798, Paris Dauphine University.
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- Catherine Hausman & Maximilian Auffhammer & Peter Berck, 2012. "Farm Acreage Shocks and Crop Prices: An SVAR Approach to Understanding the Impacts of Biofuels," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(1), pages 117-136, September.
- Paltsev, Sergey, 2012. "Implications of Alternative Mitigation Policies on World Prices for Fossil Fuels and Agricultural Products," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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