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 University of Alberta, Department of Economics in its series Working Papers with number 2011-1.
Length: 44 pages
Date of creation: 01 Jan 2011
Date of revision: 01 May 2011
agriculture; energy policy; global warming; land quality; renewable fuel standards;
Other versions of this item:
- Chakravorty, Ujjayant & Hubert, Marie-Hélène & Moreaux, Michel & Nostbakken, Linda, 2010. "Will Biofuel Mandates Raise Food Prices?," IDEI Working Papers 653, Institut d'Économie Industrielle (IDEI), Toulouse.
- 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-Hélène & Moreaux, Michel & Nostbakken, Linda, 2010. "Will Biofuel Mandates Raise Food Prices?," TSE Working Papers 10-212, Toulouse School of Economics (TSE).
- 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
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-01-23 (Agricultural Economics)
- NEP-ALL-2011-01-23 (All new papers)
- NEP-ENE-2011-01-23 (Energy Economics)
- NEP-ENV-2011-01-23 (Environmental Economics)
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- 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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CUDARE Working Paper Series
1119, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Janda, Karel & Kristoufek, Ladislav & Zilberman, David, 2011. "Biofuels: Review of Policies and Impacts," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5v1112qr, Department of Agricultural & Resource Economics, UC Berkeley.
- Karel Janda & Ladislav Kristoufek & David Zilberman, 2011. "Modeling the Environmental and Socio-Economic Impacts of Biofuels," Working Papers IES 2011/33, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2011.
- Quentin Grafton, R. & Kompas, Tom & Van Long, Ngo, 2012.
"Substitution between biofuels and fossil fuels: Is there a green paradox?,"
Journal of Environmental Economics and Management,
Elsevier, vol. 64(3), pages 328-341.
- GRAFTON, R. Quentin & KOMPAS, Tom & LONG, Ngo Van, 2011. "Substitution between Biofuels and Fossil Fuels: Is There a Green Paradox?," Cahiers de recherche 10-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Quentin Grafton & Tom Kompas & Ngo Van Long, 2012. "Substitution between bio-fuels and fossil fuels: is there a Green Paradox?," CIRANO Working Papers 2012s-10, CIRANO.
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