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Long‐Run Impact of Biofuels on Food Prices

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  • Ujjayant Chakravorty
  • Marie‐Hélène Hubert
  • Michel Moreaux
  • Linda Nøstbakken

Abstract

About 40 percent of US corn is now used to produce biofuels, which are used as substitutes for gasoline in transportation. In this paper, we use a Ricardian model with differential land quality to show that world food prices could rise by about 32 percent by 2022. About half of this increase is from the biofuel mandate and the rest is a result of demand‐side effects in the form of population growth and income‐induced changes in dietary preferences, from cereals to meat and dairy products. However, aggregate world carbon emissions would increase, because of significant land conversion to farming and leakage from lower oil prices.

Suggested Citation

  • Ujjayant Chakravorty & Marie‐Hélène Hubert & Michel Moreaux & Linda Nøstbakken, 2017. "Long‐Run Impact of Biofuels on Food Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(3), pages 733-767, July.
    • Handle: RePEc:bla:scandj:v:119:y:2017:i:3:p:733-767
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    File URL: https://doi.org/10.1111/sjoe.12177
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    Citations

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    Cited by:

    1. Bahel, Eric & Marrouch, Walid & Gaudet, Gérard, 2013. "The economics of oil, biofuel and food commodities," Resource and Energy Economics, Elsevier, vol. 35(4), pages 599-617.
    2. Amigues, Jean-Pierre & Moreaux, Michel, 2016. "The Joint Dynamics of the Energy Mix, Land Uses and Energy Efficiency Rates During the Transition Toward the Green Economy," TSE Working Papers 16-625, Toulouse School of Economics (TSE).
    3. repec:eee:jfpoli:v:79:y:2018:i:c:p:121-131 is not listed on IDEAS
    4. repec:wly:quante:v:8:y:2017:i:1:p:117-147 is not listed on IDEAS
    5. Duc Hong Vo & Tan Ngoc Vu & Anh The Vo & Michael McAleer, 2019. "Modeling the Relationship between Crude Oil and Agricultural Commodity Prices," Energies, MDPI, Open Access Journal, vol. 12(7), pages 1-41, April.
    6. Ujjayant Chakravorty & Marie‐Hélène Hubert & Beyza Ural Marchand, 2019. "Food for fuel: The effect of the US biofuel mandate on poverty in India," Quantitative Economics, Econometric Society, vol. 10(3), pages 1153-1193, July.
    7. Amigues, Jean-Pierre & Moreaux, Michel, 2018. "Competing Land Uses and Fossil Fuel, Optimal Energy Conversion Rates During the Transition Toward a Green Economy Under a Pollution Stock Constraint," TSE Working Papers 18-981, Toulouse School of Economics (TSE).
    8. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel & Nathan C. Parker, 2013. "Unintended Consequences of Transportation Carbon Policies: Land-Use, Emissions, and Innovation," NBER Working Papers 19636, National Bureau of Economic Research, Inc.
    9. Yongyang Cai & Kenneth Judd & Jevgenijs Steinbuks, 2017. "A nonlinear certainty equivalent approximation method for dynamic stochastic problems," Quantitative Economics, Econometric Society, vol. 8(1), pages 117-147, March.
    10. Ujjayant Chakravorty & Marie-Hélène Hubert & Beyza Ural Marchand, 2016. "The effect of the US biofuels mandate on poverty in India," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2016-13, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.

    More about this item

    JEL classification:

    • 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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