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Impacts Of Large Scale Expansion Of Biofuels On Global Poverty And Income Distribution

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  • Cororaton, Caesar B.
  • Timilsina, Govinda R.
  • Mevel, Simon

Abstract

This paper analyzes the impact of expansion in biofuels on the global economy, income distribution and poverty. It utilizes simulation results of two World Bank models: a global computable general equilibrium (CGE) model integrated with biofuels, land-use, and climate change modules, and a global income distribution model that utilizes household survey data of 116 countries. The first model simulates the effects over time of large scale expansion of biofuels on resource allocation, output prices, commodity prices, factor prices, and household income of the different countries and regions in the world. The second model uses these results recursively to calculate the impact on global income distribution and poverty. The results from the CGE model indicate that large scale expansion of biofuels lead to higher world prices of sugar, corn, oilseeds, wheat, and other grains, which lead to higher food prices. The increase in food inflation is higher in developing countries than in developed countries. The expansion of biofuels results in higher wages of unskilled rural labor relative to wages of the other labor types which are skilled urban, skilled rural, and unskilled urban, especially in developing countries. These positive wage effects on unskilled rural labor trigger movement of unskilled urban labor towards rural and agriculture. This is because production of feedstock in developing countries is relatively intensive in the use of unskilled rural labor. The effects of large scale expansion of biofuels on poverty vary across regions. But overall there is a slight increase in global poverty. The increase largely comes from South Asia (particularly India) and Sub-Saharan Africa. Significant number of countries in Sub-Saharan Africa show higher poverty with large scale expansion of biofuels. However, poverty declines in East Asia and Latin America regions. Overall, there is a slight increase in the GINI coefficient. There is a slight increase in the GINI coefficient in Sub-Saharan Africa and East Asia. There is a small reduction in the GINI coefficient in the rest of the regions.

Suggested Citation

  • Cororaton, Caesar B. & Timilsina, Govinda R. & Mevel, Simon, 2010. "Impacts Of Large Scale Expansion Of Biofuels On Global Poverty And Income Distribution," Proceedings Issues, 2010: Climate Change in World Agriculture: Mitigation, Adaptation, Trade and Food Security, June 2010, Stuttgart- Hohenheim, Germany 91279, International Agricultural Trade Research Consortium.
  • Handle: RePEc:ags:iatr10:91279
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    References listed on IDEAS

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    Cited by:

    1. Condon, Nicole & Klemick, Heather & Wolverton, Ann, 2015. "Impacts of ethanol policy on corn prices: A review and meta-analysis of recent evidence," Food Policy, Elsevier, vol. 51(C), pages 63-73.
    2. Pena-Levano, Luis M & Rasetti, Michele & Melo, Grace, 2016. "Interaction of biofuel, food security, indirect land use change and greenhouse mitigation policies in the European Union," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236075, Agricultural and Applied Economics Association.
    3. Miranda, Mario J. & Farrin, Kathleen M. & Larson, Donald F. & Chen, Shu-Ling, 2013. "Differential Effects of Food Security Policies on Subsistence Farmers and the Urban Poor," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149736, Agricultural and Applied Economics Association.

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    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy; Food Security and Poverty; International Relations/Trade; Land Economics/Use; Resource /Energy Economics and Policy;

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