The Long Run Impact of Biofuels on Food Prices
More than 40% of US grain is now used to produce biofuels, which are used as substitutes for gasoline in transportation. Biofuels have been blamed universally for recent increases in world food prices. Many studies have shown that these energy mandates in the US and EU may have a large (30-60%) impact on food prices. In this paper we show that demand-side effects - in the form of population growth and income-driven preferences for meat and dairy products rather than cereals - may play as much of a role in raising food prices as biofuel policy. By specifying a Ricardian model with differential land quality, we show that a significant amount of new land will be converted to farming which is likely to cause a modest increase in food prices. However, biofuels may increase aggregate world carbon emissions, due to leakage from lower oil prices and conversion of pasture and forest land for farming.
|Date of creation:||01 May 2012|
|Date of revision:|
|Contact details of provider:|| Postal: 8-14 HM Tory, Edmonton, Alberta, T6G 2H4|
Phone: (780) 492-3406
Fax: (780) 492-3300
Web page: http://www.economics.ualberta.ca/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harry de Gorter & David R. Just, 2010.
"The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy,"
Applied Economic Perspectives and Policy,
Agricultural and Applied Economics Association, vol. 32(1), pages 4-32.
- Harry de Gorter & David R. Just, 2010. "The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy and Agricultural Policy," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 4-32.
- Fischer, Carolyn & Newell, Richard, 2004.
"Environmental and Technology Policies for Climate Mitigation,"
dp-04-05, Resources For the Future.
- Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
- Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers 12881, Iowa State University, Department of Economics.
- William D. Nordhaus, 1973. "The Allocation of Energy Resources," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 529-576.
- Chen, Xiaoguang & Huang, Haixiao & Khanna, Madhu, 2011.
"Land Use and Greenhouse Gas Implications of Biofuels: Role of Technology and Policy,"
2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania
103216, Agricultural and Applied Economics Association.
- Xiaoguang Chen & Haixiao Huang & Madhu Khanna, 2012. "Land-Use And Greenhouse Gas Implications Of Biofuels: Role Of Technology And Policy," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1250013-1-1.
- Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2002. "Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model," Journal of Development Economics, Elsevier, vol. 68(2), pages 289-307, August.
- Ujjayant Chakravorty & Bertrand Magne & Michel Moreaux, 2012. "Resource Use under Climate Stabilization: Can Nuclear Power Provide Clean Energy?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 349-389, 03.
- Bento, Antonio M. & Goulder, Lawrence H. & Jacobsen, Mark R. & von Haefen, Roger H., 2007.
"Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes,"
127021, Cornell University, Department of Applied Economics and Management.
- Antonio M. Bento & Lawrence H. Goulder & Mark R. Jacobsen & Roger H. von Haefen, 2009. "Distributional and Efficiency Impacts of Increased US Gasoline Taxes," American Economic Review, American Economic Association, vol. 99(3), pages 667-99, June.
- Chakravorty, Ujjayant & Magné, Bertrand & Moreaux, Michel, 2006.
"A Dynamic Model of Food and Clean Energy,"
IDEI Working Papers
403, Institut d'Économie Industrielle (IDEI), Toulouse.
- Ujjayant Chakravorty & Marie-HéLène Hubert, 2013.
"Global Impacts of the Biofuel Mandate under a Carbon Tax,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 95(2), pages 282-288.
- Ujjayant Chakravorty & Marie-Hélène Hubert, 2013. "Global impacts of the biofuel mandate under a carbon tax," Post-Print halshs-00761197, HAL.
- Madhu Khanna & David Zilberman, 2012. "Modeling The Land-Use And Greenhouse-Gas Implications Of Biofuels," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1250016-1-1.
- Chakravorty, Ujjayant & Magne, Bertrand & Moreaux, Michel, 2009. "Endogenous Resource Substitution under a Climate Stabilization Policy: Can Nuclear Power Provide Clean Energy?," Working Papers 2009-19, University of Alberta, Department of Economics, revised 01 Sep 2010.
- 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.
- repec:inr:wpaper:26086 is not listed on IDEAS
- Vernon W. Ruttan, 2002.
"Productivity Growth in World Agriculture: Sources and Constraints,"
Journal of Economic Perspectives,
American Economic Association, vol. 16(4), pages 161-184, Fall.
- Ruttan, Vernon W., 2002. "Productivity Growth In World Agriculture: Sources And Constraints," Staff Papers 14176, University of Minnesota, Department of Applied Economics.
- Crago, Christine Lasco & Khanna, Madhu, 2014.
"Carbon abatement in the fuel market with biofuels: Implications for second best policies,"
Journal of Environmental Economics and Management,
Elsevier, vol. 67(2), pages 89-103.
- Crago, Christine Lasco & Khanna, Madhu, 2010. "Carbon Abatement in the Fuel Market with Biofuels: Implications for Second-Best Policies," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60894, Agricultural and Applied Economics Association.
- Keyzer, M.A. & Merbis, M.D. & Pavel, I.F.P.W. & van Wesenbeeck, C.F.A., 2005. "Diet shifts towards meat and the effects on cereal use: can we feed the animals in 2030?," Ecological Economics, Elsevier, vol. 55(2), pages 187-202, November.
- Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
- Rajagopal, Deepak & Zilberman, David, 2007. "Review of environmental, economic and policy aspects of biofuels," Policy Research Working Paper Series 4341, The World Bank.
- Anselm Eisentraut, 2010. "Sustainable Production of Second-Generation Biofuels: Potential and Perspectives in Major Economies and Developing Countries," IEA Energy Papers 2010/1, OECD Publishing.
- Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1201-34, December.
- Gouel, Christophe & Hertel, Thomas, 2006. "Introducing Forest Access Cost Functions into a General Equilibrium Model," GTAP Research Memoranda 2215, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Thomas W. Hertel & Wallace E. Tyner & Dileep K. Birur, 2010. "The Global Impacts of Biofuel Mandates," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 75-100.
- Mark W. Rosegrant & Tingju Zhu & Siwa Msangi & Timothy Sulser, 2008. "Global Scenarios for Biofuels: Impacts and Implications ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 495-505.
- Brent Sohngen & Robert Mendelsohn & Roger Sedjo, 1999. "Forest Management, Conservation, and Global Timber Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 1-13.
When requesting a correction, please mention this item's handle: RePEc:ris:albaec:2012_011. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brenda Carrier)
If references are entirely missing, you can add them using this form.