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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.

Abstract

This paper analyzes the impact of large-scale expansion of biofuels on the global income distribution and poverty. A global computable general equilibrium model is used to simulate the effects of the expansion of biofuels on resource allocation, commodity prices, factor prices and household income. A second model based on world-wide household surveys uses these results to calculate the impacts on poverty and global income inequality. The study finds that the large-scale expansion of biofuels leads to an increase in production and prices of agricultural commodities. The increased prices would cause higher food prices, especially in developing countries. Moreover, wages of unskilled rural labor would also increase, which slows down the rural to urban migration in many developing countries. The study also shows that the effects on poverty vary across regions; it increases in South Asia and Sub-Saharan Africa, whereas it decreases in Latin America. At the global level, the expansion of biofuels increases poverty slightly.

Suggested Citation

  • Cororaton, Caesar B. & Timilsina, Govinda R., 2012. "Impacts of large-scale expansion of biofuels on global poverty and income distribution," Policy Research Working Paper Series 6078, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6078
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    References listed on IDEAS

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    1. Habib-Mintz, Nazia, 2010. "Biofuel investment in Tanzania: Omissions in implementation," Energy Policy, Elsevier, vol. 38(8), pages 3985-3997, August.
    2. Maurizio Bussolo & Rafael E De Hoyos & Denis Medvedev, 2010. "Economic growth and income distribution: linking macro-economic models with household survey data at the global level," International Journal of Microsimulation, International Microsimulation Association, vol. 3(1), pages 92-103.
    3. Arndt, Channing & Benfica, Rui & Tarp, Finn & Thurlow, James & Uaiene, Rafael, 2010. "Biofuels, poverty, and growth: a computable general equilibrium analysis of Mozambique," Environment and Development Economics, Cambridge University Press, vol. 15(01), pages 81-105, February.
    4. Rafael E. de Hoyos & Denis Medvedev, 2011. "Poverty Effects of Higher Food Prices: A Global Perspective," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 387-402, August.
    5. Hertel, Thomas & Tyner, Wally & Birur, Dileep, 2008. "Biofuels for all? Understanding the Global Impacts of Multinational Mandates," GTAP Working Papers 2809, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    6. Keeney, Roman & Hertel, Thomas, 2008. "The Indirect Land Use Impacts of U.S. Biofuel Policies: The Importance of Acreage, Yield, and Bilateral Trade Responses," GTAP Working Papers 2810, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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    10. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
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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. 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.
    3. 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.

    More about this item

    Keywords

    Rural Poverty Reduction; Food&Beverage Industry; Regional Economic Development; Economic Theory&Research; Labor Policies;

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