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Will Biofuel Mandates Raise Food Prices?

Ujjayant Chakravorty (), Marie-Hélène Hubert, Michel Moreaux and Linda Nøstbakken

No 2011-1, Working Papers from University of Alberta, Department of Economics

Abstract: Biofuels 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.

Keywords: agriculture; energy policy; global warming; land quality; renewable fuel standards (search for similar items in EconPapers)
JEL-codes: Q24 Q32 Q42 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2011-01-01, Revised 2011-05-01
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Related works:
Working Paper: Will Biofuel Mandates Raise Food Prices? (2010)
Working Paper: Will Biofuel Mandates Raise Food Prices? (2010) Downloads
Working Paper: Will Biofuel Mandates Raise Food Prices? (2010) Downloads
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