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The Long Run Impact of Biofuels on Food Prices

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

No 805, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: More than 40% of US corn 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 use a partial equilibrium framework to 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 a differential land quality, we find 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.

Keywords: Clean Energy; Food Demand; Land Quality; Renewable Fuel Standards; Transportation (search for similar items in EconPapers)
JEL-codes: Q24 Q32 Q42 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-agr and nep-ene
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Related works:
Journal Article: Long‐Run Impact of Biofuels on Food Prices (2017) Downloads
Working Paper: The Long Run Impact of Biofuels on Food Prices (2017) Downloads
Working Paper: The Long-Run Impact of Biofuel on Food Prices (2015) Downloads
Working Paper: The Long-Run Impact of Biofuel on Food Prices (2015) Downloads
Working Paper: The Long Run Impact of Biofuels on Food Prices (2012) Downloads
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