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Do Biofuel Mandates Raise Food Prices?

Ujjayant Chakravorty (), Marie-Hélène Hubert, Michel Moreaux and Linda Nøstbakken
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Marie-Hélène Hubert: University of Rennes 1 - CREM, (UMR 6211 CNRS)

Economics Working Paper Archive (University of Rennes 1 & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS

Abstract: Biofuels have received a lot of attention as a substitute for gasoline in transportation. They have been blamed universally for recent increases in world food prices. Both the United States and the European Union have adopted mandatory blending policies that require a sharp increase in their use. Many studies have shown that these energy mandates may have a large (30-60%) impact on food prices. We develop a model that takes into account dietary preferences - the fact that with rising incomes, people in the developing world will consume more meat and dairy products, which are land-intensive relative to cereals. On the supply side, we allow for conversion of new lands to farming. We show that about half the increase in food prices can be attributed to population growth and dietary changes, and only the remaining come from biofuel policy. Moreover, with endogenous land supply, food price increases are likely to be much smaller than predicted by other studies. Finally, these biofuel policies do not lead to any reduction in carbon emissions.

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: 2012-03
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cremwp:201214

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