Skip to main content
Article
The Long Run Impact of Biofuels on Food Prices
Scandinavian Journal of Economics (2017)
  • Ujjayant N Chakravorty, Tufts University
  • Marie Helene Hubert
  • Michel Moreaux, Toulouse School of Economics
  • Linda Nostbakken
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 past increases in world food prices, and 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 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
Publication Date
2017
Citation Information
Ujjayant N Chakravorty, Marie Helene Hubert, Michel Moreaux and Linda Nostbakken. "The Long Run Impact of Biofuels on Food Prices" Scandinavian Journal of Economics (2017)
Available at: http://works.bepress.com/chakravorty/2/