The Long Run Impact of Biofuels on Food Prices

55 Pages Posted: 12 Jul 2012 Last revised: 5 Feb 2017

See all articles by Ujjayant Chakravorty

Ujjayant Chakravorty

Tufts University

Marie-Helene Hubert

University of Rennes 1 (CREM)

Michel Moreaux

University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ)

Linda Nøstbakken

Norwegian School of Economics (NHH) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2015

Abstract

More than 40% of US grain 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 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 show 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

JEL Classification: Q240, Q320, Q420

Suggested Citation

Chakravorty, Ujjayant and Hubert, Marie-Helene and Moreaux, Michel and Nøstbakken, Linda, The Long Run Impact of Biofuels on Food Prices (February 2015). CESifo Working Paper Series No. 3876, Available at SSRN: https://ssrn.com/abstract=2104053

Ujjayant Chakravorty (Contact Author)

Tufts University ( email )

Medford, MA 02155
United States

Marie-Helene Hubert

University of Rennes 1 (CREM) ( email )

11 Rue Jean Macé
Rennes, Rennes 35065
France

Michel Moreaux

University of Toulouse 1 - Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ) ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
France

Linda Nøstbakken

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47-55959134 (Phone)

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