The Long-Run Impact of Biofuels on Food Prices

Resources for the Future Discussion Paper 15-48

53 Pages Posted: 4 Nov 2015

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: October 30, 2015

Abstract

More than 40 percent 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 energy mandates in the United States and European Union may have a large (30-60 percent) 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 biofuels 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 actually increase aggregate world carbon emissions, due to leakage from lower oil prices and conversion of pasture and forest land to farming.

Keywords: clean energy, food demand, land quality, renewable fuel standards, transportation

JEL Classification: Q24, Q32, Q42

Suggested Citation

Chakravorty, Ujjayant and Hubert, Marie-Helene and Moreaux, Michel and Nøstbakken, Linda, The Long-Run Impact of Biofuels on Food Prices (October 30, 2015). Resources for the Future Discussion Paper 15-48, Available at SSRN: https://ssrn.com/abstract=2685685 or http://dx.doi.org/10.2139/ssrn.2685685

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)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
236
Abstract Views
780
rank
98,345
PlumX Metrics