Long‐Run Impact of Biofuels on Food Prices

35 Pages Posted: 30 Jun 2017

See all articles by Ujjayant Chakravorty

Ujjayant Chakravorty

Tufts University

Marie-Helene Hubert

University of Rennes 1 (CREM)

Michel Moreaux

Institut Universitaire de France

Linda Nøstbakken

Norwegian School of Economics (NHH) - Department of Economics

Date Written: July 2017

Abstract

About 40 percent of US corn is now used to produce biofuels, which are used as substitutes for gasoline in transportation. In this paper, we use a Ricardian model with differential land quality to show that world food prices could rise by about 32 percent by 2022. About half of this increase is from the biofuel mandate and the rest is a result of demand‐side effects in the form of population growth and income‐induced changes in dietary preferences, from cereals to meat and dairy products. However, aggregate world carbon emissions would increase, because of significant land conversion to farming and leakage from lower oil prices.

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, Long‐Run Impact of Biofuels on Food Prices (July 2017). The Scandinavian Journal of Economics, Vol. 119, Issue 3, pp. 733-767, 2017, Available at SSRN: https://ssrn.com/abstract=2995196 or http://dx.doi.org/10.1111/sjoe.12177

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

Institut Universitaire de France ( email )

103, bld Saint-Michel
75005 Paris
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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