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Long‐Run Impact of Biofuels on Food Prices
Author(s) -
Chakravorty Ujjayant,
Hubert MarieHélène,
Moreaux Michel,
Nøstbakken Linda
Publication year - 2017
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12177
Subject(s) - biofuel , economics , agricultural economics , gasoline , mandate , agriculture , food prices , differential (mechanical device) , natural resource economics , food security , geography , microbiology and biotechnology , waste management , archaeology , aerospace engineering , political science , law , engineering , biology
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.