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GTAP Resource #2999

"Analyzing the Global Poverty Impacts of Biofuel Mandates"
by Hertel, Thomas

The recent food price spike in global markets has placed considerable stress on millions of low income households around the world (Ivanic and Martin, 2008). Estimates to date of the role of biofuels in this price spike are all over the map – with some arguing that they have contributed next to nothing (USDA, 2008) to the recent price spikes and others arguing that the majority of the recent price increases (Mitchell, 2008). As usual, the truth likely lies somewhere in between. Regardless of the absolute size of the price rise driven by the biofuels boom, there is an important question about the qualitative impact of biofuels growth on poverty. It is ambiguous, since consumers – particularly in low income households -- are hurt by higher food prices, while rural producers potentially gain due to higher incomes. The goal of this paper is to begin sorting out this ambiguity.
Biofuels growth in the US has been extremely rapid since 2001, with ethanol production rising by more than 300% by 2006. Projections for 2015 involve the more than doubling of 2006 production levels (US Energy Information Agency, 2008). In the EU, biodiesel is the dominant biofuel, and there the rate of increase is even more dramatic – 500% between 2001-2006 and nearly the same rate of increase projected to 2015 – largely fueled by generous subsidies and tax exemptions. With this amount of agricultural production being absorbed by the energy sector, a significant impact on food prices is to be expected. This paper examines the global poverty impacts of EU and US biofuels growth over the entire period: 2001 to 2015.

Resource Details (Export Citation) GTAP Keywords
Category: 2009 Conference Paper
Status: Published
By/In: Presented at the 12th Annual Conference on Global Economic Analysis, Santiago, Chile
Date: 2009
Created: Hertel, T. (4/13/2009)
Updated: Hertel, T. (4/13/2009)
Visits: 4,207
- Economic analysis of poverty
- Renewable energy

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