Chakravorty, Ujjayant, Hubert, Marie-Hélène, Moreaux, Michel and Nøstbakken, Linda (2017) Long-run impact of Biofuel on Food Prices. Scandinavian Journal of Economics, 119 (3). pp. 733-767.

Abstract

About 40% 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 rise by about 32% by 2022, about half of that from the biofuel mandate and the rest due to 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 increase, due to significant land conversion to farming and leakage from lower oil prices.