Freeman Spogli Institute for International Studies Program on Energy and Sustainable Development Stanford University


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Biofuels, Rural Development, and the Changing Nature of Agricultural Demand

Book Chapter

Rosamond L. Naylor - Stanford University

Published by
Center on Food Security and the Environment, April 11, 2012

Policies promoting ethanol and biodiesel production and use in the U.S., Europe, and other parts of the world since the mid-2000s have had profound and largely unintended  consequences on global food prices, agricultural land values, land acquisition, and food security in developing countries. They have also created regional opportunities in the form of agricultural investments, crop yield growth, and prosperous farm economies. This paper reviews the main policy initiatives behind the 21st century biofuels boom—with specific attention to renewable fuel mandates—and describes how these policies influence food price levels and stability in international and national markets. It also explores the implications of an expanding biofuels industry for development policy and food security in countries with persistently high rates of hunger, including virtually all sub-Saharan African countries and India. The paper ends by suggesting three themes surrounding the debate over crop-based biofuels: 1) the dominant role of uncertainty in energy and agricultural markets, especially in light of new energy investments, financial instability, and climate change; 2) the importance of government policies and well-developed supply chains as pre-requisites for profitable biofuel industries; and 3) the need to weigh opportunity costs to biofuels development in terms of fiscal expenditures, land and water resources, and political capital. These issues are particularly important for food insecure countries as they chart their development strategies for the future. Policies that appear promising for food and energy security at the macro-scale today might have major shortfalls for poor communities and households over the longer run if food availability, access, stability and nutrition are seriously compromised.