The perverse effects of biofuel public-sector policies

Annual Review of Resource Economics

Volumn 5, Issue , 2013, Pages 463-483

  Gorter, Harry De ^a   Drabik, Dusan ^a   Just, David R ^a  

^a Department of Obstetrics Gynecology   (United States)

Author keywords

Agriculture; Air pollution; Biofuels; Burden of taxation; Energy; Environment; Externalities; Greenhouse gases; Mandates; Subsidies; Tariffs; Traffic congestion

Indexed keywords

EID: 84878994845     PISSN: 19411340     EISSN: 19411359     Source Type: Journal    
DOI: 10.1146/annurev-resource-091912-151933     Document Type: Article

References (89)

1. Abbott PC. 2012. Biofuels, binding constraints and agricultural commodity price volatility. Presented at NBER Conf. Econ. Food Price Volatility, Seattle, August 16. http://www.nber.org/chapters/c12808.pdf
2. Abbott PA, Hurt C, Tyner WE. 2008. What's driving food prices? Issue Rep., Farm Found., Oak Brook, Ill. http://www.farmfoundation.org/news/ articlefiles/404-FINAL%20WDFP%20REPORT%207-28-08.pdf
3. Abbott PA, Hurt C, Tyner WE. 2009. What's driving food prices? March 2009 update. Issue Rep., Farm Found., Oak Brook, Ill. http://www.farmfoundation.org/ news/articlefiles/105-FINAL%203-10-09% 20-%20Food%20Prices%20Update.pdf
4. Al-Riffai P, Dimaranan B, Laborde D. 2010. Global trade and environmental impact study of the EU biofuels mandate. Final Rep. by CEPII and IFPRI for Eur. Comm.
5. Babcock BA. 2012a. Biofuels and food prices. Presented at conference sponsored by Agric. Trade Promot. Cent., Chin. Minist. Agric., and Int. Cent. Sustain. Trade Policy, Beijing, August. http://www.card.iastate. edu/facstaff/profile.aspx?id=13&show=presentations
6. Babcock BA. 2012b. Preliminary assessment of the drought's impacts on crop prices and biofuel production. Policy Brief 12-PB 7, Cent. Agric. Rural Dev. (CARD), Iowa State Univ., Ames, Iowa. http://www.card. iastate.edu/ publications/dbs/pdffiles/12pb7.pdf
7. Baffes J, Haniotis T. 2010. Placing the 2006/08commodity priceboominto perspective. Policy Res. Work. Pap.5,371,WorldBank.http://www-wds.worldbank.org/ servlet/WDSContentServer/WDSP/IB/2010/07/21/000158349-20100721110120/Rendered/ PDF/WPS5371.pdf
8. Balcombe K, Rapsomanikis G. 2008. Bayesian estimation and selection of nonlinear vector error correction models: the case of the sugar-ethanol-oil nexus in Brazil. Am. J. Agric. Econ. 90(3):658-68
9. Bento AM, Klotz RL, Landry JR. 2012. Are there carbon savings from US biofuel policies? The critical importance of accounting for leakage in land and fuel markets. Presented at Eur. Assoc. Environ. Resour. Econ. Annu. Conf., 19th, Prague
10. Byrd ES. 2012. Application of the competitive storage model to US corn ethanol policy. MSc. Thesis, CharlesH Dyson Sch. Appl. Econ. Manag., Cornell Univ., Ithaca, NY
11. CARD. 2012. Historicalethanoloperatingmargins.http://www.card.iastate. edu/research/bio/tools/hist-eth-gm.aspx
12. Carter CA, Rausser GC, Smith AD. 2011. Commodity booms and busts. Annu. Rev. Resour. Econ. 3:87-118
13. Carter CA, Rausser GC, Smith AD. 2012. The effect of the US ethanol mandate on corn prices. Work. Pap., Dep. Agric. Resour.Econ.,Univ.Calif.,Davis. http://agecon.ucdavis.edu/people/faculty/aaron-smith/docs//Carter-Rausser-Smith- Ethanol-Paper-Sep18.pdf
14. Chen X, Khanna M. 2012. The market-mediated effects of low carbon fuel policies. AgBioForum 15(1):1-17
15. Collins KJ. 2008. The role of biofuels and other factors in increasing farm and food prices: a review of recent developments with a focus on feed grain markets and market prospects. Supporting material for a review byKraftFoodsGlob.http://www.globalbioenergy.org/uploads/media/ 0806-Keith-Collins-The-Role-of-Biofuels-And-Other-Factors.pdf
16. Cooper KB, Drabik D, de Gorter H. 2012. Welfare effects of biofuel policies in the presence of fuel and labor taxes. Presented at Agric. Appl. Econ. Assoc. Annu. Meet., Seattle, August 12-14. http://purl.umn.edu/124763
17. Cororaton CB, Timilsina GR. 2012. Impacts of large-scale expansion of biofuels on global poverty and income distribution. Policy Res. Work. Pap. 6,078, Dev. Res. Group, Environ. Energy Team, World Bank
18. Cui J, Lapan H, Moschini G, Cooper J. 2011. Welfare impacts of alternative biofuel and energy policies. Am. J. Agric. Econ. 93(5):1235-56
19. de Gorter H. 2008. Explaining agricultural commodity price increases: the role of biofuel policies. Presented at Conf., Rising Food and Energy Prices: US Food Policy at a Crossroads, Or. State Univ., Corvallis, Or., Oct. 2. http://arec.oregonstate.edu/sites/default/files/faculty/perry/degorter.pdf
20. de Gorter H. 2010a. Agriculture and climate change. Presented at Conf. Bioecon. Glob. Clim. Change, Mich.StateUniv.,April26-27.http://espp.msu.edu/ climatechange/symsession-DeGorter-Harry.php
21. de Gorter H. 2010b. Does US corn-ethanol really reduce emissions by 21%? Lessons for Europe. Biofuels 1(5): 671-73. http://www.future-science.com/doi/ pdf/10.4155/bfs.10.54 de
22. Gorter H, Just DR. 2008a. The economics of the US ethanol consumption mandate and tax credit. Unpub. Pap., Dep. Appl. Econ. Manag., Cornell Univ. (Prep. for Semin. at Cornell, May 1)
23. de Gorter H, Just DR. 2008b. "Water"in the US ethanol tax credit and mandate: implications for rectangular deadweight costs and the corn-oil price relationship. Rev. Agric. Econ. 30(3):397-410
24. de Gorter H, Just DR. 2009a. The economics of a blend mandate for biofuels. Am. J. Agric. Econ. 91(3):738-50
25. de Gorter H, Just DR. 2009b. Ethanol standards: why federal policy is crazy. Comment.,CatoInst.,June23.http://www.cato.org/pub-display.php?pub-id= 10309
26. de Gorter H, Just DR. 2009c. The welfare economics of a biofuel tax credit and the interaction effects with price contingent farm subsidies. Am. J. Agric. Econ. 91(2):477-88
27. de Gorter H, Just DR. 2009d. Why sustainability standards for biofuel production make little economic sense. Policy Anal. 647, Cato Inst., Washington, DC. http://www.cato.org/pubs/pas/pa647.pdf
28. de Gorter H, Just DR. 2010a. Ethanol and corn prices: the role of US tax credits, mandates and import tariffs. In The Economic Impact of Public Support to Agriculture: Studies in Productivity and Efficiency, Vol. 7, ed. VE Ball, R Fanfani, LGutierrez, pp. 155-70. New York: Springer
29. de Gorter H, Just DR. 2010b. The social costs and benefits of biofuel policies with pre-existing distortions. In US Energy Tax Policy, ed. G Metcalf, pp. 338-79. New York: Cambridge Univ. Press
30. de Gorter H, Just DR. 2010c. The social costs and benefits of biofuels: the intersection of environmental, energy and agricultural policy. Appl. Econ. Perspect. Policy 32(1):4-32
31. de Gorter H, Drabik D. 2012a. Biofuel policies and grain crop price volatility. Biofuels 3(2):111-13
32. de Gorter H, Drabik D. 2012b. The effect of biofuel policies on food grain commodity prices. Biofuels 3(1):21-24
33. de Gorter H, Drabik D, Just DR. 2011. The economics of a blender's tax credit versus a tax exemption: the case of US "splash & dash"biodiesel exports to the European Union. Appl. Econ. Perspect. Policy 33(4):510-27
34. de Gorter H, Drabik D, Just DR. 2013a. Biofuel policies and food grain commodity prices 2006-2012: all boom and no bust? AgBioforum 16(1):1-13
35. de Gorter H, Drabik D, Just DR. 2013b. How biofuels policies affect the level of grains and oilseed prices: theory, models and evidence. Glob. Food Secur. 1(2):in press
36. Drabik D. 2011. The theory of biofuel policy and food grain prices. Work. Pap. 2011-20, Charles H Dyson Sch. Appl. Econ. Manag., Cornell Univ., Ithaca, NY http://dyson.cornell.edu/research/researchpdf/wp/2011/Cornell-Dyson-wp1120. pdf
37. Drabik D, de Gorter H. 2012. Biofuels policy, drought and corn prices. Biofuels 3(6):649-51. http://www. future-science.com/doi/pdf/10.4155/bfs.12.58
38. Drabik D, de Gorter H, Just DR. 2010. The implications of alternative biofuel policies for carbon leakage. Work. Pap. 2010-22, Charles H Dyson Sch. Appl. Econ. Manag., Cornell Univ., Ithaca, NY. http://aem. cornell.edu/research/ researchpdf/wp/2010/Cornell-Dyson-wp1022.pdf
39. Du X, Hayes DJ. 2011. The impact of ethanol production on US and regional gasoline markets: an update to May 2009.Work. Pap. 11-WP 523, CARD, Iowa State Univ., Ames, Iowa. http://www.card.iastate.edu/publications/dbs/pdffiles/ 11wp523.pdf
40. Du X, Hayes DJ. 2012. The impact of ethanol production on US and regional gasoline markets: an update to 2012. Work. Pap. 12-WP 528, CARD, Iowa State Univ., Ames, Iowa. http://www.card.iastate.edu/publications/dbs/pdffiles/ 12wp528.pdf
41. Dumortier J, Hayes DJ, Carriquiry MA, Dong F, Du X, et al. 2011. Sensitivity of carbon emission estimates from indirect land-use change. Appl. Econ. Perspect. Policy 33:428-48
42. Eichner T, Pethig R. 2009. Carbon leakage, the green paradox and perfect future markets. Work. Pap. 2,542, CESifo. http://www.cesifo-group.de/portal/pls/ portal/docs/1/1186530.pdf
43. Elam TE. 2012. The RFS, fuel and food prices, and the need for statutory flexibility. Rep., FarmEcon, Carmel, Indiana. http://www.nationalchickencouncil. org/wp-content/uploads/2012/07/RFS-issues- FARMECON-LLC-7-16-12-FINAL.pdf
44. Food Agric. Organ. (FAO). 2008. Soaring food prices: facts, perspectives, impacts and actions required. Presented at High-Level Conf. on World Food Secur.: Chall. of Clim. Change and Bioenergy, Rome, June
45. Fischer C, Newell R. 2008. Environmental and technology policies for climate mitigation. J. Environ. Econ. Manag. 55(2):142-62
46. Gilbert CL. 2010. How to understand high food prices. J. Agric. Econ. 61(2):398-425
47. Grafton RQ, Kompas T, van Long N. 2010. Biofuels subsidies and the green paradox. Work. Pap. 2,960, CESifo. http://www.cesifo-group.de/portal/pls/portal/ docs/1/1185708.pdf
48. Hahn R, Cecot C. 2009. The benefits and costs of ethanol: an evaluation of the government's analysis. J. Regul. Econ. 35(3):275-95
49. Headey D. 2011. Rethinking the global food crisis: the role of trade shocks. Food Policy 36(2):136-46
50. Headey D, Fan S. 2010. Reflections on the global food crisis:Howdid it happen?Howhas it hurt?Andhowcan we prevent the next one? Res. Monogr. 165, IFPRI, Washington, DC. http://www.ifpri.org/sites/default/files/publications/ rr165.pdf
51. Hertel TW. 2009. Analyzing the global poverty impacts of biofuel mandates. Presented at Annu. Conf. Glob. Econ. Anal., 12th, Santiago, Chile
52. Hochman G, Rajagopal D, Zilberman D. 2011. The effect of biofuels on the international oil market. Appl. Econ. Perspect. Policy 33(3):402-27
53. Hoel M. 2008. Bush meets Hotelling: effects of improved renewable energy technology on greenhouse gas emissions.Work. Pap. 2,492, CESifo. http://www.cesifo-group.de/portal/pls/portal/docs/1/1186636.pdf
54. Hotelling H. 1931. The economics of exhaustible resources. J. Polit. Econ. 39:137-75
55. Irwin S, Good D. 2012. Ethanol-does the RFS matter?farmdocDaily,August2. http://www.farmdocdaily.illinois.edu/2012/08/ethanoldoes-The-rfs-matter.html
56. Johnson R, Libecap G. 2001. Information distortion and competitive remedies in government transfer programs: the case of ethanol. Econ. Gov. 2:101-34
57. Khanna M, Ando AW, Taheripour F. 2008. Welfare effects and unintended consequences of ethanol subsidies. Rev. Agric. Econ. 30(3):411-21
58. Khanna M, Crago CL. 2012. Measuring indirect land use change with biofuels: implications for policy. Annu. Rev. Resour. Econ. 4:161-84
59. Knittel CR, Smith A. 2012. Ethanol production and gasoline prices: a spurious correlation.Work. Pap., Sch. Manag., Mass. Inst.Technol.,Cambridge, Mass.http://web.mit.edu/knittel/www/papers/knittelsmith-latest.pdf
60. Laborde D. 2011. Assessing the land use consequences of European biofuels policies. Rep. by ATLASS Consort. for DG TRADE under Framew. Contract TRADE/07/A2, Brussels
61. Lapan H, Moschini G. 2012. Second-best biofuel policies and the welfare effects of quantity mandates and subsidies. J. Environ. Econ. Manag. 63(2):224-41
62. Libecap GD. 2003. Agricultural programs with dubious environmental benefits: the political economy of ethanol agricultural policy and the environment. In Agricultural Policy and the Environment Agricultural Policy and the Environment (The Political Economy Forum), ed. RE Meiners, B Yandle, A Avery, D Avery, pp. 89-105. Lanham, MD: Rowman & Littlefield
63. MalloryML,Irwin SH, Hayes DJ. 2012.Howmarket efficiency and the theory of storage link corn and ethanol markets. Energy Econ. 34:2157-66
64. McCalla AF. 2009. World food prices: causes and consequences. Can. J. Agric. Econ. 57(3):23-34
65. Mitchell D. 2008. A note on rising food prices. Policy Res. Work. Pap. 4,682, Dev. Prospect. Group,WorldBank,Washington,DC.http://www-wds.worldbank. org/servlet/WDSContentServer/WDSP/IB/2008/07/28/000020439-20080728103002/ Rendered/PDF/WP4682.pdf
66. OECD. 2006. Agricultural market impacts of future growth in the production of biofuels. Comm. Agric., Dir. Food Agric. Fish., OECD, Paris
67. Oladosu G. 2012. Estimates of the global indirect energy-use emission impacts of USA biofuel policy. Appl. Energy 99(11):85-96
68. Parry IWH, Small K. 2005. Does Britain or the United States have the right gasoline tax? Am. Econ. Rev. 95(4):1276-89
69. Parry IWH, Walls M, Harrington W. 2007. Automobile externalities and policies. J. Econ. Lit. 45(2):373-99
70. Paulson N. 2012. Is the ethanol mandate truly a mandate? An estimate of banked RINsstocks.farmdocDaily,March15.http://www.farmdocdaily.illinois.edu/ 2012/03/is-The-ethanol-mandate-Truly-A.html
71. Rajagopal D, Hochman G, Zilberman D. 2011. Indirect fuel use change (IFUC) and the life cycle environmental impact of biofuel policies. Energy Policy 39(1):228-33
72. Rajagopal D, Sexton S, Hochman G, Zilberman D. 2009. Recent developments in renewable technologies: R & D investment in advanced biofuels. Annu. Rev. Resour. Econ. 1:309-32
73. Rausser GC, de Gorter H. 2012. US policy contributions to food grain commodity prices. Presented at UNUWider Workshop Polit. Econ. Food Price Policy, Cornell Univ., Ithaca, NY, July 9-12
74. Roberts MJ, Schlenker W. 2012. Identifying supply and demand elasticities of agricultural commodities: implications for the US ethanol mandate.Work. Pap., Dep. Agric. Resour. Econ., Univ. Calif., Berkeley. http://are.berkeley. edu/~schlenker//ethanol.pdf
75. Searchinger T, Heimlich R, Houghton R, Dong F, Elobeid A, et al. 2008. Use of US croplands for biofuels increases greenhouse gases through emissions from land use change. Science 319(5867):1238-40
76. Serra T. 2012. Biofuel-related price transmission literature: a review. Unpub. Pap., Cent. Rec. Econ. Desenvol. Agroaliment. (CREDA), Castelldefels, Spain
77. Sexton S, Zilberman D. 2011. Land for food and fuel production: the role of agricultural biotechnology. In The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, ed. JS Graff Zivin, JM Perloff, pp. 269-88. Chicago: Univ. Chicago Press
78. Sinn H-W. 2008. Public policies against global warming: a supply-side approach. Int. Tax Public Financ. 15(4):360-94
79. Sinn H-W. 2009. The green paradox. CESifo Forum 10(3):10-13. http://www.cesifo-group.de/portal/pls/portal/docs/1/1191478.pdf
80. Stoeckel A. 2008. High food prices: causes, implications and solutions. Pub. 08/100, Rural Ind. Res. Dev. Corp., Aust. Gov. Stoft S. 2010. Renewable fuel and the global rebound effect. Res. Pap. 10-06, Glob.EnergyPolicyCent.http: //papers.ssrn.com/sol3/papers.cfm?abstract-id=1636911
81. Thompson W, Whistance J,Meyer M. 2011. Effects of US biofuel policies on US and world petroleum product markets with consequences for greenhouse gas emissions. Energy Policy 39(9):5509-18
82. Timmer PC. 2008. Causes of high food prices. Econ. Work. Pap. 128, As. Dev. Bank, Manila Timmer PC. 2010. Reflections on food crises past. Food Policy 35:1-11
83. Trostle R. 2008. Global agricultural supply and demand: factors contributing to the recent increase in food commodity prices. Rep. WRS-0801, Econ.Res.Serv.,USDA.http://www.ers.usda.gov/media/218027/wrs0801-1-.pdf
84. Trostle R, Marti D, Rosen R. Westcott P. 2011. Why have food commodity prices risen again? Rep. WRS- 1103, Econ. Res. Serv., USDA. http://www.ers.usda. gov/publications/wrs1103/
85. Tyner WE. 2010. The integration of energy and agricultural markets. Agric. Econ. 41(1):193-201
86. Tyner WE, Taheripour F, Hurt C. 2012. Potential impacts of a partial waiver of the ethanol blending rules. Presented at Purdue Univ./Farm Found. Webconf., August 16
87. Tyner WE, Viteri D. 2010. Implications of blending limits on the US ethanol and biofuels markets. Biofuels 1(2):251-53
88. Wright BD. 2011. The economics of grain price volatility. Appl. Econ. Perspect. Policy 33(1):32-58
89. Zilberman D, Hochman G, Rajagopal D, Sexton S, Timilsina G. 2012. The impact of biofuels on commodity food prices: assessment of findings. Am. J. Agric. Econ. 17(June 7); doi: 10.1093/ajae/aas037