January 23, 2011

Meeting the Mandate for Biofuels: Implications for Land Use, Food and Fuel Prices

by Xiaoguang Chen, Haixiao Huang, Madhu Khanna, Hayri Önal

- This paper uses a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to estimate the effects of these policies on cropland allocation, food and fuel prices, and the mix of biofuels from corn and cellulosic feedstocks over the 2007-2022 period. We find that the biofuel mandate will increase corn price by 24%, reduce the price of gasoline by 8% in 2022, and increase social welfare by $122 B (0.7%) relative to Business As Usual scenario.

Chen, X., H. Huang, M. Khanna and H. Önal (2011). "Meeting the Mandate for Biofuels: Implications for Land Use, Food and Fuel Prices." NBER Working Paper No. 16697, Jan 2011.