Biofuels: Impacts on Land, Food, and Prices Mark W. Rosegrant Director Environment and Production Technology Division AAAS Annual Meeting “Session on Biofuels,

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Presentation transcript:

Biofuels: Impacts on Land, Food, and Prices Mark W. Rosegrant Director Environment and Production Technology Division AAAS Annual Meeting “Session on Biofuels, Tropical Deforestation and Climate Policy: Key Challenges and Opportunities” Chicago, USA, February 14, 2009

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Outline  Biofuels and Food Prices: Recent Trends  Long run Impacts of Biofuels on Land use and Food Prices  Climate Change and Biofuels  Role of Agricultural Productivity in Balancing Biofuel Expansion  Policy Implications Page 2

content/uploads/2008/03/biofuel.jpg BIOFUELS AND FOOD PRICES: RECENT TRENDS

Trends in Food and Oil Prices Page 4 Source: Data from WB 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Contributing Factors to Food Price Rise  Biofuels  Rapid income growth  Underinvestment in agricultural productivity and technology  Water and land scarcity, production shocks (emerging climate change)  High input and transport costs (energy price)  Trade policy, low stocks, speculation, exchange rates

Biofuel Impacts on Prices? SourceEstimateCommodityTime period World Bank (April 2008) 75 %global food indexJanuary 2002 – February 2008 IMF (2008?)70 % 40 % corn soybeans ???? IFPRI (May 2008)39 % % corn rice & wheat 2000 – 2007 OECD-FAO (May 2008) 42 % 34 % 24 % coarse grains vegetable oils wheat 2008 – 2017 Collins (June 2008)25-60 % % corn US retail food 2006 – 2008 Glauber (June 2008)23-31 % 10 % 4-5 % commodities global food index US retail food April 2007 – April 2008 January – April 2008 CEA (May 2008)35 % 3 % corn global food index March 2007 – March 2008 Source: FAO 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Simulated Real Price of Maize, Baseline and Low-biofuel Scenarios Source: IFPRI IMPACT simulations, April 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Increase in malnourished children in high biofuel scenario compared to low biofuel scenario, Source: IFPRI IMPACT projections, July 2008

Page 9 LONG RUN IMPACTS OF BIOFUELS ON LAND USE AND PRICES fe_and_the_land/images/life-and- land_r2_c2.jpg images/1_image.jpg

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE What about the Long Run? Land Demand and Supply Drivers  Demand drivers Production of food, fiber, energy (biofuels), and timberProduction of food, fiber, energy (biofuels), and timber Emissions mitigation and carbon sequestrationEmissions mitigation and carbon sequestration Urban developmentUrban development Non-market ecosystem servicesNon-market ecosystem services –Biodiversity  Supply issues Technology and crop productivity growthTechnology and crop productivity growth Land suitability and accessibilityLand suitability and accessibility Climate changeClimate change Property rightsProperty rights Water quality and quantityWater quality and quantity Land productivityLand productivity Page 10

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Sources of Cereal Production Growth, Baseline, Source: IFPRI IMPACT simulations, April 2008

World Price Projections, baseline Page 12 Source: IFPRI IMPACT simulations, April 2008 Cereals Meat

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Global Price of Maize: Baseline, W/o Biofuel and W/o Climate Change, Page 13 Source: IFPRI IMPACT simulations for HadCM3/SRES B2 scenario (with IMAGE temperature and CO2 fertilization effects, April, 2008)

Page 14 CLIMATE CHANGE AND BIOFUELS

Climate Change Effects on Maize Yield Page 15 Hadley GCM, SRES Scenario A2a, Maize Variety IB0041 Source: G. Nelson, J. Koo, R. Robertson, “Simulating the Yield Consequences of Climate Change: Combining Crop Models with Location-specific Climate and Physical Constraints”, EPTD, IFPRI, in draft

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Reference Scenario: Biomass & Land Use Source: Gurgel et al Reference scenario is BAU where there is no attempt to control GHG emissions. Biomass only enters when competitive with fossil fuels.

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Emissions Mitigation Scenario Page 17 Source: Gurgel et al Policy Scenario includes a cumulative reduction of emissions of 40% from 2012 to 2100, where limits on fossil fuel usage spurs biomass conversion.

Page 18 tro/images/cropssector.jpg images/buck cattleinsaleyards.JPG ROLE OF AGRICULTURAL PRODUCTIVITY IN BALANCING BIOFUEL EXPANSION agri_gallery/agriculture_field_at_than javur.jpg

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Crop Productivity and Land Use Fixed productivity means no purpose-grown bioenergy Page 19 Source: Wise et al. 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Crop Prices: Frozen Crop Productivity Page 20 Source: Wise et al. 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Global Maize Price, Page 21 Source: IFPRI IMPACT simulations, April 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Number of Malnourished Children in Developing Countries, Page 22 Source: IFPRI IMPACT simulations, April 2008

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Annual Investment Requirements: Alternative Scenarios Page 23 Source: IFPRI IMPACT simulations, April 2008

POLICY IMPLICATIONS

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 25  Increasing crop productivity: agricultural research,water management, and rural investment  Increasing crop productivity: agricultural research, water management, and rural investment Emphasis on crop breeding (including biotechnology) targeting abiotic and biotic stressesEmphasis on crop breeding (including biotechnology) targeting abiotic and biotic stresses Water harvesting, minimum tillage, integrated soil fertility managementWater harvesting, minimum tillage, integrated soil fertility management Rural infrastructure investment to improve access to markets, risk insurance, credit, inputsRural infrastructure investment to improve access to markets, risk insurance, credit, inputs Investments in Agricultural Research and Technology

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 26  Need full integration of policies aimed at agricultural growth, biofuels and energy, climate change and carbon sequestration  Dealing with competing demands for land and trade-offs with environment can only be met by bringing externalities into the growth equation  Dealing with competing demands for land and trade-offs with environment can only be met by bringing externalities into the growth equation Integration of Growth, Energy, and Climate Policies