International Policies on Bioenergy and Biofuels - Industrial Crops: Breeding for BioEnergy and Bioproducts - page 392

14 %, and the European Union accounts for 15 %. Rosegrant [ 71 ] shows that the
biofuel growth accounted for 30 % of the food price increase from 2000 to 2007.
The biggest impact was on corn prices, 39 %, and rice prices, 21 %.
The estimates of Ciaian and Kancs [ 50 ] indicate that both biofuel and
non-biofuel agricultural commodity prices are affected by biofuels but that there
is a delayed price transmission for non-biofuel agricultural commodities. 19
According to their estimates, the magnitude of the price transmission elasticities
between crude oil and agricultural commodity prices ranges between 0.04 and 0.27
but is higher for biofuel agricultural commodities (sugar, soybeans, corn, and
wheat), between 0.13 and 0.27, than for non-biofuel commodities (banana, cotton,
sorghum, rice, tea), between 0.04 and 0.06. Similar range of estimated long-run
price transmission elasticities for rice and soybeans, 0.16 and 0.32, respectively, is
provided by Rahim et al. [ 17 ].
Land Use
An important aspect of biofuels relates to land use change and associated environ-
mental implications. In fact, one of the main reasons behind the policy support of
biofuel is to decrease the dependence on fossil fuels, thus decreasing the green-
house gas emissions. Although a direct effect of biofuels may be to reduce green-
house gas emissions, if indirect effects are taken into account, this may not hold true
anymore. One channel through which negative environmental impacts may emerge
is leakage effects from biofuels on land use. Due to price interdependencies
between biofuel and agricultural markets, biofuel support policies may have
far-reaching environmental effects by leading to the expansion of agricultural
production into forest, idle, or high-value land. At the same time, land use reloca-
tion from food crops to biofuel crops may have implications for food security.
The total world agricultural area allocated to biofuel production represented
14 million hectares in 2006 and 30 million hectares in 2011, and it is expected to
reach 100 million hectares in 2050, representing 1%, 2%, and 6 %, respectively, of
the total world arable area [ 9 ]. However, when looking at specific crop sectors for
main biofuel-producing countries, the land devoted to biofuel production is much
more significant. For example, in 2010 the area devoted to biofuel feedstock
production covered between 60 % and 75 % of the rapeseed area in the European
Union, 48 % of the sugarcane area in Brazil, and 31 % of the corn area in the United
States [ 9 ].
Theoretical models provide two explanations for biofuel policies' impact on
land use: a direct land use change impact and an indirect land use change impact.
The direct impact on land use change captures the agricultural land switched to
19 Their findings indicate a small and statistically insignificant transmission between crude oil
price and agricultural commodity prices through the indirect input channel.