Biomedical Engineering Reference
In-Depth Information
biofuel and agricultural markets exerts pressure on food markets. Given the limited
availability of agricultural land, this competition leads to price escalation especially
in years when supply shocks occur in agricultural production. Although empirical
findings tend to confirm the inflationary effect of biofuel policies on food prices, the
magnitude of this effect is subject to significant uncertainty. The earlier studies
were less supportive of the existence of the causal link between biofuel and food
prices; the recent literature tends to support it.
One of the main reasons behind the policy support of biofuel is to decrease
dependence on fossil fuels, thus decreasing the greenhouse gas emissions. Although
direct effect of biofuels may lead to a reduction in greenhouse gas emissions, if
indirect land use effects are taken into account, this may not hold any more. Due to
price interdependencies between biofuel and agricultural markets, biofuel policies
may have far-reaching environmental effects by leading to the expansion of agri-
cultural production into forest, idle, or high-value land. Empirical evidence tends to
confirm that this is indeed the case and that biofuels lead to both direct land use
changes (land substitution away from non-biofuel crops to biofuel crops) and
indirect land use changes (expansion of total land use).
Acknowledgment We acknowledge the financial support from the Slovak Research and Devel-
opment Agency, contract No. APVV-0894-11 and VEGA1/0830/13. This work was co-funded by
European Community under project no 26220220180: Building Research Centre “AgroBioTech”.
The views expressed in the paper are purely those of the authors and may not in any circumstances
be regarded as stating an official position of the European Commission.
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