Arbeitspapier

Food for Fuel: The Effect of the US Biofuel Mandate on Poverty in India

More than 40% of US grain is used for energy due to the Renewable Fuels Mandate (RFS). There are no studies of the global distributional consequences of this purely domestic policy. Using micro-level survey data, we trace the effect of the RFS on world food prices and their impact on household level consumption and wage incomes in India. We first develop a partial equilibrium model to estimate the effect of the RFS on the price of selected food commodities - rice, wheat, corn, sugar and meat and dairy, which together provide almost 70% of Indian food calories. Our model predicts that world prices for these commodities rise by 8-16% due to the RFS. We estimate the price pass-through to domestic Indian prices and the effect of the price shock on household welfare through consumption and wage incomes. Poor rural households suffer significant welfare losses due to higher prices of consumption goods, which are regressive. However they benefit from a rise in wage incomes, mainly because most of them are employed in agriculture. Urban households also bear the higher cost of food, but do not see a concomitant rise in wages because only a small fraction of them work in food- related industries. Welfare losses are greater among urban households. However, more poor people in India live in villages, so rural poverty impacts are larger in magnitude. We estimate that the mandate leads to about 26 million new poor: 21 million in rural and five million in the urban population.

Sprache
Englisch

Erschienen in
Series: IZA Discussion Papers ; No. 11784

Klassifikation
Wirtschaft
Personal Income, Wealth, and Their Distributions
Microeconomic Analyses of Economic Development
Renewable Resources and Conservation: Land
Alternative Energy Sources
Thema
biofuels
distributional effects
household welfare
renewable fuel standards
poverty

Ereignis
Geistige Schöpfung
(wer)
Chakravorty, Ujjayant
Hubert, Marie-Helene
Ural Marchand, Beyza
Ereignis
Veröffentlichung
(wer)
Institute of Labor Economics (IZA)
(wo)
Bonn
(wann)
2018

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Chakravorty, Ujjayant
  • Hubert, Marie-Helene
  • Ural Marchand, Beyza
  • Institute of Labor Economics (IZA)

Entstanden

  • 2018

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