IFPRI’s biofuels research highlights links between food economies, their supporting ecosystems and the wider global energy economy and its linkages to agriculture. It uses quantitative analysis to connect growing renewable energy demand to policy-driven biofuel production and its influence on consumption and trade patterns for both energy and non-energy goods. IFPRI aims to understand biofuels’ impact on agricultural prices and trade, the use of land and water for agriculture —and what this means for the poor in developing countries and the environment, as a whole. To better understand the medium- to long-term economic and environmental consequences of increasing biofuels production, IFPRI takes into account energy-use trends as well as other important drivers of global economic and environmental change, such as climate trends and socio-economic growth (i.e. increasing populations, income and rates of urbanization). Researchers also design policy reforms and identify strategic investments that could effectively alleviate poverty and malnutrition and improve rural livelihoods.
Global Scenario Analysis and Tools
Scenario-based analysis provides insight into biofuel growth in the global environmental and economic context. By considering alternative trajectories of the key socioeconomic drivers determining income growth, population, and energy demand, IFPRI evaluates the range of possible outcomes that might arise as the demands for food, feed, and fuel products compete for available supply. This analysis identifies important sources of uncertainty and provides the basis for policy recommendations.
IFPRI uses the International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) model to examine the effects of water availability and climate change on the global food supply, demand, trade, prices, and food security. IMPACT is among the key components of IFPRI’s scenario analysis of biofuels, and has been used in a number of empirical studies.
IFPRI uses additional models to develop and analyze medium- to long-term projections of agricultural markets; land-use modules are being developed to examine the trade-offs between agricultural and non-agricultural land use activities. IFPRI’s Globalization, trade, and markets theme uses the Modeling International Relationships in Applied General Equilibrium (MIRAGE) model to analyze biofuel policies, and looks at the structure of ethanol and biodiesel trade regimes and the implications for land markets and other sectors of the global economy.
Drawing on household-level data, IFPRI looks at the micro-level impacts of biofuels in countries worldwide. These impacts include the effects of food and energy price changes on household food consumption, poverty status and nutrition, as well as the impact of cheaper, cleaner forms of energy on household welfare. Key questions that are relevant to the development of bioenergy production and capacity in less-developed countries are whether: there is a trade-off in land, labor or other resources going into biofuels versus other productive sectors of the economy; the design of biofuel production systems provide benefits to rural households in terms of employment, expanded market for their farm outputs, or the direct provision of energy or other services; the implementation of national biofuels policy have adequate safeguards to prevent loss of access to land or other negative socio-economic or environmental impacts; and adequate technologies are available to produce biofuels at competitive costs or if countries should wait for the emergence of better crop or conversion technologies.
The work that IFPRI has done with country-level, economy-wide market models to examine the potential poverty-reducing effects of biofuels growth on urban and rural households has been instrumental in illustrating the potential synergies and trade-offs of biofuels growth with other important development goals. IFPRI’s work in this area has supported the country case studies done by the Food and Agricultural Organization of the United Nations for their Bioenergy and Food Security program as well as the Biofuels and the Poor project, led by Stanford University and funded by the Bill and Melinda Gates Foundation.