Impacts of Large-Scale Expansion of Biofuels on Global Poverty and Income Distribution
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World Bank, Washington, DC
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This paper analyzes the impact of large-scale expansion of biofuels on the global income distribution and poverty. A global computable general equilibrium model is used to simulate the effects of the expansion of biofuels on resource allocation, commodity prices, factor prices and household income. A second model based on world-wide household surveys uses these results to calculate the impacts on poverty and global income inequality. The study finds that the large-scale expansion of biofuels leads to an increase in production and prices of agricultural commodities. The increased prices would cause higher food prices, especially in developing countries. Moreover, wages of unskilled rural labor would also increase, which slows down the rural to urban migration in many developing countries. The study also shows that the effects on poverty vary across regions; it increases in South Asia and Sub-Saharan Africa, whereas it decreases in Latin America. At the global level, the expansion of biofuels increases poverty slightly.
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ADVERSE IMPACT, AGRICULTURAL COMMODITIES, AGRICULTURAL POLICY, AGRICULTURAL PRICES, AGRICULTURE, BASE YEAR, BILATERAL TRADE, CLIMATE CHANGE, CONSUMER GOODS, CONSUMER PRICE INDEX, CONSUMER PRICES, CORN, COUNTERFACTUAL, CRISES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISPOSABLE INCOME, DISTRIBUTIONAL EFFECTS, ECOLOGICAL ZONES, ECONOMIC GROWTH, ELASTICITY, ELASTICITY OF SUBSTITUTION, EQUILIBRIUM, EXOGENOUS VARIABLES, EXPORTS, FARMER, FARMERS, FOOD CROPS, FOOD DEMAND, FOOD EXPENDITURE, FOOD INSECURITY, FOOD POLICY, FOOD POLICY RESEARCH, FOOD PRICE, FOOD PRICE INFLATION, FOOD PRICES, FOOD PRODUCTION, FOOD SECURITY, FOOD SHARE, FOOD SUPPLY, FREE TRADE, FRUITS, GDP, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM ANALYSIS, GINI COEFFICIENT, GLOBAL POVERTY, GOVERNMENT EXPENDITURES, GRAINS, GROSS DOMESTIC PRODUCT, GROWTH PROJECTIONS, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, IFPRI, INCOME, INCOME DISTRIBUTION, INCOME INEQUALITY, INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE, INTERNATIONAL TRADE, INVENTORY, LABOR MOVEMENT, LABOR SUPPLY, LAND SUPPLY, LIVING STANDARDS, MACROECONOMIC MODELS, MULTIPLIERS, NATIONAL INCOME, OPTIMIZATION, PADDY, PER CAPITA CONSUMPTION, PETROLEUM PRODUCTS, POOR, POOR PEOPLE, POVERTY ANALYSIS, POVERTY ESTIMATES, POVERTY INCIDENCE, POVERTY LINE, POVERTY LINES, POVERTY RATES, POVERTY REDUCTION, POVERTY THRESHOLD, PRICE INDEXES, PROCESSED FOODS, PRODUCT DIFFERENTIATION, PURCHASING POWER, REAL GDP, REDUCTION IN POVERTY, REGIONAL LEVEL, REGIONAL POVERTY, RENTS, RESOURCE ALLOCATION, RURAL, RURAL AREAS, RURAL DEVELOPMENT, RURAL HOUSEHOLDS, RURAL LABOR, RURAL SECTOR, SAVINGS, SOCIAL COSTS, SUGAR, SUGAR BEET, SUGAR CANE, SUGARCANE, SUPPLY CURVE, UNSKILLED LABOR, UNSKILLED WORKERS, UTILITY FUNCTION, UTILITY MAXIMIZATION, VALUE ADDED, VEGETABLES, WAGE PREMIUM, WAGES, WHEAT