The ag subsidies exacerbating this food crisis


Kim Elliott highlights a policy instrument readily available to policymakers to address the food prices crisis:

While it is hard to know exactly how much biofuels are to blame for rising food prices, especially for wheat and rice, subsidies for biofuel production are one of the few policy levers available in the short run to relieve demand pressures. So it’s odd that a new World Bank analysis of responses to rising food prices prepared for the Development Committee stops short of recommending changes in the aggressive promotion of biofuel use. Most of the note focuses on ways that developing countries can cope, and that the World Bank and donors can help. The short discussion of bio-fuels focuses on the bank’s role in “informing the discussion” only to conclude:

Trade-offs between energy security, climate change and food security objectives need to be carefully monitored and integrated into both food and bio-fuel policy actions.

This rather tepid response overlooks the many scientific analyses that raise serious questions about the environmental benefits of the current generation of biofuels, especially corn-based ethanol. It has long been known that substituting corn-based ethanol for gasoline does little to cut greenhouse gas emissions because producing it is so resource-intensive. A literature review from the Congressional Resource Service concluded that using corn ethanol cuts net greenhouse gas emissions by only about 20 percent because of the heavy use of fertilizers and pesticides, which are themselves energy-intensive and cause water pollution besides.

Worse, recent research published in Science magazine suggests that when land-use changes are taken into account, production of corn-based ethanol actually leads to a net increase in greenhouse gas emissions…

[I]n the midst of the current crisis, and given the new evidence on the perverse effects on the environment, continuing to subsidize and promote the use of food crops for fuel is simply unconscionable.

Given the success of the ethanol lobby in spite of harsh criticism from economists over the years, I have little hope that policymakers will acknowledge the error of their ways even in the midst of this crisis.