Modeling Future Prospects for Food & Fuel:
Biofuels and Global Agricultural Growth
Siwa Msangi
Environment and Production Technology Division (IFPRI)
“Intersection of Energy & Agriculture” Conference
UC Berkeley Campus
4-5 October 2007
Monday, July 31, 2017
Overview
• Biomass in the Energy Balance
• Energy and Agricultural Markets
• Quantitative Framework for Examining Linkages
• Results and Implications for Food Security
• Other Implications (e.g. Asia) and Conclusions
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Not necessarily a new idea…
“We can get fuel from fruit, from
that shrub by the roadside, or
from apples, weeds, saw-dust—
almost anything! There is fuel in
every bit of vegetable matter
that can be fermented … And it
remains for someone to find out
how this fuel can be produced
commercially—better fuel at a
cheaper price than we know
now.”
~ Henry Ford, 1925
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Energy from Biomass
• The idea of getting energy from plant matter is
certainly not new – it has been around for as
long as humans have had energy needs
• The paradigm of “plenty” that has prevailed in
the past has taken for granted that there would
always be enough cheap energy to meet human
needs – even into the 1960s and ‘70s. Perhaps
not as much research on non-fossil biomass
occurred in that period
• In more recent times there has been intensive
rethinking of our energy futures and the role the
agriculture can play in it
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EJ/year
Energyof1850-2000
History of World
world supply
primary energy
500
450
400
350
300
250
200
150
100
50
0
1850 1875 1900 1925 1950 1975 2000
Gas
Oil
Coal
Nuclear
Hydro +
Biomass
Hydro+ means
hydropower plus
other renewables
besides biomass
Energy supply grew 20-fold between 1850 and 2000. Fossil fuels
Year
INTERNATIONAL
FOOD80%
POLICY
INSTITUTE
supplied
ofRESEARCH
the world’s
energy in 2000. (Holdren 2007)
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Agriculture and Energy Linked Asymmetrically
• Agriculture is linked to Energy markets through
• Costs of fossil-based inputs like fertilizer
• Direct costs of fuel in agricultural production and
processing
• Competition for base resources – land and water
• We see more discussion and analysis of the
first two then the last… but all are important
• This linkage is asymmetric  the contribution
of ag-based biofuels to world energy
economies is relatively small relative to the
impact that biofuels could have on the ag
sector and world food economies
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A New Driver for Global Food Markets
• The linkages between the functioning of food and
energy economies is becoming more closely
linked and apparent
• The prices of food commodities are likely to
become closely-tied to their use (and implicit
value) in biofuel production processes
• We’ve seen this connection most strongly in the
interplay between sugar and ethanol in Brazil –
and how sugar and ethanol producers respond to
world sugar and oil prices
• Yet another stressor for food economies (besides
climate, water and land quality degradation)
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Prices: Agricultural and Energy Prices
Increasingly Correlate
500
450
400
350
70
Corn
Rice
Sugar
Oil seeds
Crude oil (right)
60
50
300
40
250
30
200
150
20
100
10
50
0
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
0
…and price variations are up
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Source: IMF, 2007; OECD, 2005; World Bank, 2007
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Food Production, Malnourishment & Price Trends
More food
price spikes
ahead? 
Reversal of
downward
trend in
food prices?
Source:
from Wood and FOOD
Ehui (Chapter
8 “Food”. Millennium
Ecosystem Assessment 2005)
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Why Biofuels Are of Interest/Concern to Us
• Biofuel production in industrialized nations
• Reduce surplus of grain stocks that would otherwise be put on
food markets in lean years or distributed as food aid
• Could affect the support policies of developed countries for key
export crops which have impact on developing c’ty farmers
• Possible negative food security impacts
• Displacement of food producers through land pressures
• Higher food prices for net consumers and attendant negative
effects on poor, vulnerable and food-insecure households
• Possible benefits for developing regions
• Opportunities for income beyond just producing raw biomass for
biofuel production – share in the value chain
• Higher market prices for farmers, wages for ag laborers
• Including developing agricultural economies into ‘clean’, marketbased mechanisms for improving the environment
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Approaching These Linkages Quantitatively
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Model-Based Analyses of Biofuel Futures
• A number of issues raised relate directly to the linkages between
energy markets and agricultural market economies
• The linkages are complex and varied in nature, depending on the
nature of the farm system, food system and energy system
• The issue of scarcity comes up at key points – such as the
availability of land and water – besides the underlying scarcity of
fossil-based energy resources, which is a major driver of
technological innovation and sets the threshold for conversion
efficiency and cost thresholds
• In order to address all of these issues together, we need an
analytical framework which can allow us to see how the dynamics
of energy and food markets can interact, and the nature of the
various components
• Given the complex nature of these interactions, we need to
simplify greatly in some areas and go into more detail in others –
depending on what our ultimate interest is (such as human wellbeing )
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Linkages b/w Energy and Agriculture
Capital
Technology
substitution
possibilities
Labor
Health &
Human
Energy
Water
Land
Fertilizer
Human
capital
Land/Soil
Quality
Machinery
Air Quality
Environmental Quality
Water
Quality
Productivity
Environment
Food Consumption
Non-agric
Activities
Technology
substitution
possibilities
Energy Crop
Production
Cash Crop
Production
Food Crop
Production
Livestock
Production
Renewable
Energy
Fossil-based
Energy
Distribution
Energy Consumption
Income
Processing
POVERTY
Household
Savings
Assets
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Markets
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Focusing on the Important Linkages
• Economic Growth and Energy Demand (for Transport)
• Energy demand is closely linked to economy-wide dynamics
of growth, and comes from a variety of sectors and uses
• Transport is an especially important one, wrt biofuels
• Linking (Transport) Energy Demand to Biofuels
• Based on country-level policy (e.g. blending)
• Also based on country-level capacity to produce
• Linking Biofuel production to feedstock demand
• Biofuels can come from a range of feedstocks – some are
more appropriate to regions than others
• Need to pick up the degree of flexibility that is possible
• Linking Ag Commodity Demands to Food Outcomes
• An obvious price effect of increased demand for products
• Perhaps other second-round effects that ultimately affect food
security, nutrition and overall welfare
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Simplified Analytical Framework
Exogenous Drivers to the Model
(at present)
Endogenously Modeled in IMPACT
Production
Area, Yield
Trade
Equilibrium
Balance
Ag Revenue
Environment (water)
Food/Feed
Demand
Other Demand
Inequality
Hhold
Analysis
Price
Scenarios
Area growth
Yield growth
GDP growth
Population
growth
Transport
Energy
Demand
Other
energy
Demand
% Energy Demand
from Biofuels
Consumption
conversion
technology
Poverty
Nutritional status
Overall Welfare
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Feedstock
Demand
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Per Capita Transport Energy Demand
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Source: Own Projections
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Per Capita Transport Energy Demand (Asia)
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Source: Own Projections
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Scenario Development
• Based on data of production capacity (and projected
growth in capacity)
• Main “drivers” are that of country-level GDP and
population -- which determine overall level of
transportation energy demand
• Policy-driven blending requirements give rise to
projections of ethanol and biodiesel demand &
production out to 2020
• Simple ethanol and biodiesel trade representation
• Basic scenarios represent displacement of gasoline
and diesel with biofuels according to current
trajectories as well as more ‘aggressive’ levels of
adoption
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Biofuel Details
• Biodiesel projections focus mainly on the European
Union 15 (EU-15) countries
• Because the EU accounts for almost 90 percent of global
production volume
• Biodiesel feedstock crops are mostly oilseeds
(haven’t examined plantation oil trees in detail)
• For bioethanol production, feedstock crops include
•
•
•
•
Maize
Sugarcane/beet
Wheat
Cassava
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IMPACT-Model: biofuel scenarios by 2020
Biofuel Expansion
Price changes % by
2020
Scenario 1
Actual plans and assumed
expansions
corn: + 3
oilseeds: +8
Scenario 2
Doubling of Scen.1
expansion
corn: + 13
oilseeds: +17
Neglect of technology and
expansion
Corn: +20–41
Oilseeds: +26-76
another
scenario
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Calorie availability changes in 2020
compared to baseline (%)
N America
SSA
S Asia
MENA
LAC
ECA
EAP
-3.0
-2.5
-2.0
-1.5
Biofuel expansion
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-1.0
-0.5
0.0
Drastic biofuel expansion
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Source: IMPACT-WATER
Price-effects for Bangladesh five-person household living
on one dollar-a-day per person
How they would spend…their 5 $
3.00 $ on food
.50 $ on energy
1.50 $ on nonfood
>a 20 percent increase in food and energy prices requires
them to cut 70 cents from their other expenditures.
Cuts will be made most in food expenditures:
>reduced diet quality, and
>increased micronutrient malnutrition
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Food & Energy Expenditure Shares
(for $1/day poor)
Country/year
Rural
Urban
69.5
10.4
63.8
7.7
Bangladesh, 2000
Food
Energy
65.6
9.3
60.1
9.4
Guatemala, 2000
Food
Energy
50.5
1.3
47.6
1.3
Tajikistan, 2003
Food
Energy
70.7
4.9
73.7
4.2
Ethiopia, 1999
Food
Energy
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source: Ahmed et al., 2007 (cited in von Braun, 2007)
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Main Messages
• There will be increasing pressure on agricultural
markets in future if crop-based energy production
continues on the current path (with present
technologies)
• There are direct implications for crop breeding for
productivity improvement and quality in wheat, maize,
and sugar crops
• Although there is uncertainty about the timing of
eventual large-scale use of cellulosic conversion
technologies for biofuel production this will be a critical
factor for development of biofuels market
• Other factors behind a “food-versus-fuel” trade-off
such as land and water (both quantity and quality)
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Important Bio-Physical Constraints
• While some crops may be more favorable from the
perspective of profitability, they may encounter binding
environmental constraints such as water (e.g. sugarcane
in India, maize in Northern China)
• Even where water might be available, there might also
be constraints on available land for expansion (e.g.
Southern China)
• A more detailed look at land-use is necessary in order to
project trade-offs between alternative uses into the future
• Need to add account for water balance, as well
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Linkages in Multi-Model Assessment: GEO-4
Input to several
models
Technological
Change
IFs
Female
secondary
education
Global fish
demand
Feasibility
of irrigation
- population
- GDP/cap
- Productivity of
economy
EcoOcean
IMPACT
Irrig area &
efficiency
Status of
global fisheries
Ecosystem
bio-diversity
Food production
Climate-adjusted
yield
N, land
Livestock
WaterGAP
Input to several
models
Electricity
IMAGE (land)
Globio
IMAGE (energy)
Harmonization of
Energy
IMAGE (climate)
Change in temp &
precipitation
Change in temp &
precipitation
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Basin-level representation of China & India
Tremendous variation over
space in hydrological and
agro-ecological conditions
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Water Scarcity and Drought Stresses in Asia
Proportion of failed
growing seasons
for rainfed
cultivation, 100
year weather
simulation
Source: Hyman et al. forthcoming
Note: The figure illustrates 100 year weather simulation based on historic data analysis
• Drought
•
•
lowers average expected yields
exacerbates other production uncertainties, reducing technology adoption of the poorest farmers
• Drought impacts need to be mitigated by investments in irrigation
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Water Scarcity and Drought Stresses
Share of irrigation in total water consumption expected to
decrease
Share of irrigation in total water
consumption
2000
Projected 2050
100
90
80
70
60
50
40
30
20
10
0
China
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India
Other South Asia
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Water Scarcity and Drought Stresses
At the same time, water availability for irrigation is declining
Irrigation Water as Share of Total Used in Agriculture
100
2000
2050
90
80
Percent
70
60
50
40
30
20
10
0
All Asia
China
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India
Southeast
Asia
Other South
Asia
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Sources of Food Production Growth,
BAU, 2050
2.5
annual growth
2.0
1.5
1.0
0.5
0.0
-0.5
SSA
LAC
ESAP
Area expansion
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CWANA
NAE
Yield improvement
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Sources of Food Production Growth,
high “ARK”, 2050
2.5
annual growth
2.0
1.5
1.0
0.5
0.0
-0.5
SSA
LAC
ESAP
Area expansion
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CWANA
NAE
Yield improvement
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Overall Conclusions
• Impacts of global biofuel development and growth on rural
poor are likely to be mixed and farming system-specific –
both positive and negative – needs careful assessment
• There may not necessarily be a ‘crowding-out’ effect –
there’s room for complementarities and synergy
• There are a common set of conditions for promoting rural
development and enhancing socio-economic growth and
bio-fuel capacity potential
• CORE BUSINESS: Should stay focused on rural socioeconomic growth and development as well as on
agricultural research and productivity enhancement
• Energy-Agriculture linkages will continue to reduce
surpluses and tighten market conditions – leaves room for
policy intervention and social protection
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Thank You !!
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