Date of Award
Master of Science
Food prices have increased rapidly in recent years, and so has ethanol consumption. Some studies have claimed that there is a connection between those two. Net exporters of food tend to benefit from higher prices, while regions that are net importers of food, tend to be adversely affected. The large amount of poor countries in the second group justifies an investigation of the causes of increasing food prices. This thesis aims to contribute to the discussion, analyzing, theoretically and empirically, the impact that the diversion of feedstock from food to ethanol production has on food prices. The interaction between food prices and ethanol is first examined in a two-good (food and ethanol), one input (land) theoretical model. The outcome of this model is that an increase in ethanol productivity will have a positive impact on food prices, which is confirmed in the empirical test. We also found that increases in area allocated to produce sugarcane based ethanol in Brazil had depressing effects on relative food prices. No significant conclusion could be found on the effect of the area allocated to produce corn based ethanol in the United States.
This thesis is Open Access and may be downloaded by anyone.