Competition between food and biofuel production in Ethiopia: a partial equilibrium analysis

Abstract

Motivated by the rapid rise and volatility of oil prices, many countries are promoting biofuels as alternative energy sources. The claimed advantage that biofuels reduce GHG emissions is also an additional driver behind the widespread adoption of biofuel in Ethiopia and other countries. However, there is a growing concern that expanded production of biofuels might crowd out agricultural production by vying for scarce land and water resources. This article uses a partial equilibrium model to examine the competition between food and biofuel production in Ethiopia. The partial equilibrium model replicates a baseline scenario of Ethiopia’s Social Account Matrix for the year 2000. Several simulation exercises are implemented to examine the effects of reductions in biofuel processing costs and rise of oil prices on agricultural production and consumption. The results show that the expansion of biofuel production has limited scope to crowd out agricultural production. However, the results are preliminary and future research could give more insights by exploring long-run dynamics, such as changes in agricultural productivity, energy and food demand, and availability of arable land.

Acknowledgements

The author is grateful for the helpful feedback received from Rolf Groeneveld while conducting the analysis for this paper. The author is also thankful for four anonymous reviewers who provided useful comments during the review process.

Financial & competing interests disclosure

The author has no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

No writing assistance was utilized in the production of this manuscript.