Biofuels and Agricultural Growth: Challenges for Developing Agricultural Economies and Opportunities for Investment

Global projections for increasing food demand combined with increasing demand for energy from all sources – including crop-based biofuels – point toward greater stress on food systems and their supporting ecosystems. In many parts of the world, increasing household incomes has translated into increasing demands for energy, of which transportation fuel comprises a fast-growing share. Accompanying the world’s steady population growth is an increasing demand for food and the necessary feedstuffs to fuel the requisite increases in livestock production. The combination of these two trends will inevitably lead to greater stresses and demands on the natural resource base and eco-systems that underlie the world’s food and energy production systems – such as land and water. In this chapter, we examine the increasing demands on agricultural production systems, within the context of both biofuels and demographically driven demand for food and feed products, and the implied stresses that these drivers represent. By looking at the implied crop productivity improvements that are necessary to maintain adequate supplies of food and feed for a growing global population, we are able to infer the magnitude of investments in agricultural research, among other policy interventions (such as irrigation investments), that are needed to avoid worsening food security outcomes in the face of growing biofuel demands. From our analysis, clear policy implications will be drawn as to how to best avoid the deterioration in human well-being, and recommendations for strengthening food systems and their ability to deliver needed services will also be made. By illustrating the policy problem in this way, we hope to better clarify the key issues that connect biofuels growth to agricultural growth, human welfare, and policy-focused interventions and investments.