Unintended Consequencens of the Ethanol Mandate

Harvard economist Jeffrey Miron:

A new working paper by Michael Roberts and Wolfram Schlenker finds that

the current US ethanol mandate requires that about 5 percent of world caloric production from corn, wheat, rice, and soybeans be used for ethanol generation. As a result, world food prices are predicted to increase by about 30 percent and global consumer surplus from food consumption is preducted to decrease by 155 billion dollars annually.

In other words, the mandate needs to generate at least $155 billion worth of annual benefits from reduced global warming to pass a cost-benefit test. Since ethanol use appears to increase GHG emissions, the mandate fails big time!

Before the U.S. adopts costly new policies to reduce global warming, it should eliminate existing policies that contribute to global warming and make no sense from any other perspective.

1 thought on “Unintended Consequencens of the Ethanol Mandate

  1. God save us all if this the king of analysis being taught at Harvard. Ethanol only increases GHG under the disproven theory of indirect land use changes and many would say that energy security is a more important issue than GHG. Moreover, who is predicting a 30% increase in food prices? Corn carryout (surpluses) are projected to be nearly 2 billion bushels this fall and another large U.S. crop will increase stocks even further.

Comments are closed.