Leveling the Field for Biofuels: Comparing the Economic and Environmental Impacts of Biofuel and Other Export Crops in Malawi

Abstract

The International Food Policy Research Institute (IFPRI), established in 1975, provides evidence-based policy solutions to sustainably end hunger and malnutrition and reduce poverty. The Institute conducts research, communicates results, optimizes partnerships, and builds capacity to ensure sustainable food production, promote healthy food systems, improve markets and trade, transform agriculture, build resilience, and strengthen institutions and governance. Gender is considered in all of the Institute's work. IFPRI collaborates with partners around the world, including development implementers, public institutions, the private sector, and farmers' organizations, to ensure that local, national, regional, and global food policies are based on evidence. IFPRI is a member of the CGIAR Consortium.

Evaluating irrigation investments in Malawi: economy‐wide impacts under uncertainty and labor constraints

“…Our comparative‐static CGE model for Malawi follows Lofgren et al. () and builds on previous CGE modeling work on Malawi (Schuenemann et al., ) by simulating the functioning of the Malawian economy using behavioral and structural equations that govern the decision‐making of economic agents and maintain macroeconomic consistency and resource constraints . Households maximize their utility and producers maximize their profits, both groups interact at factor and product markets where prices adjust to ensure equilibrium.…”

European Union non-tariff barriers to imports of African biofuels

“…Emissions of feedstock cultivation depend on which existing crops are displaced by sugarcane. Malawian sugarcane has a high soil organic carbon (SOC) potential of up to 1.2 tC/ha/yr, whereas maize or soy beans only store 0.62 and 0.84 tC/ha/yr, respectively (Schuenemann et al, 2017). Replacing these crops with sugarcane would thus increase carbon sequestration.…”

“…16 CGE models have previously been used to study the impacts of potential biofuel production in several other Sub-Saharan countries including Mozambique (Arndt et al, 2010a) and Tanzania (Arndt et al, 2012;Thurlow et al, 2015). We built on Schuenemann et al, (2017) who compare the economic and environmental impacts of biofuels and other export crops in Malawi and come to the conclusion that the EU sustainability criteria for biofuels are unfairly biased, as other export crops can produce even poorer outcomes in terms of the environment.…”

“…CGE models simulate the functioning of a market economy by combining the behaviour of microeconomic agents with closure rules of macroeconomic aggregates and are thus able to capture economy-wide impacts of policy interventions both in terms of production and income distribution. Our CGE model equations for Malawi follow the recursive-dynamic version of the International Food Policy Research Institute (IFPRI) standard CGE model (Diao & Thurlow, 2012) and can be found in Schuenemann et al (2017). Profit-maximising producers and utility-maximising households come together at factor and product markets where equilibrium prices ensure that supply equals demand.…”

“…This is the exact amount of land that the Malawian government is hoping foreign and domestic investors will equip with irrigation infrastructure under the Irrigation Master Plan (SMEC, 2015). Schuenemann et al (2017) have shown that while large-scale estate production of sugarcane feedstock increases the overall economic growth effects of biofuels in Malawi, outgrower schemes have a higher poverty reduction impact. Thus we add the sugarcane production sectors from the former studyone producing feedstock on estate land and the other on smallholder landand their respective ethanol processing sectors to our model to quantify the foregone benefits of each technology and to replicate their results with the 116 000 hectares from the Irrigation Master Plan.…”