Biofuel commitments in India and international trade

This chapter examines the consequences of biofuel commitments in India and of biofuel policies in other parts of the world on poverty, welfare, land use, trade, food security, etc. in India to the year 2020. The study uses a general equilibrium model framework and shows that biofuel policies outside India will not reduce poverty in India. While the urban poor will face higher food prices, the effect for the rural poor will be dampened because they would benefit from increased wages in agriculture. The national biofuel policy in India would increase global production of sugarcane by almost 20% and sugarcane prices by about a quarter of present values. The welfare effects for India are negative, because biofuel production is (implicitly or explicitly) subsidized.