The recent run-up in global food prices is wreaking well-documented havoc throughout the developing world. As prices for major food staples have doubled or tripled over the past 12–18 months, food riots have broken out in more than a dozen countries, and the president of the World Bank has suggested that the rise in food prices will push 100 million people below the poverty line, undoing decades of economic growth almost overnight. FSE’s Peter Timmer calculates that high rice prices alone could cause the premature death of 10 million people in Asia. It is difficult to imagine an issue of more pressing global importance today.

Ongoing FSE research is focusing on which agricultural adaptations should be prioritized, for what crops, and in what locations.Getting prices down out of the stratosphere of course involves understanding what got them there in the first place. And while there is much disagreement over the primacy of different factors, most analysis seems to agree on three important contributors. The first is the recent expansion of biofuels production in the United States and the European Union, which has diverted corn and other grains from traditional feed and food markets into the production of fuel. Turning grain into fuel has been made increasingly profitable by the high and rising price of oil — the second factor in rising food prices — which, in addition to increasing demand for petroleum alternatives, has raised the production costs of farmers, raising transport costs and increasing the price of farm inputs like diesel and fertilizer. Finally, the agricultural and trade policies of various governments around the world have added to the problem, particularly as the nervous governments of a few key Asian rice exporters have attempted to stabilize domestic food supplies by restricting exports, helping send rice prices through the roof.

As these factors have come together in recent months, underwritten by longer-run trends of rising incomes and food demand in the developing world, many analysts have reached for the appealing metaphor of the “perfect storm,” invoking a situation in which everything that could have gone wrong did. But are things really as bad as they might have been?

Perhaps not. The recent spike in food prices saw only a half-hearted contribution from one of the main culprits in past short-run price swings: weather. A bad weather year that harms production in important producing regions often sends prices soaring. One of the best examples is an extreme el Nino event of the sort that occurs roughly once a decade, during which drought cripples rice production throughout much of Southeast Asia. Earlier work by FSE researchers showed that global rice prices can rise 50 percent or more as a result of extreme el Nino events.

The recent food price spikes were certainly not without influence from the weather. For instance, the much-cited long-run drought in Australia — traditionally a large wheat exporter — certainly has put upward pressure on global wheat prices, and there were modest weather-related declines in yield in other parts of the world (such as Russia and Ukraine). On the whole, however, supply disruptions over the past few years have been minor, and favorable weather is expected to result in record harvests for many large food- and feedproducing nations in coming months. But agricultural markets have hardly responded to this good news and prices remain at or near all time highs.

What then might a perfect storm actually look like? Add the effects of climate change to the current mix of biofuels, high oil prices, and trade restrictions, and the recent rise in food prices could be a small measure of things to come. Research is expanding rapidly in the field of climate change impacts, and researchers at FSE are at the forefront of understanding the implications of climate change for humanity’s ability to feed itself. The conventional wisdom has long been that a modest amount of climate change could actually be beneficial for global agriculture, with warming temperatures perhaps lengthening the growing season and expanding the areas in which we can grow crops. But recent work by researchers at FSE and others suggests that climate change could hurt agriculture immediately and, in some places, severely.

The rise in food prices will push 100 million people below the poverty line, undoing decades of economic growth almost overnight. High rice prices alone could cause the premature death of 10 million people in Asia.In a paper published in the January issue of the journal Science, an FSE research team led by David Lobell examined the likely effects of climate change on agriculture throughout the developing world. Combining data from a suite of climate models that simulate future changes in rainfall and precipitation with a host of historical data on climate and agricultural production, Lobell and colleagues found that by 2030 the production of staple crops in some of the poorest parts of sub- Saharan Africa could decline by 30 percent or more in the absence of adaptation, with somewhat smaller declines predicted for much of South and Southeast Asia. Production declines of this magnitude represent monumental declines in welfare for some of the poorest people on earth, the same populations currently being buffeted by high food prices.

Unfortunately, new evidence also questions the ability of higher latitude countries such as the United States to cover the production shortfalls in the developing world. Again contrary to perceived wisdom, this new work shows that climate change could immediately harm agriculture in this country and other large exporting regions, further constraining global supply. Such a climate-induced supply shock, in the context of the recent developments on the demand side for food, could give us a true perfect storm for high food prices. Recent price spikes might only pale in comparison.

Given the imminence and magnitude of the production decline possible and the attendant possibilities for rising food prices and hunger throughout the developing world, FSE researchers are turning from predicting impacts to assessing adaptation options. In particular, ongoing research is focusing on which agricultural adaptations should be prioritized, for what crops, and in what locations. To that end, FSE researchers recently received a $350,000 grant from the Rockefeller Foundation — one of the most important funders of agricultural research — to help the foundation prioritize agricultural investments in sub-Saharan Africa in the face of climate change. With the potentially severe impacts of climate change already on our doorstep, there is little time to lose.

This past autumn, the Freeman Spogli Institute ( FSI ) in conjunction with the Woods Institute for the Environment launched a program on Food Security and the Environment (FSE) to address the deficit in academia and, on a larger scale, the global dialogue surrounding the critical issues of food security, poverty, and environmental degradation.

“Hunger is the silent killer and moral outrage of our time; however, there are few university programs in the United States designed to study and solve the problem of global food insecurity,” states program director Rosamond L. Naylor. “FSE’s dual affiliation with FSI and Stanford’s new Woods Institute for the Environment position it well to make significant steps in this area.”

Through a focused research portfolio and an interdisciplinary team of scholars led by Naylor and Center for Environmental Science and Policy (CESP) co-director Walter P. Falcon, FSE aims to design new approaches to solve these persistent problems, expand higher education on food security and the environment at Stanford, and provide direct policy outreach.

Productive food systems and their environmental consequences form the core of the program. Fundamentally, the FSE program seeks to understand the food security issues that are of paramount interest to poor countries, the food diversification challenges that are a focus of middle-income nations, and the food safety and subsidy concerns prominent in richer nations.

CHRONIC HUNGER IN A TIME OF PROSPERITY

Although the world’s supply of basic foods has doubled over the past century, roughly 850 million people (12 percent of the world’s population) suffer from chronic hunger. Food insecurity deaths during the past 20 years outnumber war deaths by a factor of at least 5 to 1. Food insecurity is particularly widespread in agricultural regions where resource scarcity and environmental degradation constrain productivity and income growth.

FSE is currently assessing the impacts of climate variability on food security in Asian rice economies. This ongoing project combines the expertise of atmospheric scientists, agricultural economists, and policy analysts to understand and mitigate the adverse effects of El Niño-related climate variability on rice production and food security. As a consequence of Falcon and Naylor’s long-standing roles as policy advisors in Indonesia, models developed through this project have already been embedded into analytical units within Indonesia’s Ministries of Agriculture, Planning, and Finance. “With such forecasts in hand, the relevant government agencies are much better equipped to mitigate the negative consequences of El Niño events on incomes and food security in the Indonesian countryside,” explain Falcon and Naylor.

FOOD DIVERSIFICATION AND INTENSIFICATION

With rapid income growth, urbanization, and population growth in developing economies, priorities shift from food security to the diversification of agricultural production and consumption. “Meat production is projected to double by 2020,” states Harold Mooney, CESP senior fellow and an author of the Millennium Ecosystem Assessment. As a result, land once used to provide grains for humans now provides feed for hogs and poultry.

These trends will have major consequences for the global environment—affecting the quality of the atmosphere, water, and soil due to nutrient overloads; impacting marine fisheries both locally and globally through fish meal use; and threatening human health, as, for example, through excessive use of antibiotics.

An FSE project is analyzing the impact of intensive livestock production and assessing the environmental effects to gain a better understanding of the true costs of this resource-intensive system. A product of this work recently appeared as a Policy Forum piece in the December 9, 2005, issue of Science titled "Losing the Links Between Livestock and Land."

Factors contributing to the global growth of livestock systems, lead author Naylor notes, are declining feed-grain prices, relatively inexpensive transportation costs, and trade liberalization. “But many of the true costs remain largely unaccounted for,” she says, including destruction of forests and grasslands to provide farmland for feed crops destined not for humans but for livestock; utilization of large quantities of freshwater; and nitrogen losses from croplands and animal manure.

Naylor and her research team are seeking better ways to track all costs of livestock production, especially hidden costs of ecosystem degradation and destruction. “What is needed is a re-coupling of crop and livestock systems,” Naylor says, “if not physically, then through pricing and other policy mechanisms that reflect social costs of resource use and ecological abuse.” Such policies “should not significantly compromise the improving diets of developing countries, nor should they prohibit trade,” Naylor adds. Instead, they should “focus on regulatory and incentive-based tools to encourage livestock and feed producers to internalize pollution costs, minimize nutrient run-off, and pay the true price of water.”

LOOKING AHEAD

The future of the program on Food Security and the Environment looks bright and expansive. Building on existing research at Stanford, researchers are identifying avenues in the world’s least developed countries to enhance orphan crop production— crops with little international trade and investment, but high local value for food and nutrition security. This work seeks to identify advanced genetic and genomic strategies, and natural resource management initiatives, to improve orphan crop yields, enhance crop diversity, and increase rural incomes through orphan crop production.

Another priority research area is development of biofuels. As countries seek energy self-reliance and look for alternatives to food and feed subsidies under World Trade Organization (WTO) rules, the conversion of corn, sugar, and soybeans to ethanol and other energy sources becomes more attractive. New extraction methods are making the technology more efficient, and high crude oil prices are fundamentally changing the economics of biomass energy conversion. A large switch by key export food and feed suppliers, such as the United States and Brazil, to biofuels could fundamentally alter export prices, and hence the world food and feed situation. A team of FSE researchers will assess the true costs of these conversions.

The FSE program recently received a grant through the Presidential Fund for Innovation in International Studies to initiate new research activities. One project links ongoing research at Stanford on the environmental and resource costs of industrial livestock production and trade to assess the extent of Brazil’s rainforest destruction for soybean production. “Tens of millions of hectares of native grassland and rainforest are currently being cleared for soybean production to supply the global industrial livestock sector,” says Naylor. An interdisciplinary team will examine strategies to achieve an appropriate balance between agricultural commodity trade, production practices, and conservation in Brazil’s rainforest states.

“I’m extremely pleased to see the rapid growth of FSE and am encouraged by the recent support provided through the new Presidential Fund,” states Naylor. “It enables the program to engage faculty members from economics, political science, biology, civil and environmental engineering, earth sciences, and medicine—as well as graduate students throughout the university—in a set of collaborative research activities that could significantly improve human well-being and the quality of the environment.”

On November 15, 2007, FSI held its third annual international conference, Power and Prosperity: New Dynamics, New Dilemmas, examining seismic shifts in power, wealth, security, and risk in the global system. Acting FSI Director Michael A. McFaul, former Secretary of State Warren Christopher, and former Secretary of Defense William J. Perry offered stagesetting remarks before a capacity crowd of business and civic leaders, diplomats, policymakers, faculty, and students. Interactive panel sessions encouraged exploration of contemporary issues with Stanford faculty and outside experts.

Image

Christopher and former Secretary of State Jim Baker are heading a new National War Powers Commission to study and resolve these issues. Planning to do something of a prospective nature, they will focus their recommendations on the 2009 Congress, seeking to bring to bear the collective judgment of both the president and a Congress traditionally reluctant to exercise the power it has under the Constitution.

“I spent most of my adult life under the dark cloud of a nuclear holocaust, a war that threatened no less than the annihilation of humanity,” said former Secretary of Defense William Perry. Now the Cold War is over, but its end did not bring about the end of history. “History is being written every day in the streets of Bagdad, in the deserts of Darfur, in the nuclear test range of North Korea, and in the nuclear laboratories of Iran.”

Image

A complementary route is to work to reduce and then eliminate nuclear weapons. Getting to the political will to take those steps was a major objective of a January 4, 2007, Wall Street Journal op-ed, “A World Free of Nuclear Weapons,” published by Perry, George Shultz, Henry Kissinger, and Sam Nunn, and conferences at Stanford. “This conference can teach us what to do,” Perry said, “what is needed is the political will to do it.”

Gi-Wook Shin, director of FSI’s Walter H. Shorenstein Asia-Pacific Research Center, chaired Plenary I, “Asia’s Triple Rise: How China, India, and Japan Will Shape our Future.” “While our policymakers are preoccupied with the Middle East, Asia is going to have much more impact on our future,” Shin said. Asia is experiencing a unique moment in Asian and world history. Can three great nations rise simultaneously, creating a regional architecture for stability and security? What role can the United States play?

“There are two defining characteristics of today’s world,” said J. Stapleton Roy, former U.S. ambassador to China, “America’s role as the sole superpower and China’s precipitous rise to power and influence.” Roy traced China’s resource demands, military development, and global economic impact and evaluated China’s influence on U.S. foreign policy. “While we see a more powerful and prosperous China as a security threat,” he stated, “the case could be made for a more optimistic scenario in which growth creates a sizable middle class, greater global dependence, and a more open society as the fifth generation of Chinese leaders takes over, the first to mature in a period of openness to the world and the power of modern democracies.”

“The only democracy in the world with which the United States had endemically bad relations during the Cold War was India. Happily that has changed,” said Robert Blackwill, former U.S. ambassador to India. He addressed our many areas of common interest: the fight against global terrorism, energy security, a healthy global economy, and shared democratic values. Analyzing the pending civil nuclear cooperation deal, he placed India’s need for 15–20 new nuclear reactors in the context of domestic growth. Some 450 million people make less than $1.50 per day; India will not tolerate outside direction to slow growth. “The United States and India are natural allies,” he concluded.

“The India entering its seventh decade as an independent country is one that is open to the contention of ideas and interests within it and outside … wedded to the democratic pluralism that is its greatest strength and determined to fulfill the creative energies of its people. Such an India truly enjoys soft power in today’s world.” former under secretary-general of the united nations shashi tharoor“Japan has resumed a solid growth track,” said Michael H. Armacost, Shorenstein Distinguished Fellow and former U.S. ambassador to Japan. The country seeks respect and wants a permanent seat on the U.N. Security Council, which it deserves. Japan’s economy is four times the size of China’s; Japan’s military budget is just 1 percent of GDP, yet it is the third largest in the world and the most sophisticated in Asia. Japan has the resources of a great power—huge financial reserves, modern science and technology, and enormous aid and investment flows. As Japan assumes a more robust international role, we should expect the Japanese to “hedge their bets,” he said, balancing strong U.S. ties with other nations and competing with China in pan-Asian community building efforts. Japan-U.S. relations should not be forgotten, he advised, as we focus on China and India.

Shashi Tharoor, diplomat, historian, and former U.N. under secretary-general, mused about “India’s Future as a Great Power.” Asking what makes a country a world leader, he acknowledged that India has the world’s second largest population, fourth largest military, status as a nuclear power, and the fifth largest economy. Yet a nation that cannot feed, educate, or employ its people cannot be termed a “great power,” Tharoor noted. He suggested that India’s greatest asset is its “soft power”— its liberal democracy, social and cultural diversity, and enormously popular culture. All hold important lessons. “The India entering its seventh decade as an independent country,” he said, “is open to the contentions of ideas and interests within it and outside … wedded to the democratic pluralism that is its greatest strength and determined to liberate and fulfill the creative energies of its people. Such an India truly enjoys soft power in today’s world.”

Lynn Eden, associate director for research at CISAC, chaired Plenary II, “Critical Connections: Faces of Security in the 21st Century,” examining security risks posed by Iraq, nuclear weapons, and food security and the environment—issues, she noted, “that are also central themes of the Stanford International Initiative: improving governance, pursuing security, and advancing human well-being.”

“There are now multiple indications that conditions on the ground in Iraq have improved quite substantially,” said Hoover Institution denior fellow and CDDRL faculty member Larry Diamond. Violence is down and there is a return to something approaching normalcy, as a result of the 30,000 “surge” in U.S. troops and a more effective counterinsurgency strategy adopted by General David Petraeus. The new military-sized force and strategy come at a propitious moment, when the Sunni Arab heartland has turned against Al Qaeda. As Al Qaeda has been weakened, fear, fatal bombings, and Iraqi and U.S. fatalities have declined significantly. The problem is that strategic military gains have not been matched with requisite political progress: enacting an oil revenue sharing bill, reversing de-Baathification, and scheduling provincial elections. “The harsh fact is that military progress on the ground is not sustainable,” warned Diamond, “without political progress toward reconciliation in Bagdad and the provinces.”

“As Americans, we have not thought systematically about what it means when we use the phrase ‘Islamic fundamentalism.’ We tend to treat it holistically. If we are going to understand this threat, we have to disaggregate that big thing called ‘the Muslim world’—we have to know the difference between Islamic fundamentalist, Islamist, and liberal Muslims.” acting fsi director and political science professor michael a. mcfaulAssessing nuclear proliferation, CISAC Co-Director Scott D. Sagan said, “In 1963, John F. Kennedy famously relayed his nuclear nightmare that by the 1970s there might be 15–20 nuclear weapons states. Was Kennedy’s fear inaccurate or only premature?” Today there are nine nuclear states, but the Non-Proliferation Treaty (NPT) is cracked and challenges abound. The A.Q. Khan network in Pakistan exported nuclear technology to Libya, North Korea, and Iran. North Korea withdrew from the NPT and conducted a 2006 test, before agreeing to dismantle its nuclear program. Iran has rejected international demands to suspend uranium enrichment. The United States has not lived up to its NPT commitment to work toward eventual elimination of nuclear weapons. For Sagan, keys to nonproliferation include a successful U.N. 2010 NPT Review Conference, peaceful resolution of the North Korean and Iranian crises, developing control of the international fuel cycle, and American ratification of the Comprehensive Test Ban Treaty.

Turning to human security, Rosamond L. Naylor, the Julie Wrigley Senior Fellow at FSI and the Woods Institute for the Environment, reported that 1 billion people face acute risks every day from hunger, infectious disease, resource depletion, climate change, and civil conflict. Incredibly, 15 percent of the world’s population lives on less than $1 per day and 50 percent live on less than $2 a day. Three billion people are vulnerable to disruptions in food prices because of competing biofuels and climate change. While terrorism kills 3,000 people each year and battle deaths claim 20,000, more than 6–8 million people die every year from hunger and malnutrition. “What can be done?” asked Naylor. We urgently need to conserve our genetic crop resources and invest in rural development, agriculture, and education.

Gilles Kepel, professor and chair, Middle East and Mediterranean Studies, at Sciences Po, delivered the dinner keynote, “Islamic Fundamentalism: On the Rise or the Decline?” “As Americans we have not thought systematically about what it means when we use the phrase ‘Islamic fundamentalism,’” said Acting FSI Director Michael McFaul. “If we are going to understand this threat, we have to disaggregate that big thing called ‘the Muslim world’—we have to know the difference between Islamic fundamentalist, Islamist, and liberal Muslims.” Gilles Kepel, a leading author and scholar of the Middle East, who has “invested tremendously in the study of Islam,” was invited to fill that void. “When it comes to understanding Islamic fundamentalism, Paris is the 21st century,” said McFaul. “I see it as a real challenge to all of us to learn from our French colleagues, and tonight I promise you, you will learn from one of our French colleagues.”

In a December 2001 manifesto, Knights Under the Prophet’s Banner, Ayman al-Zawahiri, Osama bin Laden’s mentor and Al Qaeda ideologue, admitted Islamic jihadists had failed to mobilize the masses to overthrow their corrupt rulers, “the nearby enemy,” and establish Islamic states, Kepel began. By inflicting a massive blow on 9/11 on “the far enemy,” the United States, they would demonstrate that America was weak, Islamic militants were strong, and the masses could revolt against their leaders without fear. The Muslim world and then the whole world would become ruled by Shariah under Islamist aegis. Kepel then asked, “Have they succeeded in what they set out to do?”

“After 9/11, we had a clash of two grand narratives: ‘jihad and martyrdom’ where the apostate regimes of the West and the Middle East were about to fall and ‘the War on Terror’ in which the roots of terrorism would be eradicated and autocratic regimes would tumble, bringing about democracy and a transformation of the Middle East.” professor gilles kepel, institute of political studies, parisKepel’s answer was no. Since 9/11, he said, “There have been two grand narratives: the narrative of jihad and martyrdom preached by Zawahiri and bin Laden, arguing that the rotten regimes of the West and the Middle East would fall, as jihadists waged copy-cat bombings in Africa, Europe, and the Middle East, suicide operations, and so forth” and “the narrative of the American-led War on Terror,” hammering that the roots of terrorism would be eradicated and autocratic regimes would tumble, bringing about democracy and the transformation of the Middle East.

The 2003 invasion of Iraq opened a new area for radical Islamic mobilization. But the two clashing narratives gave ground to something unexpected: the rise of Iranian influence in the region and “a golden opportunity not for Sunni Islamic fundamentalists but for the radical Shia in Iran,” who after the 2005 election of President Ahmadinejad found they could engage in nuclear blackmail with the world and threaten the United States with the activation of Shiite militias in Iraq, where American forces would be at a disadvantage fighting two enemies at the same time.

While Zawahiri continues to paint the “triumphal march of Sunni fundamentalism,” Kepel stated, “the discrepancy between his world view and reality is growing bigger and bigger.” To date, the bigger winner from 9/11 is not Al Qaeda but the Islamic Republic of Iran. Iran and Hezbollah have become the heroes and champions of the Muslim world. This fragmentation in the Muslim world, pitting Shia against Sunni, has weakened the Sunni radical movements’ ability to mobilize. How the confrontation plays out, he concluded, will determine the future of the Middle East.

POWER AND PROSPERITY: NEW DYNAMICS, NEW DILEMAS

INTERACTIVE PANEL DISCUSSIONS ON CRITICAL ISSUES
In an FSI conference highlight, participants engaged in spirited debate on leading issues with Stanford faculty and outside experts. Audio recordings of the plenary and panel discussions are available below.

IS DEMOCRACY GOOD FOR HEALTH?
Alan M. Garber, Grant Miller, Douglas K. Owens, and Paul H. Wise

NUCLEAR POWER WITHOUT NUCLEAR PROLIFERATION?
Scott D. Sagan, David G. Victor, Robert Rosner, and Siegfried S. Hecker

A CHANGING CONTINENT? OPPERTUNITIES AND CHALLENGES FOR EUROPEAN UNION EXPANSION
Katherine Jolluck, Mark Leonard, Monica Macovei, and Wolfgang Münchau

GROWING PAINS - GROWTH AND TENISIONS IN CHINA
Andrew G. Walder, Jean C. Oi, Scott Rozelle, and Xueguang Zhou

AUTOCRATIC HEGEMONS AND THE NATIONAL INTEREST: DEALING WITH CHINA, IRAN, AND RUSSIA
Kathryn Stoner, Larry Diamond, Michael A. McFaul, and Abbas Milani

FOOD SECURITY, CLIMATE CHANGE, AND CIVIL CONFLICTf
Rosamond L. Naylor, David Lobell, and Edward A. Miguel

FACES OF ENGERY SECURITY
David G. Victor, Bryan J. Hannegan, and Chris Mottershead

OVERCOMING BARRIERS TO CONFLICT RESOLUTION: THE MIDDLE EAST
Allen S. Weiner, Byron Bland, Bruce Jones, and Lee D. Ross

The Bill & Melinda Gates Foundation’s Agricultural Development Program has awarded Stanford University’s Program on Food Security and the Environment (FSE) and a team of collaborators $3.8 million over three years to conduct a quantitative assessment of the effect of biofuels expansion on food security in the developing world. This work will determine how different scenarios of expanded biofuels production in rich and poor countries will affect global and regional food prices, farmer incomes, and food consumption of the poor. In three case-study countries (India, Mozambique, Senegal), it will make a more detailed assessment of the opportunities and pitfalls associated with an array of possible biofuels development scenarios (e.g., using different crops for biofuels production, using marginal land versus highly productive land, etc.). We expect the work will represent the first systematic, detailed effort to address the effects of biofuels expansion on welfare in poor countries and the first available analytic tool for assessing possible biofuels investments in individual developing countries. Project collaborators include FSE, the International Food Policy Research Institute, the Center on Chinese Agricultural Policy, and the University of Nebraska.

Through this grant, the Bill & Melinda Gates Foundation aims to assess how biofuels may affect smallholder farmers in the developing world. This includes assessing both the risks, such as increasing food prices, and the potential opportunities for smallholder farmers to leverage biofuels to boost their productivity, increase their incomes, and build better lives for themselves and their families. The foundation and Stanford University will disseminate the findings widely to inform a broad audience, including policymakers.

FSE is also very pleased to announce a private gift from Lawrence Kemp for further work in the biofuels area. The Kemp gift will be devoted to building a team of faculty and students on campus who will analyze the transmission of global price effects to local markets, provide policy advice and communication on biofuels, and expand the field-level coverage of Stanford’s biofuels work.

In the November 2007 issue of Environment, project collaborators Rosamond L. Naylor (FSE), Adam Liska, Marshall Burke (FSE), Walter P. Falcon (FSE), Joanne Gaskell, Scott Rozelle (FSE), and Kenneth Cassman demonstrate how high energy prices and biofuelspromoting agricultural policy result in higher food prices generally and then examine in detail the potential global effects of biofuels expansion in four countries for four crops—corn in the United States, cassava in China, sugarcane and soy in Brazil, and palm oil in Indonesia. They argue that in each case, the threats to global food security from biofuels expansion likely outweigh the benefits, especially in the short run. This is because in many poor countries these crops play an important role in the diets of the poor and because the poorest in the world typically spend more money on food than they earn in income through farming. They also note that “second generation” technologies such as cellulosic biofuels will likely not play a significant role in biofuels production over the next decade or longer—and thus in the near-term are very unlikely to be the win-win that their proponents suggest. “The ripple effect: biofuels, food security, and the environment” excerpted from Environment, November 2007

The integration of the agricultural and energy sectors caused by rapid growth in the biofuels market signals a new era in food policy and sustainable development. For the first time in decades, agricultural commodity markets could experience a sustained increase in prices, breaking the long-term price decline that has benefited food consumers worldwide. Whether this transition occurs—and how it will affect global hunger and poverty—remain to be seen. Will food markets begin to track the volatile energy market in terms of price and availability? Will changes in agricultural commodity markets benefit net food producers and raise farm income in poor countries? How will biofuels-induced changes in agricultural commodity markets affect net consumers of food? At risk are more than 800 million food-insecure people—mostly in rural areas and dependent to some extent on agriculture for incomes— who live on less than $1 per day and spend the majority of their incomes on food. An additional 2–2.5 billion people living on $1 to $2 per day are also at risk, as rising commodity prices could pull them swiftly into a food-insecure state.

The potential impact of a large global expansion of biofuels production capacity on net food producers and consumers in low-income countries presents challenges for food policy planners and raises the question of whether sustainable development targets at a more general level can be reached. Achieving the 2015 Millennium Development Goals adopted by the United Nations General Assembly in 2000, which include halving the world’s undernourished and impoverished, lies at the core of global initiatives to improve human well-being and equity, yet today virtually no progress has been made toward achieving the dual goals of alleviating global hunger and poverty. The record varies on a regional basis: Gains have been made in many Asia-Pacific and Latin American-Caribbean countries, but progress has been mixed in South Asia and setbacks have occurred in numerous sub-Saharan African countries. Whether the biofuels boom will move extremely poor countries closer to or further from the Millennium Development Goals remains uncertain.

Biofuels growth also will influence efforts to meet two sets of longer-run development targets. The first encompasses the goals of a “sustainability transition,” articulated by the Board on Sustainable Development of the U.S. National Academy of Sciences, which seeks to provide energy, materials, and information to meet the needs of a global population of 8–10 billion by 2050, while reducing hunger and poverty and preserving the planet’s environmental life-support systems. The second is the Great Transition of the Global Scenario Group, convened by the Stockholm Environment Institute, which focuses specifically on reductions in hunger and greenhouse gas (GHG) emissions beyond 2050. As additional demands are placed on the agricultural resource base for fuel production, will ecosystem services (such as hydrologic balances, biodiversity, and soil quality) that support agricultural activities be eroded? Will biofuels development require a large expansion of crop area, which would involve conversion of marginal land, rainforest, and wetlands to arable land? And what will be the net effect of biofuels expansion on global climate change?

Although the questions outnumber the answers at this stage, two trends seem clear: Total energy use will continue to escalate as incomes rise in both industrial and developing countries, and biofuels will remain a critical energy development target in many parts of the world if petroleum prices exceed $55–$60 per barrel. Even if petroleum prices dip, policy support for biofuels as a means of boosting rural incomes in several key countries will likely generate continued expansion of biofuels production capacity. These trends will have widespread ripple effects on food security—defined here as the ability of all people at all times to have access to affordable food and nutrition for a healthy lifestyle—and on the environment at local, regional, and global scales. The ripple effects will be either positive or negative depending on the country in question and the policies in play.

Crude oil prices hit $120 a barrel this month, translating into gas pump prices above $4 a gallon in parts of the United States. As a result, the rallying cry of energy self-sufficiency is gaining strength, reinforcing the U.S. policy of promoting renewable fuels, particularly corn-based ethanol, to reduce dependence on imported oil.

But a different rallying cry—food self-sufficiency—is becoming louder in many developing countries where rice, wheat and other staples are in such short supply that food riots have erupted. China, India, Argentina and several other countries have raised export restrictions on key crops to ensure food supplies for their consumers. That move has further increased world prices.

It is important to remember two key lessons from similar chaos in world food markets in 1973-74. First, attempts to gain domestic price stability create global price instability. And second, once policies are established to protect food markets, they are not easily dismantled. It took two decades for rice trade to expand in Asia, and even then, it remained limited.

The United States must take a lead in confronting the world food crisis. But to do so will require a genuine commitment to improving the well-being of people around the world—and recognizing that energy self-sufficiency at home can mean widespread starvation abroad.

In its starkest form, the global food crisis is about rising agricultural commodity prices that place hundreds of millions of poor people at greater risk of malnutrition. Most of the 800 million people globally who survive on a dollar a day or less live in rural areas and work on farms.

The two- to fourfold jump in prices during the past 18 months for internationally traded commodities, such as rice, wheat, corn, soy and vegetable oils, has resulted in fewer and smaller meals for the poor. The rise in the number of malnourished people globally is only beginning to be tallied.

High food prices have been associated with high petroleum prices. The cost of crop production is up, the value of the dollar is down, and biofuels are an attractive alternative to fossil fuels for transportation. Diverting one-fifth of the U.S. corn crop to corn-ethanol production and setting a renewable fuels mandate of 20 percent of U.S. motor fuel consumption by 2022— a fourfold increase in 15 years—has driven up prices for corn and substitute crops, especially soybeans.

Demand for corn, soy and other livestock feeds already had been rising due to increased meat consumption by China and other emerging economies. Add some major weather, pest and disease shocks, and the market for staple agricultural commodities tightened dramatically in 2006 and 2007.

Moreover, a surge in speculative activity has exacerbated market volatility.

How should the three presidential candidates, in particular, address this crisis?

For starters, the United States should retreat from its heavy promotion of corn-based ethanol and allow the markets to settle. Although the 2008 U.S. Farm Bill, passed by the House and Senate last week, includes a reduction in the ethanol blending credit from 51 cents to 45 cents per gallon, the subsidy remains high and is offset by other biofuels production incentives.

President Bush plans to veto the bill, but both the House and the Senate passed it with more than the two-thirds majority needed to overturn a veto. The presidential candidates, Sens. John McCain, Barack Obama and Hillary Rodham Clinton, were all absent for the vote.

The bill increases the Food Stamp Program by $10 billion to help poor Americans buy food at higher prices, but there are no measures that will assure developing countries and international markets that global food supplies will be adequate and that prices will come down. Congress needs to endorse the World Food Program's new strategy of providing food aid in the form of cash instead of surplus grain shipments, a strategy that would allow food-deficit countries to purchase their calories regionally and thereby promote agriculture closer to home.

It also would be wise for the U.S. Agency for International Development to expand, not abolish, investments in agricultural research for low-income countries.

The world can produce plenty of crops at reasonable prices for food and feed, if appropriate agricultural investments are made. But it cannot produce enough crops for food, feed and fuel at prices affordable to half of the world's population.

Democrats voting in Ohio and Texas may well decide the shape of the U.S. presidential election. Regardless of who they choose to run against Sen. John McCain, the all but certain Republican candidate, it is likely that energy issues will figure more prominently in the election than at any time in the last generation. High prices are sapping economic growth, the No. 1 concern across most of the country. Gasoline is now approaching $4 a gallon; natural gas and electricity are also more costly than a few years ago. Global warming has become a bipartisan worry, and solving that problem will require radical new energy technologies as well. All this is good news in the rest of the world, which is hoping that a new regime in Washington will put the United States on a more sustainable energy path.

It may be a vain hope. It is extremely unlikely that Washington will ever supply a coherent energy policy, regardless of who takes the White House in November. That's because serious policies to change energy patterns require a broad effort across many disconnected government agencies and political groups. Higher energy efficiency for buildings and appliances, a major energy use area, requires new federal and state standards. Higher efficiency for vehicles requires federal mandates that always meet stiff opposition in Detroit. A more aggressive program to replace oil with biofuels requires policy decisions that affect farmers and crop patterns-yet another part of Washington's policymaking apparatus, with its own political geometry. New power plants that generate electricity without high emissions of warming gases require reliable subsidies from both federal and state governments, because such plants are much more costly than conventional power sources. Approvals for these new plants require favorable decisions by state regulators, most of whom are not yet focused on the task. Expanded use of nuclear power requires support from still another constellation of administrators and political interests. And so on.

Whenever the public seizes on energy issues, the cabal of Washington energy experts imagines that these problems can be solved with a new comprehensive energy strategy, backed by a grand new political coalition. Security hawks would welcome reduced dependence on volatile oil suppliers, especially in the Persian Gulf. Greens would favor a lighter tread on the planet, and labor would seize on the possibility for "green-collar" jobs in the new energy industries. Farmers would win because they could serve the energy markets. The energy experts dream of a coalition so powerful that it could rewire government and align policy incentives.

This coalition, alas, never lasts long enough to accomplish much. For an energy policy to be effective, it must send credible signals to encourage investment in new equipment not just for the few months needed to craft legislation but for at least two decades-enough time for industry to build and install a new generation of cars, appliances and power plants, and make back the investment. The coalition, though, is politically too diverse to survive the kumbaya moment.

Just two weeks ago the feds canceled "FutureGen," a government-industry project to develop technologies for burning coal without emitting copious greenhouse gases, demonstrating that the government is incapable of making a credible promise to help industry develop these badly needed technologies over the long haul. (The project had severe design flaws, but what matters most is that the federal government was able to pretend to support the venture for as long as it did and then abruptly back off.) Similarly, legislation late last year to increase the fuel economy of U.S. automobiles will have such a small effect on the vehicle fleet that it will barely change the country's dependence on imported oil and will have almost no impact on carbon emissions. Democrats and Republicans alike claim they want to end the country's dependence on foreign oil, but neither party actually does much about it.

The only policies that survive in this political vacuum are those that target narrower political interests with more staying power. Thus America has a highly credible policy to promote corn-based ethanol, because that policy really has nothing to do with energy; it is a chameleon that takes on whatever colors are needed to survive. It is a farm program that masquerades as energy policy; at times, it has been a farm program that masquerades as rural development. As an energy policy it is a very costly and ineffective way to cut dependence on oil. As a global warming policy it is even less cost effective, since large-scale ethanol doesn't help much in cutting CO₂ and other warming gases. Similarly, the United States has a stiff subsidy for renewable electricity-mainly wind and solar plants-because environmentalists are well organized in their support for it. The coal industry periodically gets money for its favored technologies, as in FutureGen, but even that powerful lobby has a hard time getting the government to stay the course.

Europe is in danger of contracting the same affliction. To be sure, most European countries long ago started taxing energy as a convenient way to raise revenues, which fortuitously also makes energy more costly and creates a strong incentive for efficiency. That approach did not originate as an energy policy, but it has emerged as a keystone of Europe's more successful efforts to tame energy consumption. And Europe is in the midst of shifting policymaking from the individual countries to Brussels, which may create a more coherent approach. But despite these advantages, Europe is notable for its inability to be strategic. For example, Brussels is touting a new pipeline called Nabucco that would help Europe cut its dependence on Russia for its natural gas. So far, Brussels is good at talking about the Nabucco dream but can't agree on a route, financing, or even on where to get the gas that would replace Russia's.

The rising powers in Asia are also finding that they, like America, have a hard time developing and applying strategic energy policies. China develops energy policy through its economic planning system, with mixed results. The country doesn't even have an energy ministry, and efforts to create one are being stymied by the bureaucracy and companies that fear they will lose influence. India has four energy ministries and no real central strategy. Like America, India is very good at declaring visions for strategic energy policy but dreadful at putting them into practice. The Japanese public is just as fickle, but the government bureaucracy is entrenched and far-sighted enough to keep its focus long after public interest has waned.

All this means that the underlying forces that are causing high demand for energy (and high prices) and emitting greenhouse gases will be hard to alter. The effort to solve global warming might change this pessimistic iron rule of energy policy, because the environmental community that is the core of the coalition in support of global warming policy is becoming much stronger and has shown staying power. For the moment, however, that is a hypothesis to be proved.