Biomass for food or fuel : technology, food security and climate externality

• Main Authors: Ho, Jie Jia, Lee, Yi Ting, Ong, Li Ting
• Other Authors: Chang Youngho
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Social sciences::Economic theory::Microeconomics
• Online Access: http://hdl.handle.net/10356/59077
• Institution: Nanyang Technological University

This study develops a utility model that maximizes social welfare. We solve this social planner problem to obtain the optimal allocation of biomass between food and fuel and evaluate the impact of technology. A minimum food mandate is then considered in relation to the controversial issue of food security. An extension that accounts for climate externality is built upon the existing model to internalize externality from greenhouse gas emissions for a more representative assessment. The model is operationalized using a numeric simulation that examines the interplay of the aforementioned factors. Cases analysed includes the effect of technology on the optimal allocation ratio, the effect allocation ratio and minimum food mandate have on overall societal utility, and how the inclusion of climate externality changes the game. The results also depend on the level of utility the society derives from food and fuel respectively. Our findings show that under constant technology, the social planner’s decision to ensure food security only maximizes overall societal utility when consumers derived a higher share of utility from food. In the presence of technological advancement, a minimum food mandate prevents food shortages at the expense of overall societal utility.