by Ricardo Hausmann, guest blogger
Thanks to Dani’s blog, I learned about the website to track progress on the MDG. I was also impressed by the fact that the UN website also flagged a story calling for a 5-year freeze on bio-fuels production by a UN human rights expert worried about hunger in Africa. The argument is pretty straightforward and has already been expressed by Fidel Castro and Hugo Chavez. It is that using food as fuel is a crime because food should be used to feed people, not machines. Making food a substitute for fuel raises its price and excludes the poor from feeding themselves. This obviously assumes that the amount of food is given and does not respond to demand, prices and technology. Whys is it that there is agricultural protectionism in this world? Presumably because if the forces of free trade were unleashed in this world, food prices would fall making (mostly rich-country) farmers poorer. At current technologies, there is an excess of arable land that could be productively used and hence the equilibrium price would be too low to support some sense of desired income for farmers.
If biofuels lead to more demand for agricultural products and land it is interesting to ponder how the markets will respond and how the gains and losses will be distributed. In this respect one wonders what makes a person a human rights expert and how you can go from that expertise to a ban on a technology. What in their training allows human rights experts (and the UN organizations that support them) to work out the impact of an industry on prices, quantities, incomes, investments, growth and inequality. Apparently, this expert concluded that the fact that food prices have gone up is an indication that they did so because of biofuels production, not because of increased food demand in the fast growing developing world which today includes not only East Asia and India, but also much of Africa. More interesting is the question of how human rights can so easily be promoted by limiting the freedom of people to decide what they grow and how they use their land and skills. And if this is the road to prosperity, why stop at 5 years? Lets ban them forever! In a different assessment, I have argued that a biofuels industry would probably have rather good overall effects on the world and especially on those developing countries that have ample good land that is not being cultivated. Much of this land is in Africa, but it is not being used mainly because infrastructure is inadequate and sugar production has been discouraged over the past three decades because of incredibly distortionary policies in the US and the EU.
Here is a graph of the countries with their relative endowment of good land that is not being cultivated. It is based on some calculations done with Rodrigo Wagner, using the Geographic Information System.
Note the share of the Democratic Republic of Congo (ZAR), Sudan, Central African Republic (CAF), Mozambique, Tanzania, Zambia, Angola, Chad and Cameroun. These are countries that have found very few products with which to connect their citizens to the global economy. Prohibiting them from using the biofuels industry as a stepping stone in their development is not something that should be done lightly. How human rights would be affected is a pretty complex issue and it is irresponsible for the UN to come out against it based on the view of a human rights “expert”. It may well be the most important thing to happen to Africa in a long time in terms of creating sustainable livelihoods and justifying the expansion of a sorely needed road infrastructure that could crowd in further investment and development.