Full Title: Market-oriented ethanol and corn-trade policies can reduce climate-induced US corn price volatility
Author(s): Monika Verma, Thomas Hertel, and Noah Diffenbaugh
Publisher(s): Environmental Research Letters
Publication Date: June 1, 2014
Full Text: Download Resource
Description (excerpt):
Agriculture is closely affected by climate. Over the past decade, biofuels have emerged as another important factor shaping the agricultural sector. We ask whether the presence of the US ethanol sector can play a role in moderating increases in US corn price variability, projected to occur in response to near-term global warming. Our findings suggest that the answer to this question depends heavily on the underlying forces shaping the ethanol industry. If mandate-driven, there is little doubt that the presence of the corn-ethanol sector will exacerbate price volatility. However, if market-driven, then the emergence of the corn-ethanol sector can be a double-edged sword for corn price volatility, possibly cushioning the impact of increased climate driven supply volatility, but also inheriting volatility from the newly integrated energy markets via crude oil price fluctuations.