ABSTRACT
Literature review Most of the literature is concerned with the effect of liquid bio fuels (especially ethanol) on food prices and land utilization, disregarding the effect of other agriculture-based energy production, such as charcoal and firewood. Moreover, no paper analyzes the link between crop expansion to produce energy and the performance of land prices. According to Blackman et al. (2007), Alexander and Hurt (2008) and Robert Zoellick, (the World Bank president, in an interview to NPR (2009) on 11 April 2008) droughts, financial market speculators and increasing demand for food together with the expansion of ethanol and other bio fuels were the main causes for the skyrocketing food prices from early 2006 to middle 2008.1 In the United States, Alexander and Hurt (2008) estimated that the total cost of food would grow to US$22 billion in 2007 in relation to 2005, and two-thirds of the additional cost were due to bio fuels demand. Camargo et al. (2008) and Mueller and Martha Jr. (2008) deal with the impact of ethanol expansion on land use in Brazil. The first paper analyzes the shift of crops and pastures in the state of São Paulo from 2001 to 2006 when sugar cane crops grew by almost 1 million ha. Simultaneously, land use for soybeans and planted forests grew by 200,000 ha and corn, beans, coffee, rice and orange together lost over than 300,000 ha, and planted pastures lost 1 million ha. However, all agricultural activities with decreasing cropland have increased their productivity. Mueller and Martha Jr. (2008) highlight the direct and indirect impacts on land use caused by sugar cane expansion in the Brazilian Cerrado. Focusing on five Brazilian areas covered with Cerrado vegetation,2 the authors conclude that sugar cane plantations and ethanol mills expanded, but do not represent a serious threat to other agricultural activities in the Cerrado area. Their future expansion could expel more cattle to the Amazon Rainforest region, and consequently increase deforestation.
