The Cost to Developing Countries of
U.S. Corn Ethanol Expansion
Timothy A. Wise
GDAE Working Paper 12-02
Download the working paper
In an earlier paper and report, GDAE estimated that from 2006-2011 U.S. ethanol expansion cost Mexico about $1.5 billion due to ethanol-related corn price increases. Here GDAE applies the same methodology to estimate the global impacts on corn-importing countries. We estimate the six-year costs at $11.6 billion and rising; they are projected to reach $15.9 billion this year with the U.S. drought, rising prices, and continued high import levels. Developing countries absorb more than half of those costs - $6.6 billion from 2006-11. That figure rises to $9.3 billion with this year’s record $2.7 billion in ethanol-related import cost. In addition we find:
- Net Food Importing Developing Countries, among the most vulnerable to food price increases, incurred ethanol-related costs of $2.1 billion.
- Thirteen developing countries incurred per-capita impacts greater than Mexico’s, and they include a wide spectrum of large and small countries from all regions of the developing world – Colombia, Malaysia, Botswana, Syria.
- North African countries saw large impacts, with $1.4 billion in ethanol-related import costs, led by Egypt ($679 million). Other countries experiencing social unrest – Tunisia, Libya, Syria, Iran, Yemen – also suffered high impacts, highlighting the link between rising food prices and political instability.
- Central American countries felt impacts nearly those of Mexico, scaled to population. The region has seen its dependence on food imports rise over the last 20 years, and corn imports cost an extra $368 million from 2006-11 due to U.S. ethanol expansion. Guatemala saw the largest impacts, with $91 million in related costs.
- Latin American partners to trade agreements with the United States saw high costs, as import-dependence grows. The six-year ethanol-related cost of corn imports was $2.4 billion for Latin American nations involved in NAFTA, CAFTA-DR, and the bilateral agreements with Panama, Colombia, Peru, and Chile.
The paper and report from ActionAid, "Fueling the Food Crisis," recommend changes to U.S. biofuels policies, including a more flexible renewable fuels mandate that places food and people before fuel and cars.
Download the Working Paper: The Cost to Developing Countries of U.S. Corn Ethanol Expansion
Download the ActionAid report: Fueling the Food Crisis
Read more on GDAE’s work on the Global Food Crisis and U.S. Biofuels
The Global Development and Environment Institute’s Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries, with a particular emphasis on the WTO and NAFTA's lessons for trade and development policy. The goal of the program is to identify policies and international agreements that foster sustainable development.