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2014-04-24 | Research Brief

Biofuels Can Have a Win-win Outcome that Improves Smallholder Productivity and Increases Household Welfare

Gebreegziabher, Zenebe, Alemu Mekonnen, Tadele Ferede, Fantu Guta, Jörgen Levin, Gunnar Köhlin, Tekie Alemu and Lars Bohlin. 2014. “Biofuels Can Have a Win-win Outcome that Improves Smallholder Productivity and Increases Household Welfare” EfD Research Brief 13-02
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Rising prices of fossil fuels, together with apprehension about the environmental harm created by them, have resulted in increasing efforts to search for alternative energy sources such as biofuels. Biofuels production is still a debatable issue regarding the opportunities it creates and the challenges it poses.

Its proponents see it as an alternative energy source that substitutes renewable and relatively clean energy for conventional energy sources. Sceptics, however, consider it a threat to the poor. Some even take it further and perceive it as a crime against humanity to raise crops for fuel instead of food. It is crucial for low-income, food-deficit countries such as Ethiopia to investigate the distributional and food security questions raised by such investments. Will such biofuel investments be pro-poor or will they lower the income of vulnerable people or groups? Which group in Ethiopia, if any, will be affected negatively due to increasing biofuel investments in the country? Will such investments undermine the country’s food production or food security? Findings in Ethiopia suggest that biofuels investments can have a “win-win” outcome that can improve smallholder productivity, food security, and household welfare.