Bigger Than Any of Us

Filed in archive Opinion on January 17, 2007

I received a comment from Brad Ewing of Environmental-economics and he has got very interesting ideas. Brad is a graduating economics major and it looks like he is going on the right path by being very critical and inquisitive. Please make it a point to visit his blog and read his very intelligent writing. On the subject of biofuels, he said:

Biofuels will do little to curb energy demand and they have a very likely possibility of disrupting food and water markets. Politicians throughout the world have got this one wrong. ADM is no better than Exxon. Government resources would be better spent on reducing demand through conservation policies and R & D with renewable energies such as wind and solar.

Upon reading his comment, I realized there is truth to it. But this is where the macro in macro-economics ends and the micro in microeconomics take over. If you consider a locality as a household, (the household and individual is at the center of microeconomics), you would then be taking a look at what really would be happening when biofuels become an integral part of the local economy. To sum it all up, biofuels or any renewable energy development for that matter, is bigger than any of us. Why so?

One of the biggest contributions of a biofuel economy is the development of ancilliary industries. Which means more jobs for people. More markets for goods and services that were otherwise not there. Truth is, any energy project creates that. But biofuels provide the highest possible rate of involvement community-wise. Think of solar and intuitively, once the solar panels are in place there would be very little by way of additional jobs that it would create. Not biofuels. Biofuels will need continous participation from many stakeholders. And that is why although it would not create much of a dent in the total energy demand of any country (unless you are a primary producer like Brazil), it would definitely create a resurgence in the local agricultural economy. And when that happens, people get empowered, purchasing more and requiring other services. Isn't that what we mean by economic progress?

What do you guys think?

Photo from Liquid-Biofuels.Com