Future Focus: Signposts to Success for New Zealand's Primary Industries
Appendix 1 - Influence Diagram: Complex impacts of Drivers for biofuel development
An influence diagram illustrates complex causal relationships among trends and issues. It is by necessity a simplification. Here, only the growth of China is considered as a driver of oil price increases, and biofuel demand. The US Government responds by increasing subsidies for growing crops e.g. corn as feedstocks for bioethanol. This increases bioethanol supply. Oil prices also drive increased investment in biofuel R&D, which drives both supply of and knowledgeable consumer demand for biofuel. These multiple drivers for increased supply also lead to intermittent price falls, which result in further subsidy increases, and so on.
Increased biofuel supply leads to competition for feedstocks in grain-fed agriculture, increasing grain prices (and arguably making food unaffordable in some regions), and promoting a general increase in agricultural commodity prices. In New Zealand this results in land price inflation and increased conversion to dairying, and increased export supply of meat and dairy products (already strongly driven by increased Chinese demand). Intensification and changes in land use raise issues of water quality and availability, greenhouse gas emissions, and environmental sustainability. Global concerns about these issues in turn drive biofuel R&D and US subsidies.
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