Barr, Kanlaya Jintanakul

Applied Economic Perspectives and Policy Vol. 33 no. 3 (2011): 449-462.

The elasticity of aggregate supply of cropland is one key to understandingthe degree to which policy-induced increases in demand for biofuel feedstocksor agricultural CO2 offsets will result in higher prices or expanded cropproduction. We report land supply elasticities for the United States and Brazilestimated directly from recent changes in planted crop acreage and estimatedchanges in expected returns. The resulting aggregate implied land-use elasticitieswith respect to price are quite inelastic in the United States and Brazil elasticitieshave declined sharply in recent years. The estimated elasticities imply that currentestimates of land-based CO2 emissions from biofuels expansion may be overstated

JEL Classification: Q10, Q15, Q18

Keywords: agricultural land elasticity, Brazil crop production, U.S. aggregate land supply elasticity