Agricultural Land Elasticities in the United States and Brazil

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2010-02-01
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Barr, Kanlaya
Babcock, Bruce
Carriquiry, Miguel
Nasser, Andre
Harfuch, Leila
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Babcock, Bruce
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Center for Agricultural and Rural Development

The Center for Agricultural and Rural Development (CARD) conducts innovative public policy and economic research on agricultural, environmental, and food issues. CARD uniquely combines academic excellence with engagement and anticipatory thinking to inform and benefit society.

CARD researchers develop and apply economic theory, quantitative methods, and interdisciplinary approaches to create relevant knowledge. Communication efforts target state and federal policymakers; the research community; agricultural, food, and environmental groups; individual decision-makers; and international audiences.

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Center for Agricultural and Rural Development
Abstract

The elasticity of aggregate supply is one key to understanding the degree to which policyinduced increases in demand for biofuel feedstocks or agricultural CO2 offsets will result in higher prices or expanded supply. In this paper we report land supply elasticities for the United States and Brazil estimated directly from the observed changes in cropland and estimated changes in expected returns. The resulting aggregate implied land-use elasticities with respect to price are quite inelastic in the United States and more elastic in Brazil (0.007-0.029 and 0.382- 0.895, respectively). However, with pasture land included in Brazil, implied elasticities become much less inelastic (0.007-0.245).

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