Agricultural Land Elasticities in the United States and Brazil.

The elasticity of aggregate supply of cropland is one key to understanding the degree to which policy-induced increases in demand for biofuel feedstocks or agricultural CO2 offsets will result in higher prices or expanded crop production. We report land supply elasticities for the United States and Brazil estimated directly from recent changes in planted crop acreage 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 Brazil elasticities have declined sharply in recent years. The estimated elasticities imply that current estimates of land-based CO2 emissions from biofuels expansion may be overstated [ABSTRACT FROM AUTHOR]