The Role of Cultivated Land Expansion on the Impacts to Global Agricultural Markets from Biofuels

Fully understanding the role of biofuels on agricultural markets requires accounting for the response of all affected inputs and outputs. Previous studies have generally forced the amount of cultivated land to remain fixed regardless of price change. This study overcomes this limitation by setting alternative growth rates in farmland expansion within a general equilibrium model with a focus on agricultural and energy markets. Simulation of the model under alternative biofuel policies and market conditions reveals that a fuller utilization of available land resources significantly reduces the rise in feedstock prices brought about by biofuel policies and/or higher energy prices.