Publication Date


Series Number

10-WP 505


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).