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Soil heterogeneity, agricultural supply and land-use change: an application to biofuels production

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  • Vincent Martinet

Abstract

Biofuels policies (blend mandate or tax credit) have impacts on food and energy prices, and on land-use. The magnitude of these effects depends on the market response to price, and thus on the agricultural supply curve, which, in turn, depends on the land availability (quantity and agronomic quality). To understand these relationship beyond marginal analysis, we develop a theoretical framework with an explicit representation of land heterogeneity. The elasticity of supply curve is shown to be non-constant. This influences the welfare economics of biofuel policies. This is due to the availability of new land of marginal quality. Biofuels policies have different impacts in different countries, depending on both their global land endowment and the position of the equilibrium on the non linear agricultural supply curve. Knowing this heterogeneity helps to refine welfare analysis.

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Bibliographic Info

Paper provided by INRA, Economie Publique in its series Working Papers with number 2010/05.

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Date of creation: 26 Apr 2010
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Handle: RePEc:apu:wpaper:2010/05

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Related research

Keywords: Land use; Soil heterogeneity; Agricultural economics; Supply functions; Equilibrium; Land-use changes; Biofuels;

References

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  1. Craig Bond & Y. Farzin, 2008. "Alternative Sustainability Criteria, Externalities, and Welfare in a Simple Agroecosystem Model: A Numerical Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 383-399, July.
  2. Dietrich Vollrath, 2007. "Land Distribution and International Agricultural Productivity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 202-216.
  3. Ian W. Hardie & Peter J. Parks, 1997. "Land Use with Heterogeneous Land Quality: An Application of an Area Base Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 299-310.
  4. Llewelyn, Richard V. & Featherstone, Allen M., 1997. "A comparison of crop production functions using simulated data for irrigated corn in western Kansas," Agricultural Systems, Elsevier, vol. 54(4), pages 521-538, August.
  5. LaFrance, Jeffrey T & Pope, Rulon D., 2007. "Homogeneity and Supply," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9kw967kf, Department of Agricultural & Resource Economics, UC Berkeley.
  6. Hongli Feng & Bruce A. Babcock, 2008. "Impacts of Ethanol on Planted Acreage in Market Equilibrium," Center for Agricultural and Rural Development (CARD) Publications 08-wp472, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  7. Antle, John & Capalbo, Susan & Mooney, Sian & Elliott, Edward & Paustian, Keith, 2003. "Spatial heterogeneity, contract design, and the efficiency of carbon sequestration policies for agriculture," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 231-250, September.
  8. Carlos Arnade & David Kelch, 2007. "Estimation of Area Elasticities from a Standard Profit Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 727-737.
  9. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers 12881, Iowa State University, Department of Economics.
  10. David A. Hennessy, 2009. "Crop Yield Skewness Under Law of the Minimum Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 197-208.
  11. Keeney, Roman & Hertel, Thomas, 2008. "The Indirect Land Use Impacts of U.S. Biofuel Policies: The Importance of Acreage, Yield, and Bilateral Trade Responses," GTAP Working Papers 2810, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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